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Analyze Macro Environment Of Australian

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Question:

Discuss about the Analyze Macro Environment of Australian.
 
 

Answer:

Introduction

Marketing environment refers to the forces, which impact the ability of an industry towards building and maintaining its success (Broberg, Umans and Gerlofstig 2013). This study will be based on the scenario, where a large company wishes to invest in the retail book industry of Australia. In this context, the study will analyze the macro environment of the industry through PESTLE and Porter’s Five Force Analysis. Apart from that, the study will also analyze the segmenting variables of the industry. The purpose of the study is to explore the opportunity and threats of the industry, which will ultimately impact the new company. The study will also suggest some segmenting variables for the new company.

Macro Environment

PESTLE Analysis

PESTLE Analysis of Australian Retail Book Industry

Political

·         Free trade agreement imposed by Australian Government assists smooth business operation of Australian retail book industry

·         As per Australian copyright act, Australian booksellers are obligated to purchase bulk orders from Australian rights holder. They are restricted to purchase orders from overseas suppliers (Booksandpublishing.com.au 2017). It is ultimately pushing up the price of local book sold in retail shops and increasing the overall revenues of the industry.

·         Reduced tax rate on retail book industry has ultimately increased its profit potential.

Economic

·         Strong economic condition of Australia has enhanced the business potential of book retailers

·         Fluctuation in inflation rate sometimes hamper book retailing industry.

·         Currency fluctuation rate also impact on the profit level of the industry

Social

·         Increasing social activity among the people towards sharing interest through book reading has increases the sales potential in the industry

·         Increasing purchasing power of the consumer has enhanced the sales potential of this industry (Parsons and Descatoires 2016)

·         Increasing numbers of retirees in this country has increased the demand for books

Technological

·         Advanced technology helps the industry to keep constant relation with the customers

·         Technological advancement can help in building strong relationship with the book suppliers (Efendioglu 2015)

Legal

·         The industry comply with all the legal standards of consumer law

·         The industry also comply with all the Australian labor law

Environmental

·         Book retail industry of Australia is highly concerned about protecting the environment

·         It uses environment friendly packaging  technique for all its products

Table 1: PESTLE Analysis of Retail Book Industry in Australia

(Source: Gump 2014)

Porter’s Five Force Analysis: Threats of New Entrants

The retail book industry of Australia faces low barriers from the localized small entrants. However, it faces significant barriers from the international entrants. Their established competition has created negative growth of the industry (Wehner et al. 2017). Moreover, the percentage of trade book sales was quite low in Australian till 2015 (Referred to Appendix 1). However, the industry has used price cutting strategy for beating the treats of new entrants and started to regain the sales volume.

Threats of Substitutes

Retail book industry of Australia faces high level of threats from the media and entertainment industry. Recently, consumers spend more time on watching TV and chatting in social media. It has reduced the demand of books, which is ultimately impacting the retail book industry (Pons et al. 2016). The total value of boo sales has been demonstrated in Appendix 2.

Competitive Rivalry

The retail book industry of Australian faces tough competition from the online retailers like Amazon and The Book Depository. It forced the industry to set cheaper prices for all of their books, which has increased its market share. However, the sales of the industry have been declined by 2.2% by the year 2016 (Ibisworld.com.au 2017). On the other hand, the recent revenue of the industry demonstrated an amount of 4 billion, which is a moderate amount (Ibisworld.com.au 2017). The sales channels of the Australian book have been demonstrated in Appendix 3. In the local market, the industry faces tough competition from Booktopia and Dymocks.

Bargaining Power of Buyers

Retail book industry faces high bargaining power of buyers. Moreover, the online bookselling companies are more likely to offer discounts on the books, which they sell to the customers through online channels (Barnard 2016). Hence, customers have more power to switch in those online booksellers. It can ultimately reduce the sales potential of the industry.

Bargaining Power of Suppliers

The copyright act of Australian Government has restricted the bookselling companies to buy bulk amount of book only from local book publishers. They are not allowed to get supply of the book from any foreign suppliers. It has ultimately increased the bargaining power of suppliers over the retail bookselling industry (Gray 2013). However, share of trade and educational books have increased the overall market share of the industry (Referred to Appendix 4).

Figure 1: Porter’s Five Force Analysis of Australian Retail Book Industry

(Source: Stephens and McGowan 2015)

 

Segmenting Variables in Industry

Segmenting Variables in Australian Retail Book Industry

Segmentation

Demographic

Age: 6 year to Above: Almost all age groups having reading habits are targeted by this industry.

Gender: Both Male and Female: Readings are not restricted to any gender in today’s market. Hence, both male and female customers are selected.

Marital Status: Both Single and Married: Single customers will be segmented to offer action and adventure books, science fiction, horror and mystery books. On the other hand, married customers are segmented to offer romance, diaries, religious and history books.

Education: Mostly educated person: Books are valued to only educated customers. Students are offered by the book within their syllabus and others by different types of books.

Occupation: Can be any type and even the retired persons: All types of professional are segmented by the industry.

Income: Moderate income level: Books are kind of luxury goods. Hence, the customers having moderate income are selected.

Attitude: Positive attitude towards life: Customers having fantasy and positive attitude towards life are selected by the industry.

Psychographic

·         Customers having strong personality

·         Customers having hobbies of book reading

Demographic

Customers seeking high level of benefits are segmented by the industry

Target

·         All age group

·         Educated Persons

·         Occupation: Business persons, school students, college students, job holders and even unemployed

·         Customers having moderate income

·         Customers having positive attitude over life

Positioning

·         Wide collection of books in the bookstores

·         Various types of books including education, trade, entertainment and others

·         Moderate price range attracts the readers

·         Convenient stores of the book stores

Table 2: Segmenting Variables of Australian Book Retail

(Source:)

Conclusion

While concluding the study, it can be said that Australian book retail industry gets huge support from the government. On the other hand, the increasing reading habits of the customers have also enhanced the sales potential of the industry. The recent revenue of the industry is 1 billion, which is quite moderate. However, the industry is facing tough completion from the online book selling companies both from domestic market as well as international market. Hence, the industry has become forced to cut the price range of the books. It has ultimately declined the profit level of the industry. However, with the increasing popularity of trade and educational books, there is still hope in this industry. The new retail book company should target adult groups for selling their books.

Recommendation to Segment for New Company

Recommendation on Segmentation and Target of Book Retail Company

Segmentation

Demographic

Age: 18-Above: All the adults customers will be segmented by this company, as they are mostly associated with the hobbies of reading

Income: Moderate Income Group: The company will sell books having high prices like popular novels, Fictions, Non-fictions and many more. Hence, it will segment customers having stable income

Occupation: College Students will be segmented, as they needs various types of books included in their syllabus. Business persons will be selected for selling trade books. On the other hand, retired persons will also be a significant segment of this company, as they mostly need book readings for spending their time.

Marital Status: Both single and married customers will be segmented for their differing needs of books

Education: All educated persons will be selected by the company. Even the educated household will be the customers of the company, as they may need books on getting ideas of cooking and foods.

Attitude: Both having positive and negative attitude towards life. People having negative attitude can also buy books for overcoming their pain in life.

Psychographic

·         Customers having both positive personality in life will be selected

·         Customers having hobbies of reading and entertainment will be selected

Behavioral

Customers seeking extra benefits over their purchase will be selected

Target

·         Customers between the age of 18-above will be selected

·         Education: All types of educated Customers

·         Occupation: Businesspersons, college students, media professionals and others

·         Customers having moderate income

·         Customers having both positive and negative attitude towards life

Positioning

Wide variety of books will attract different types of customers

Affordable prices of the books will attract huge range of customers

Discounts offered to the customers will attract them a lot

Convenient store location will enhance numbers of customers

Table 3: Recommendation on Segmentation of New Book Retail Company

(Source: Created by Author)

 

References

Barnard, S., 2016. Retail or e-tail? Brick or click? Is e-tailing the ideal solution for all industries?: opinion. The Retail and Marketing Review, 12(1), pp.89-91.

Booksandpublishing.com.au. 2017. The market down under | Books+Publishing. [online] Available at: https://www.booksandpublishing.com.au/articles/2016/09/30/74713/the-market-down-under/ [Accessed 7 Apr. 2017].

Broberg, P., Umans, T. and Gerlofstig, C., 2013. Balance between auditing and marketing: An explorative study. Journal of International Accounting, Auditing and Taxation, 22(1), pp.57-70.

Efendioglu, A.M., 2015. State of information technology in small retail and service businesses: an exploratory study. Journal of Small Business Strategy, 8(2), pp.13-24.

Gray, D., 2013. Out of the Box and into the Bookstore: Non-Traditional Use of the Bookstore. Against the Grain, 15(3), p.10.

Gump, S.E., 2014. Everyday Book Marketing: Promotion Ideas to Fit Your Regularly Scheduled Life by Midge Raymond (review). Journal of Scholarly Publishing, 45(4), pp.409-413.

Ibisworld.com.au. 2017. Book Stores in Australia Market Research | IBISWorld. [online] Available at: https://www.ibisworld.com.au/industry-trends/specialised-market-research-reports/consumer-goods-services/book-stores.html [Accessed 7 Apr. 2017].

Ibisworld.com.au. 2017. Newspaper and Book Retailing in Australia Market Research | IBISWorld. [online] Available at: https://www.ibisworld.com.au/industry-trends/market-research-reports/retail-trade/other-store-based-retailing/newspaper-book-retailing.html [Accessed 7 Apr. 2017].

Parsons, A.G. and Descatoires, E., 2016. Retail marketing: A novel research agenda. Australasian Marketing Journal (AMJ), 24(2), pp.102-107.

Pons, F., Giroux, M., Mourali, M. and Zins, M., 2016. The relationship between density perceptions and satisfaction in the retail setting: Mediation and moderation effects. Journal of Business Research, 69(2), pp.1000-1007.

Stephens, P. and McGowan, M., 2015. Service Convenience: On-Line versus Brick and Mortar Bookstores. International Journal of Information Systems in the Service Sector (IJISSS), 7(3), pp.1-14.

Wehner, C., Wehner, C., Wehner, C., Wehner, C. and Wehner, C. 2017. Bookselling Industry Analysis for Australia - Porter's Five Forces & PEST. [online] bluetrain. Available at: https://bluetrainenterprises.com.au/blog/2016/11/18/industry-analysis-australian-print-bookselling/ [Accessed 7 Apr. 2017].

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