Innovation and Change

The complexity of the macro-environment can be scrutinised using a technique known as PEST analysis. PEST stands for Political, Economic, Social and Technological. The analysis aims to list all the macro-environmental factors impacting upon an organisation. (Pergamon Flexible Learning, 2005)

This technique is a beneficial tool in evaluating the factors affecting the mobile phone industry within this remit. Shown below is the PEST Analysis for the mobile phone industry:

The use of the MINTEL Report, Mobile Phone and Network Providers enhances the discussions of conditions and factors influencing the market. The report produced in October 2007 is of major assistance in this project as it has clearly researched consumers in the market.

Social Culture has a large impact on the industry. The values, attitudes and beliefs of consumers will influence the sales and demand levels of products. The MINTEL report shows the market is becoming increasingly saturated. Ofcom data shows that there are 69.7 million �active’ subscribers in 2006 and the percentage of individuals owning a handset is 87.7%. The handset market is increasingly competitive with a number of manufacturers failing in recent years.

The demographics of consumers show no clear divisions nationwide. Most people now own a mobile phone according to the figures above and there is no decisive difference between different geographical locations.

Nokia doubled their marketing expenditure between the years 2004-06 and shows its commitment to the market and making a success of its models. There has been continued strong growth from other manufacturers including Motorola, Samsung and Sony Ericsson. The advertising primarily focuses promotional expenditure on new models of phone.

Publicity and sponsorship is an important technique to increase awareness. Nokia sponsors the successful X-Factor series on UK Television, Samsung sponsor the Chelsea Football Club and Sony Ericsson sponsors the UEFA Champions League football tournament. Where deciding which events to sponsor it is valuable to ensure the values of an event are similar to the beliefs of an organisation and also to effectively aim at the target market.

Buying patterns have changed towards more monthly contracts. Previously, Pay as you Go was more popular but in a bid to increase turnover many networks offered competitive deals to improve profits. Another change has been with the drift towards longer 18 month contracts which offer better value for money but ensure no upgrade until the end of this term.

Technology and innovations in the market have been noticeable with the introduction of 3G phones and VoIP (Voice over Internet Protocol). The image of 3G has shown signs of being successful but VoIP has had little impact on the market