Analysing the Macro-Environment

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Macro-environment analysis of The Coffee Company for the Chai Latte powder product

The Coffee Company is 100% privately owned and operated company. It has been in operation since 1998 and has over 10 years experience in the coffee manufacturing market. The Coffee Company provides fresh roasted coffee to over 1000 food service customers across Australia and its retail products are available in leading Australian retailers. The Coffee Company plant is based in Moorabbin and uses market leading production methods to deliver consistent quality and flavour. The Coffee Company has sales offices in all the Australian capital cities. The current product range consist of coffee beans, ground coffee and liquid chocolates in a variety of styles and sizes. The purpose of this report is to provide a macro-environment market analysis in relation to the development and manufacturing of a Chai Latte powder product.

The macro-environment consists of six types of forces: demographic, economic, natural, technological, political and cultural. The Coffee Company must take into account the trends and changes in each of these environments, which can both pose challenges and opportunities.

Demographic Environment
As defined by Kotler et al, demographics are the "study of human populations in terms of size, density, location, age, sex, race, occupations and other statistics" (Kotler, 2007). One of the most significant trends in Australian demographics is the ageing population. Australia’s population is projected to age rapidly over the next twenty to forty years. Population ageing is the upward shift in the age structure, in which the proportion of younger people declines as the proportion of older people increases. It is forecasted “Australia's population is set to change substantially over the next 50 years, with around one in four Australians being 65 years or older by 2056” (ABS 2008).

This ageing population in the short term is made up of the generation know as the Baby Boomers. Baby Boomers are generally acknowledged as those born between 1946 and 1964. In a recent marketing report, released by Adshel, the study found, Baby Boomers are a significant part of the Australian demographic landscape as they make up 25 percent of the population and own 50 percent of the country’s wealth. Baby Boomers are generally accepted as well educated and have an assumption of lifelong prosperity and entitlement. Therefore, large group of people who have disposable income and have available time due to retirement are ‘out and about’ being more socially active than ever. This results in higher volumes of customers dining in cafes and restaurants with Baby Boomer customers spending more per visit due to having higher disposal income.

The challenge for The Coffee Company is to specifically target the marketing campaign at the Baby Boomer demographic in a way that generates more sales without negatively impacting the revenue stream being generated from non-Boomer demographic groups.

Economic Environment
The economic environment is best described as having the “factors that affect consumer buying power and spending patterns" (Kotler et al 2007).

The major factor impacting the current economic environment is the global financial crisis. Two major indicators of economic health in the Australian economy, Gross Domestic Product and the Unemployment Rate, have both deteriorated markedly over recent months. The global financial crisis, which is now affecting the real economy, has dampened growth prospects by diminishing available credit, reducing household wealth, decreasing Australia’s terms of trade and eroding business and household confidence. Access Economics are reporting economic growth is projected to slow even further and consequently unemployment is forecast to rise.

Consumer buying power and spending patterns are directly linked to disposable income. As the level of disposable income increases, consumers are more likely...
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