Macroenvironment & Consumer Behaviour Analysis: The Functional Water Industry

Introduction

Macroenvironmental and consumer behaviour analysis is a fundamental component of strategic planning. For existing and emerging business organizations, profitability and growth is strongly dependent on how effectively the businesses’ respond to the macroenvironment and consumer preferences. Macroenvironmental appraisal involves the scanning the business functioning climate for potential changes in specific patterns and trends, forecasting future trends, and evaluating the impact of the current and future changes on the firm’s performance (Ginter & Duncan 1990, p. 92). For this report, the Functional Water (FW) industry in Australia is selected for macroenvironment and consumer behaviour evaluation. Concurrently, the purpose of this report is to employ two real-life marketing examples, Coca Cola Amatil Limited (CCA) and Asahi Group Holdings Limited (Asahi), to investigate the macroenvironment and consumer behaviour in Australia for the FW industry. A critical evaluation of these environments will follow the macroenvironment and consumer behaviour analysis in light of key marketing theories. Recommendations on the viability of investing in the Australian FW industry will also be provided.   

Macroenvironmental Analysis

CCA and Asahi are two of the major players in the Australian FW industry that have monitored and adjusted to the political, economic, social, technological, legal and environmental conditions in the country. The PESTLE analysis (Table 1 in the Appendices section) will help in analysing the business climate and environment in Australia.

Political

Being a constitutional monarchy with British Royalty and the Prime Minister heading the democratic government, Australia has a stable and safe political environment for conducting businesses. According to the report published by MarketLine Industry Profiles (2019, p. 21), CCA and Asahi have faced stiff market competition from other brands such as Nestle and Coca-Cola that availed the favourable political conditions in the country and improved their 2018 market shares in the FW industry (Figure 1 in Appendices section).

Economic

As a key member of the Organization for Economic Cooperation and Development (OECD), the G20, Commonwealth of Nations, and the World Trade Organization, Australia has become an economic hub. Although the GDP growth rate is set to decline by 6.67% (Figure 2 in Appendices section) by the end of  2019-20 fiscal year (FY) due to recession and substantial financial losses incurred due to the COVID-19 pandemic, the growth rate is expected to climb to 6.11% in the 2020-21 FY (Statista 2020). The revenues generated from the Australian FW market amount to $445.6 million and are expected to grow by 3% in the period 2021-2026 (Yeoh 2020, p. 7)). Moreover, the profit increased by 1% in the period 2016-2021. Despite the market entry of imported beverages, CCA and Asahi have benefitted from the conducive economic environment and have gained market recognition in the last five years.

Social

As far as the quality of life, health, wealth and education is concerned, Australia is one of the ideal countries in the world, comprising of a relatively small yet a multicultural population. With an increased focus towards education and sports, the country educates and nurtures young talent, which is a huge benefit to the business industries. According to the report published by MarketLine Industry Profiles (2019, p. 25-30), both CCA and Asahi have availed the availability of a talented and dynamic workforce in Australia to recruit key employees for various managerial roles.