Introduction
Environmental scanning is necessary for discovering factors that might affect business. It is a very effective instrument for planning and developing marketing strategies. In this paper, such an analysis will be conducted for a chosen organization. However, before this, it is necessary to define two pertinent concepts: marketing management and the general marketing environment. Marketing management is a process of controlling and planning the development of new products and services (“What is marketing management?” n.d.). It includes advertising, promotions, and sales. Other important aspects of marketing management are the application and tracking of marketing resources and activities to increase the company’s customer base. The general marketing environment is a mix of internal and external factors that have an impact on the company’s performance (“Marketing environment,” n.d.). Internal factors might include personnel, policies, assets, products, and some others. Usually, a company can control such factors. On the other hand, external factors consist of micro and macro environments. Therefore, they cannot be controlled by a company.
The chosen organization is Abu Dhabi Commercial Bank (ADCB). It was founded in the1980’s due to the merger of several banks in the UAE (“Abu Dhabi Commercial Bank,” n.d.). The city’s government has more than half of ADCB shares. This company is one of the leading banks in the UAE. The main goal of this paper is to evaluate the implications for marketing management in the next decade to address the five most significant changes that are likely to occur in the general marketing environment.
Market
To start the analysis, it is paramount to define the market in terms of three aspects: geographic market, customer base, and customer needs. A geographic market is a market that is classified by geographical division. It depends on three factors: population density, climate, and culture. The company works in multiple regions around the globe. There are more than 100 states and cities in which the company does business (“Geography,” n.d.). The customer base is made up of clients to whom a firm provides its products and services. As the company is present in a great number of countries, it has a large customer base that has over 700,000 clients (“Key performance indicators,” n.d.). The company satisfies customers’ needs by providing retail, investment, merchant, and commercial activities.
Trends and Factors
First, it is necessary to identify political trends and factors. Several important political aspects are pertinent to the marketing manager of the company. The UAE has low trade restrictions. Although the country’s government has designed different limitations and conditions, there is a very liberal trade regime. The main goal of the trade policy is to improve market access for products. This is implemented via “multilateral trade liberalization and bilateral and regional trade agreements” (“Summary,” n.d., para. 1). Also, such a policy is promoted both at the federal and emirate level. Therefore, each emirate is very independent. Another important political trend is that there are low barriers to market entry. The UAE has “no restrictions on profit transfer or capital repatriation” (“Potential barriers,” n.d., para. 9). The majority of Free Zones support this position to improve the trade environment. Therefore, as the main political factors include low trade restrictions and experienced political environment the most probable change in the marketing environment is the intense globalization of the market.
Second, it is necessary to identify economic trends and factors. One of the main economic factors is taxes. The UAE does not have federal business tax regulations. Although each emirate has introduced its business taxes that might be very high (up to 55%), they are mostly applied to the oil and gas industry (“Corporate,” n.d.). Another important factor is the UAE’s stable economy. It creates a favorable investment environment for domestic and foreign businesses. Cost, environmental, and market advantages make the country a major business center. In recent years, the UAE has become a leading trading hub (“The United Arab Emirates,” n.d.). The country has many developed industries such as banking, finance, insurance, transportation, consulting, manufacturing, logistics, and many others. Therefore, the main economic factors pertinent to the case are adequate business taxes, a stable economy, a competitive market, and high productivity (“The United Arab Emirates,” n.d.). The increasing sustainability of the company allows predicting establishment new distribution and supply channels.
Third, it is necessary to identify social factors. In the last decade, the UAE has experienced significant growth in the population. It doubled during the period between 2005 and 2010. By 2014, the population was approximately 9 million (“Population,” n.d.). However, UAE citizens make up less than a third of the total population. Also, the rapid development of the country has led to changes in Emirati society. It has a significant impact on its major social institutions, which are marriage and family. Modern tendencies regarding gender roles and relations are becoming more and more prevalent in the country. For example, women promote new values that contradict traditional ones related to polygamy, family size, and women’s roles in society (Wang & Kassam, 2016). Such trends might also significantly affect marketing management of the company. Due to contradictions that take place in society, one of the possible changes is that the company might miss certain partners. However, the most prominent change is long adjustment periods in the economy caused by new social trends. Even though the country has adopted different Western business models, the UAE society is mostly orthodox. Therefore, the probability of this change is also very high.
Fourth, it is necessary to identify technological factors. The country is also experiencing incredible technological development. One of the main strategies of the UAE government is to turn the country into the major hub for technology in the world (“Innovation,” n.d.). Such development has a significant impact on customers. Nowadays, they can assess products and services at any time via mobile phones and e-commerce. These technologies have raised customers’ expectations. Therefore, it is necessary to develop new marketing channels. These channels should be aimed at increasing the speed of rendered services. Also, modern technologies change communication channels. Social media has become much more powerful in comparison with previous years (“Trends in UAE’s,” n.d.). Therefore, the company has to use such platforms to improve their communication with customers. These technologies can considerably increase the size of the market and thus the customer base of the company.
Implications
All the above-mentioned factors and trends might result in significant changes in the company’s marketing environment. The probability of their occurrence and the significance of their impact on business are demonstrated in the tables in Appendices A and B. First, political factors allow predicting market globalization. Second, economic factors allow predicting establishing new distribution and supply channels. Third, social factors allow predicting obstacles related to the adjustment to new social trends. Finally, technological factors allow predicting new acquisitions or partnerships and innovations aimed at improving communication with customers.
The first potential change is the growth of the market. Various statistics predict the significant development of the international banking industry over the next two years (“2018 Banking Industry Outlook,” n.d.). It will have an enormous impact on the company. First, it will lead to the expansion of the business. Second, new markets will attract more specialists who work in such fields as marketing, accounting, or personnel in the company. Therefore, the overall performance will be enhanced, which also will increase the output. Third, the benefits of the growth of the market include potential government subsidies or tax reductions. Such reforms might take place in the long run, in about 5-8 years (McAuley, 2016). Therefore, this change has a major advantage for the company, and it is very likely to happen.
The second change is establishing new distribution channels. The increase in foreign investments in the UAE will lead to the development of banking services (“The United Arab Emirates,” n.d.). Therefore, it might be predicted that ADCB will start establishing new distribution channels in the nearest future (2018-2019). This process might last during the next decade. However, the possible stagnation in the industry that often occurs after the rapid growth might slow down these processes in the mid-2020s (Anderson, 2017). This is also a very significant improvement. Successful distribution channels help to meet the needs and want of the target clients. It will require more developed and sophisticated electronic banking systems. As a result, relationships with customers will be closer and more robust. Eventually, all these effects will increase profits and market shares. Therefore, this change also has a major advantage for the company, and it also has high chance to take place.
The third change is new supply channels that are also might be predicted due to abundant foreign investments in the country. The main effect of this improvement will be establishing new partnerships. For example, a long-term relationship with the Emirates Foundation gives a reason to predict that similar partnerships will take place over the next decade (“Abu Dhabi Commercial Bank launches,” 2016). Supply chain management is an important element of any business. New supply chains will help the company function more efficiently. They enhance customer service because supply channels have a direct impact on distribution channels. They also reduce operating costs due to shorter trade cycles. Finally, new supply chains improve the financial position of the company as they make international trade financing easier, quicker, and more secure. Although this change might temporarily affect the stability of the company, it is still highly attractive to it. The probability of creating a new supply channel is also very high.
The fourth change is the adjustment to modern social trends. Official statistics revealed the prevalence of such social media platforms as YouTube and Facebook in the UAE (“Trends in UAE’s,” n.d.). Social trends significantly affect businesses because they reflect individual preferences. Therefore, it might be predicted the company will have to reconstruct its customer service in the next four to five years. However, the most significant changes caused by social trends should occur later. A large segment of the population in the Middle East consists of people aged 15 to 25, thus they will begin to influence business in 7-10 years (“Social media usage in the Middle East,” 2013). Also, social trends bring about changes in other departments. Employees’ preferences will also transform, and thus, it will be necessary to respond to such changes and develop new methods of interaction within and between departments. It is hard to say whether this change will be beneficial for the company or not as it depends on many factors. However, it is inevitable, especially in the long run, as modern trends are highly influential.
The fifth change is probably the most significant one as it involves new acquisitions, partnerships, and innovations. The UAE government is planning to launch several innovative programs in the nearest future (“Innovation,” n.d.). Therefore, one may predict that it will have started affecting all internal systems of the company by 2020. Also, the government promotes a long-term innovation program, thus such changes will occur over the next decade (“Museum of the Future,” n.d.). It will be necessary to hire new personnel and train the existing ones to distribute new duties. Also, new partnerships will reduce operating costs and provide the company with more capital. Therefore, it will enhance the company’s capacity. Finally, innovations will improve business processes, which will increase efficiency and productivity. Also, they will help to develop new services to address the fast-changing needs and demands of customers. Therefore, it will enhance the company’s competitiveness and add value to the offered services. These changes are also very beneficial for the company. However, they have a medium probability.
Some other important implications relate to intelligence and information systems. Nowadays, these systems are essential for the business of any size as they form the major part of business operations (“Innovation,” n.d.). The main implication pertinent to managing data, which is the purpose of these systems, is developing new more effective IT solutions. Innovations in this area will be applied by all the key players, thus the company will certainly need to utilize such technologies. ADCB cannot operate using outdated systems as it will reduce its competitiveness. First, such changes are necessary to improve the accounting system. Second, they should enhance market research. Third, the development of intelligence and information systems should optimize the processes of collecting competition information. Finally, these modifications have to be aimed at improving communication methods.
The above-discussed trends will help to improve the marketing strategies of the company. These trends are closely interrelated. For example, the market expansion will require developing new distribution and supply channels. Although these changes will be caused by different factors, they still will influence each other. However, it will be necessary to develop innovative methods of marketing that will allow achieving new goals. The problem related to the adjustment to modern social trends might be addressed by applying the love marks concept. This marketing concept appeals to the emotional support of customers (“About Lovemarks,” n.d.). Modern social trends emphasize such values as equality and respect. These values are the key elements in this concept. Lovemarks help to gain customers’ love and respect, which is much more than just brand loyalty. Therefore, by promoting such values, the company might establish a closer connection with their customers.
Another important approach is the segmentation, targeting, and position model. This model might be applied by the company to cope with new social trends and leverage technical innovations. Segmentation will allow determining the major aspects of each market segment (Hanlon, 2018). Targeting will be necessary to appraise the potential of these segments. Positioning will be applied to create a marketing mix for these segments. Therefore, the model will be important to improve commercial effectiveness through product positioning strategies for each market segment.
The analysis also allows determining how some strategic marketing issues will change in the future. As the financial market will become more globalized, it will require changing the offered products. Mainly, it will lead to software internalization and localization (“Globalization,” n.d.). Therefore, most services will have to undergo adaptation to new market segments. The market segments will also change. Due to modern social trends, women will form new market segments in the Middle East and across the globe. Also, technical innovations will allow people with disabilities to become more independent (Davis, 2017). Therefore, they will also form new market segments. These changes result in the new marketing mix. The company will need to apply new methods and tactics to promote its services in the market (“Definition of ‘Marketing Mix.’,” n.d.). However, globalization will not change the market definition as this process started decades ago. Therefore, the current definition is still relevant.
The analysis of the existing trends reveals the major strengths and weaknesses along with the potential opportunities and threats. The main strengths include the following: the company is one of the largest organizations in the UAE, it has multiple branches across the globe, and it provides a wide range of services (“Abu Dhabi Commercial Bank,” n.d.). However, the main weakness is the strong dependence of the company on the country’s government. Also, the company has many opportunities. Rapid economic growth might boost profits. Islamic banking is a developing business segment. The UAE government supports businesses and provides additional funds. However, certain threats might negatively affect the company. As mentioned above, the first threat is a fast-changing social environment. The second threat is a decline in oil and gas prices.
Taking into account all the revealed threats and opportunities, it will be necessary for the company to change its business model to cope with them. To effectively address such issues, several marketing concepts might be applied. For example, an outside-in approach is successfully used by various companies. This method emphasizes the importance of customer focus. It highlights the relationships between customers and society. These relationships are very important as they affect customers’ perceptions and feelings. Therefore, the underlying idea of any marketing strategies will be to understand the customers’ context to identify their preferences. Another effective approach is an alternative marketing model developed by Piercy and Morgan (Piercy & Morgan, 1993). This model allows differentiating between the levels of market segmentation. It suggests three levels: strategic, managerial, and operational. Strategic segmentation emphasizes corporate missions and customer benefits. Managerial segmentation is necessary for planning and allocating resources. Operational segmentation is focused on communication, distribution, and implementation. However, the company might apply conventional marketing systems as well. In such systems, the relationships between partners are focused on buying and selling. Therefore, they are not concerned about each other’s benefits but only about theirs. However, such independence might be very profitable for each partner.
This analysis allows identifying the main factors that have an impact on the business. It is also necessary to avoid unfortunate surprises. The picture that is developed during this analysis clearly describes the environment in which the company operates. The conducted environmental scanning allowed identifying changes in the major areas that might have the most crucial effect on business outcomes. This environmental scan is an important tool to assess the current market conditions. Strategic planning should be based on such scanning at all times. Therefore, it is necessary to carry out this type of environmental examination before developing new marketing strategies. This analysis is important for the long-run outlook. The examined period, ten years, is adequate for making implications.
Conclusion
The main environmental issues that might occur during the next decade are market globalization, new distribution and supply channels, the prevalence of modern social trends, and acquisitions and innovations. These changes might have different implications. However, it is more likely that they will improve the overall performance of the company due to the restructuring, reduction in production costs, business expansion, new partnerships, and hiring new specialists. Therefore, there is a very high probability that ADCB will start experiencing significant growth in the nearest future.
References
About lovemarks. (n.d.). Web.
Abu Dhabi Commercial Bank. (n.d.). Web.
Abu Dhabi Commercial Bank launches an industry-first ground-breaking initiative in partnership with Emirates Foundation. (2016). Web.
Anderson, C. (2017).Growth is stagnating. Here’s what we can do. Web.
Corporate – Taxes on corporate income.(n.d.). Web.
Davis, A. (2017). Three life-changing innovations for people with disabilities. Web.
Definition of ‘Marketing Mix.’(n.d.). Web.
Geography. (n.d.). Web.
Globalization. (n.d.). Web.
Hanlon, A. (2018). The segmentation, targeting, and positioning model. Web.
Innovation.(n.d.). Web.
Key performance indicators. (n.d.). Web.
Marketing environment definition factors & examples. (n.d.). Web.
McAuley, A. (2016). UAE embraces new era of subsidy reform. Web.
Museum of the Future. (n.d.). Web.
Piercy, N. F., & Morgan, N. A. (1993). Strategic and operational market segmentation: A managerial analysis. Journal of Strategic Marketing, 1(2), 123-140.
Population and demographic mix.(n.d.). Web.
Potential barriers to entry in the UAE. (n.d.). Web.
Social media usage in Middle East. (2013). Web.
Summary. (n.d.). Web.
Trends in UAE’s social media usage revealed. (n.d.). Web.
2018 Banking Industry Outlook. (n.d.). Web.
United Arab Emirates foreign direct investment. (n.d.). Web.
Wang, Y., & Kassam, M. (2016). Indicators of social change in the UAE: College students’ attitudes toward love, marriage and family. Journal of Arabian Studies, 6(1), 74-94.
What is marketing management? (n.d.). Web.