External Environment Analysis
Previously, you read about the industry analysis of the beer, wine and liquor industry and the five forces that affect a firm’s ability to serve consumers and turn a profit. Next, successful companies must recognize and respond to the major forces affecting our macro environment, for example; stock market decline, increase in unemployment and global warming. Companies must now consider several external environmental forces while running their business, in particular, demographics, economics, social, natural, technological and political. Demographics
Demographics can consist of population size, density, location, age, sex, race and occupation. In this analysis, we will focus on examining population size and age. Based on an estimate from July 2011, there were roughly 313 million people in our population with a growth rate of almost one percent (Central Intelligence Agency). The highest areas of growth tend to be in warmer climates, the southern and western parts of the United States. Our population rate is growing at an explosive rate that could exceed our food supply and ability to service the population. Samuel Adams needs to take into account the areas of highest growth in our population and market to these regions. Ideally, because the craft brew segment is strong on the west coast, Samuel Adams should distribute more products to the western states. As stated earlier, the Boston Brewery Company’s corporate headquarters and brewery is located in Boston, Massachusetts, which makes them primary players already in the east coast market. A second important demographic to consider when marketing is age. Age is important in the alcoholic beverage industry because of the legal drinking age requirements. One particular approach marketer’s use is generational marketing; this targets certain age groups as well as different generations. This is important for companies to consider especially since the start of the recession in 2008. Since then birth rates have dropped by seven percent and the average age has risen because of this (Livingston). An older consumer market is attractive for many industries because typically higher age groups make up a significant portion of expenditure. For the beer industry, you need to be a certain age to purchase and consume alcoholic beverages and companies are legally obligated to address this when selling their product. Economic Environment
Next, we will look at the economic environment; this includes factors that affect consumer purchasing power and spending patterns. These factors include but are not limited to price, employment and wages. Today, real income is on the rise and consumers have a number of resources available to help them make the best purchasing decision. “The U.S. convenience store count increased to a record 148,126 stores as of December 31, 2011, a 1.2 percent increase from the previous year” (Lowe). Convenience stores offer consumers fast, convenient service for their purchasing needs, particularly for the food and beverage industry, which represents the majority of consumer dollars. The continual increase in alcohol sales each year shows that in the minds of consumers’ alcohol is rather recession resistant. Price is another component that affects consumer purchasing power and spending. In our economy, the consumer price index or the inflation rate measures the variability amongst prices consumers pay for a good or service. Oil prices and tuition are two examples of inflation. U.S. consumers spent no more in May than in April after seeing almost no gain in their pay, the lack of growth in consumer spending and wages suggests that a faltering job market is slowing the economy (Crutsinger). Even though inflation is falling consumers are still not spending because of the economy, this could also be due to the decline in borrowing of credit. Somewhat correlated to change in price/inflation is unemployment. Because...
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