Factors Affecting Advertising Industry

STRATEGIC MANAGEMENT

1. INTRODUCTION

Environmental Analysis – “Global Forces and the Advertising Industry” is a study which indicates of effect of advertising industry on the environment towards development of the any company or product of a company. This study is evaluated using PESTEL and Porter Model for Five Competitive Forces which are considered as effective tools of environment analysis.

1.1 PESTEL

A PESTEL analysis is a framework or tool used by marketers to analyze and monitor the macro-environmental (external marketing environment) factors that have an impact on an organization.

PESTEL stands for:

• P–Political

• E–Economic

• S–Social

• T – Technological

• E – Environmental

• L – Legal

PESTEL – Tools Explanation

Political Factors

Social Factors (S) These factors include – population growth, age distribution, health consciousness, career attitudes and so on.

Technological Factors (T) Technological factors affect marketing and the management thereof in three distinct ways: New ways of producing, distributing goods and services and communicating with target markets (Markus, 2012).

Environmental Factors (E) These include increasing scarcity of raw materials, pollution targets, doing business as an ethical and sustainable company, carbon footprint targets set by governments (Cheverton et al., 2004).

Legal Factors (L) Legal factors include - health and safety, equal opportunities, advertising standards, consumer rights and laws, product labelling and product safety (Hasan,

Bargaining power of customers This force looks at the power of the consumer to affect pricing and quality (Porter, 2008).

2.1 HOW ATTRACTIVE THE ADVERTISING INDUSTRY?

Advertising is at front of delivering the proper message to customers and prospective customers. The purpose of advertising is to convince customers that a company’s services or products are the best, enhance the image of the company, and to hold existing customers.

From Table 1, it is clear that all the countries strongly believe that advertising industry is the strong mode of support for any industry for their development. The analysis made from Table 1, indicates that the expenditure of advertising by region has increased since 2009. It is about 8% growth in the emerging countires such as Africa and Asia Pacific, and 5% rise in the world.

Table 1: Advertsing expenditure by region.(US$ million, currency conversion at 2009) 2009 2010 2011 2012 2013

N America 156,556 160, 386 164,516 169,277