Jessie's+part+-+6+Es

=Situational Analysis: Macro Environment (Jessie) =

**The Macro Environment **
What determines the success of an organization is their ability to adapt and properly react to changes in the environment. The best organizations analyze trends, strategize according to their predictions, and prepare for uncertainty through contingency planning. Depending on the industry a company acts in, some factors affect a business more than others; but in general, six major environments directly impact the marketing mix. In other words, the Competitive, Economic, Geographic, Politic, Socio-cultural, and Technologic environments are elements that a company cannot control but still needs to respond to by modifying their product, place, price, and promotion. 1 2 We will illustrate in this section how each of the six environments relate to Ukamaku and in turn, influence their 4Ps of marketing.


 * Competition **

Ukamaku is in both the fashion and e-commerce industry, making the competitive environment the most important of all. The competition in both sectors is extreme, since customers can very easily come and go at the same time that many other businesses try to enter the field. In fashion, there is multitude of suppliers who vary from high-end, costly, and trendsetting designers to mass production and affordability-focused producers. Adding e-commerce into the equation increases the level of competition even higher since numerous brands and designers already sell their creations online, but many others also intermediate between designers and end-consumers like Ukamaku does.

The fact that the fashion industry has so many segments within allows for many competitors to enter the trade with different strategies for their marketing mix. Specifically regarding web-based fashion retailers, Ukamaku’s competitors can easily offer similar or substitute pieces to their products. Clothes being a basic necessity, means that the industry will always have stable demand (which is what makes this field extremely competitive). However, the look and type of clothes (that create style or follow trends), as well as accessories are fleeting. For example, people will always have differing reasons and motives behind choosing one color over another when purchasing T-shirt. Thus, Ukamaku establishes differentiation from other online fashion stores by selling only Canadian designers and brands. Ukamaku provides uniqueness in their service and it is their originality in that idea that attracts customers.

Generally, once an e-commerce item becomes popular, it is wildly copied and sold in other web stores. In order to be successful then, Ukamaku would need to be the authentic product that is popularized, not one of the replicators. They distinct themselves for focusing on Canadian solely, which in turn can be a great advantage when trying to attract traffic to their website. With that being their best marketable feature it also necessary to comprehend that fashion is not what the country is best known for. Therefore, Ukamaku also needs to leverage interest in Canadian fashion, both nationally and globally.

With efforts to gather internal support, Ukamaku takes part in creating pride and patriotism. On the other note, it works ironically too that were Canadian fashion to be sought and demanded outside, ­Canadians themselves would value it further. It creates double benefit to Ukamaku to market on an international scale because Canadians increase their demand while the company gets to extend their brand overseas. This factor further enhances the worth on their product, which makes it less likely to be substituted by something else. To illustrate this, we can simply look at how much acclaim and immunity high-end brands have – i.e.: a Louis Vuitton purse is “untouchable”. One notable drawback to popularization of Canadian fashion and thus, success of our national designers, is the risk of faux products. Following trends, watching for the next innovative creation, and product popularization many times leads to other brands copying the designs. Even more so, the black market is full of imitation accessories, footwear, and apparel. Ukamaku themselves would not suffer from the production of replicas but they would lose potential sales were people to buy fake products instead. This would directly hurt designers as well, which would make them less likely to put their collections for viewing online. For this reason, the competition is so intense and Ukamaku needs to constantly renovate their products offered on the website, find new talent to market, and provide top quality goods and customer service so clients are not only satisfied, but returning.

Regarding price, e-commerce shops have no inventory and can hence, risk selling their items at lower prices. Nonetheless, though Ukamaku act as mediators for fashion designers and end consumers, their prices tend to be less competitive than other web stores. Many brands make it their goal to offer affordable products to the average consumer. Ukamaku, on the other hand, looks to find Canadian, uniquely talented designers, that are sometimes unknown and for whatever reason need help to sell or market their productions. The business focuses on bringing the best of Canadian fashion to customers who are interested in purchasing local, high quality (many times hand made), and one-of-a-kind attire (some pieces are customized for the customer, most productions have only five to eight reproductions). Since Ukamaku emphasizes exclusive wear, their prices are usually costly to the average consumer. Of course, their website has a great variety of items and so, they offer a wide range of prices. Generally, however, Ukamaku’s target audience is mostly wealthy females with some level of expertise in fashion. The products Ukamaku sells is catered to a very specific segment of the population, so their prices tend to be more on the expensive side of the cost scale. This is inevitable though, for Ukamaku does not actually price items themselves since it is the designer that chooses how much an item will cost.

By selling their pieces online, online retailers have an even harder task trying to reach their target audience. Despite Ukamaku having a steady growth in their number of customers, it is still quite sparse and slowly increasing, compared to other web-based fashion stores. Ukamaku needs to gain further recognition in their status as providers of Canadian clothing, especially to the specific kind of people they would like to purchase their product. Ultimately, the fight for people’s attention online ultimately determines Ukamaku’s success or failure. Without any customers, designers would not want to sell their creations through Ukamaku either. Therefore, Ukamaku focuses on working with editors in publishing media sources so they can be featured in magazines, newspapers, and online fashion communities. By garnering attention as an outlet for designers to boost their sales, more of them will want to offer their productions to be sold through Ukamaku. Furthermore, the company also attends and organizes fashion shows – as well as other events like pop-up shops – while networking with other sources of promotion online like fashion forums, communities/groups, social media, and respectable bloggers.

Due to the fact that the company has no physical space as to where they sell their products, potential customers cannot simply visit their store. Neither can someone pass by and decide to go in, receive help from a vendor, and remember that positive experience so they can share it with someone later. Being face-to-face with a customer increases the chances of convincing them to buy something or add to it. Vendors are convincing, captivating, and very helpful in putting together outfits and suggesting more items for purchase. Therefore, when the physical store is there for customers, they create a stronger bond with the brand, employees, and feel a much more memorable and intimate buyer experience. This is even more applicable to stores that sell luxury items. When in store, people are more easily convinced to spend more than when they are by themselves looking at items with their prices side-by-side on a website. The focus shifts to whether the amount of money is worth the product.

Ukamaku, then, needs to make sure they target the right market. They need to reach the exact segment of the population that would take interest in purchasing the products they sell, regardless of the price range. In fact, we suggest Ukamaku hides the price under icons for the product so customers actually desire the piece enough to clickthrough to find the price. The website should also feature a price range filter so prices too high over a person’s budget also would not scare them away.

<span style="font-family: Tahoma,Geneva,sans-serif;">In addition, it would benefit the company greatly to implement sales promotion by giving away tickets to fashion shows, contest prizes, and customer “welcoming packages” or “kits”. Their mass selling would include paying for some ads of Ukamaku in fashion magazines and gaining publicity from active participation in fashion communities online. Lastly, as another part of our Strategic Implementation, Ukamaku should invest in search engine optimization (SEO) so that they appear as top five results for when someone searches something like “Canadian fashion”. It would also be very advantageous for Ukamaku that in the future, they expand their sales for distribution overseas. This way, the business garners even more followers while marketing Canadian style and designers allover the world.


 * <span style="font-family: Tahoma,Geneva,sans-serif;">Economy **

<span style="font-family: Tahoma,Geneva,sans-serif;">Many characteristics of the economic environment can affect the company like the financial health of the country, the inflation rates, changes to the minimum wage, and how much the government invests in Toronto (where their office is located). The advantage of being in the fashion industry is that clothes are a necessity, so there will always be a demand. However, Ukamaku mostly deals with high-end items, which in times of economic downturn, means luxury items are ignored. On the other hand, the company gains advantage over physical fashion stores because they have no inventory. Ukamaku does not suffer with the pressure of clearing their inventory and incurring potential loss in order to sell everything. Therefore, utilizing e-commerce in itself was probably the safest manner to enter the market last year in 2010, as Canada (and the rest of North America) is slowly gaining more confidence and recovering from the 2008 recession. <span style="font-family: Tahoma,Geneva,sans-serif;">While Ukamaku experiences direct effects from changes to the minimum wage, they face indirect repercussions from variances in the rate of inflation. Evidently, as the minimum wage rises, so would Ukamaku’s fixed costs. However, when there are changes in inflation rates, it affects the company’s customers and the affordability of their products. Not only would end customers feel monetarily constrained in that sense, but designers also might need to change the manufacturing of their pieces (like experimenting with alternative, better feasible material). Furthermore, due to the fact that Ukamaku’s office is located downtown Toronto, they would benefit from gaining investments in the region.

<span style="font-family: Tahoma,Geneva,sans-serif;">For example, were the government to subsidize businesses, it would generate a flow of money that the entire city could benefit from. Toronto (and the all of Canada for that matter) is very stable and because the city is known as the country’s economic capital, the prosperity is higher as well so people have better quality of life. Being comfortable in safety and financial aspects of one’s life would incentivize creativity and consumerism. With a thriving economy, Ukamaku can use the momentum to expand their sales to an international scale. The organization would more easily attain the necessary financial support were they to take a loan from the bank. It is also notable that if they extend their services globally, Ukamaku would need to consider currency exchange rates and increased shipping expenses. Depending on how the conversion turns out for the customer, the end price on top of the shipping (that is paid by the clients); which is somewhat discouraging if the prices turn out too high.

<span style="font-family: Tahoma,Geneva,sans-serif;">Therefore, the economic environment primarily affects Ukamaku’s price and product in their marketing mix. In the perspective of place, Ukamaku’s only physical space is their office, which unless corporate taxes suddenly sky-rocketed, they might have to consider moving the region or neighborhood in which they are located. Regarding promotion, Ukamaku’s plans would not change much because most of their strategic marketing is done online. Their attendance in fashion shows and networking with publishing media resources would also not differ. However, were sales to decrease in an economic depression, Ukamaku may feel a budget constraint when organizing events themselves. The company could then create alternative plans to still have events like acquiring more sponsors, increase ticket prices, and even make joint events with other e-commerce brands or online fashion communities.


 * <span style="font-family: Tahoma,Geneva,sans-serif;">Geography **

<span style="font-family: Tahoma,Geneva,sans-serif;">It is a common mistake for people to think that the physical environment does not affect e-commerce stores as much as the other five because the Internet has no geographical boundaries. Though Ukamaku’s services are web-based, the actual product, however, is not. Thus, the geographical environment can influence the company at different levels. Canadian weather, topography, and potential earthquakes can affect the organization, specifically the shipping of their products. Were Ukamaku to extend their sales on a global scale, traveling distance, time zones, and the natural, physical features of other countries would also come into play. <span style="font-family: Tahoma,Geneva,sans-serif;">Canadian land is vast though “over 60% of the population lives […] between Windsor, Ontario and Quebec City. This leaves the vast majority of Canada's territory as sparsely populated wilderness; […] Despite this, 79.7% of Canada's population resides in urban areas”. 1 What this means in Ukamaku’s perspective is that their shipping should at least cover Ontario and Quebec, which is where most of the country’s population is located. In terms of shipping, the physical distance is not much and reaching customers is quite simple because ground transportation should be enough. In order for Ukamaku to ship to all of Canada and thus cover the regions with the remaining 40% of the population, they would most likely need to use air transportation.

<span style="font-family: Tahoma,Geneva,sans-serif;">The customers incur the shipping expenses, however, Ukamaku is reliable for any loss or damage to the product. The company keeps track of deliveries too so they can monitor what delivery was completed. Therefore, when weather conditions are unfavorable, shipping may be delayed. This is common during Winter times, since snow and ice makes for critical road safety and visibility. The same idea applies in the occasion of overseas shipping, like when it is Summer in Southeast Asia where monsoons are quite common.

<span style="font-family: Tahoma,Geneva,sans-serif;">Fortunately, Canada is not at high risk for natural disasters, except for occasional earthquakes and tornadoes. The most worrisome climate condition is during Winter times, which can sometimes be extremely windy, cold, and snowy; and sometimes even freezing rain. Not only does Canada sometimes undergo weather extremes, it also has extremes in its topography. However, because most of the population lives in plain areas, the shipping obstacle to overcome is more physical distance than anything else.

<span style="font-family: Tahoma,Geneva,sans-serif;">Furthermore, since the country is so vast, it has differing time zones. There are about six different time zones in the country1, which would affect the delivery times of the products; maybe even causing a delay of an entire day’s worth. Different time zones, within Canada and around the world would also mean that were someone to try to contact Ukamaku, they would need to match the appropriate times. If Ukamaku acts in Japan, their inquiries would be done a day ahead of the current time in Toronto.

<span style="font-family: Tahoma,Geneva,sans-serif;">Thus, the geographic environment initially affects the company’s price, then place, promotion, and product. Shipping costs vary as physical distances change, as well as how Ukamaku is able to reach their customers if they are in different regions. For example, if the company wants to gain more customers in Quebec, Ukamaku needs offer a French version of their website. Same goes for the main languages across the world once they grow to international proportions. Furthermore, when time zones vary, Ukamaku may lose time they would have promoting their goods to if there is a gap between hours of operation. On a last note, the products themselves do not change much, because the purpose of Ukamaku is to divulge and sell Canadian fashion and not cater their products to other cultures. People go to Ukamaku specifically for quality, high-end Canadian items.


 * <span style="font-family: Tahoma,Geneva,sans-serif;">Politics and Government Regulations **

<span style="font-family: Tahoma,Geneva,sans-serif;">In terms of the legal environment, matters that apply to Ukamaku would be taxation, consumer protection, shipping transportation safety, privacy restrictions, advertising regulations, laws and limitations of importing into other countries and exporting out of Canada. First of all, as a business, Ukamaku would incur as part of their fixed costs their corporate taxes, like income tax or rent/property tax. Another matter of concern for the company regarding their costs would be whether the government decides that shipping methods need to have higher safety implementations. This would then increase the costs for delivery of their products.

<span style="font-family: Tahoma,Geneva,sans-serif;">Furthermore, political regulations may concern their designers and end-customers under Ukamaku’s consumers. Since clients that purchase clothes from them need to have profile accounts in their website, Ukamaku needs to properly secure that information, as well as not divulge it. The company may use the data to convert it into intelligent information on consumer patterns for strategic matters, but not share the database with others, like designers and potential partnering firms. Furthermore, Ukamaku also keeps track of their most successful designers so they can push for more productions and market the individual further to gain more attention from fans, the media, and the overall industry.

<span style="font-family: Tahoma,Geneva,sans-serif;">On top of the privacy issues, Ukamaku also needs to ensure they do not break strict rules regarding advertising in Canada. For this reason, it is a positive aspect that Ukamaku builds their customer base through personal involvement with online fashion communities and intense networking through social media. Ukamaku also directs ads to their events, which encourages attendance, not an attempt to allure clients solely for purposes of selling their product. The company is likely not to confront advertising regulations because their focus is on establishing a connection with their target audience so they become naturally interested and curious in Ukamaku’s. Also, as an e-commerce business, they rely on word of mouth to disseminate themselves across the Internet.

<span style="font-family: Tahoma,Geneva,sans-serif;">The last issue in the regulatory environment that Ukamaku would take into consideration is exporting and importing laws. There are methods determined by the government for companies to sell their products to people outside of Canada the same way there are rules that shape how international companies can do business in each and every country. The advantage Ukamaku has is that it will most likely be sending small packages when selling worldwide, not ship cargos of goods out of the country.

<span style="font-family: Tahoma,Geneva,sans-serif;">Governments can then affect Ukamaku’s marketing mix by increasing their expenses in shipping (and ultimately, the total price for a purchase), the ability to enter foreign countries (and limiting their reach to international audiences), and confine their advertising strategies into strict guidelines. On that note, the last issue would not ruin their current operations. Regardless of these regulations, Ukamaku would still be offering the same products that they do now.

<span style="font-family: Tahoma,Geneva,sans-serif;">The socio-cultural environment is crucial for a company like Ukamaku that is part of the fashion industry. Fashion is very subjective and since Ukamaku is selling Canadian designers, they need to break a cultural barrier into vogue. Though cities in Europe are predominantly known as fashion capitals (Paris and Milan), it is innovative for Ukamaku to focus on Canadian trends. However, this can work adversely were people to dismiss them precisely for Toronto not being well known as a fashion capital itself. This is one of Ukamaku’s tough missions in order to market on a global scale. <span style="font-family: Tahoma,Geneva,sans-serif;">As mentioned before, in order to market to Quebec, Ukamaku would need to provide their services in French. The language barrier would also need to be overcome for the countries that they offer their services to once they expand their reach overseas. Other cultural differences within the country may affect the organization as well, like different customs in rural versus urban areas. In addition to having opposing infrastructure, individuals in rural areas generally spend less time accessing the Internet (mainly because they have poor connections) 1; especially not ordering things online.
 * <span style="font-family: Tahoma,Geneva,sans-serif;">Culture **

<span style="font-family: Tahoma,Geneva,sans-serif;">Besides not having the same digital literacy or practices like populations in urban areas, their fashion choices would also be contrasting. For example, if people in rural areas work in agricultural fields, their primary concern would be comfort and the higher chances of staining their clothes; since work in the fields is very physically demanding. Thus, delicate and costly designs would not be as appreciated. Similarly, other cultures may also not appreciate Canadian fashion as much, not because of its origins, but because the tradition in that region is to wear certain types of clothes.

<span style="font-family: Tahoma,Geneva,sans-serif;">For this, religion and equality comes into play. Areas with very orthodox rituals may demand specific garments and outfits, as well as differing levels in hierarchy and gender. For example, nations like Pakistan and Saudi Arabia require the burka for women1 and others like Vietnam, specific garments may signify wealth and status of a person regarding their sex and age2. It is also important to note that some countries are wealthier than others, which then affects the affordability of Ukamaku’s products.

<span style="font-family: Tahoma,Geneva,sans-serif;">Divergent languages and customs affect the way Ukamaku need to market themselves in order to effectively promote their service, products, and intentions. With contrasting cultural traditions and consumer behavior, other populations around the globe will have different purchasing practices. Some societies do not trust or are not accustomed to online shopping. Other audiences may not like or even approve of Canadian fashion. As stated before, despite some people disliking Ukamaku’s products, they would not modify their items because they are offering Canada-based designs. Ergo, in order to overcome that, Ukamaku needs to determine exactly who their target audience is. <span style="font-family: Tahoma,Geneva,sans-serif;">Moreover, some societies are more materialistic than others and may be more willing to purchase Ukamaku’s clothes even after currency conversions and shipping rates are concluded. Others may feel financially constrained to be able to order the company’s garments. There is not much change to the actual that Ukamaku offer because the designer selling the apparel determines it. However, the business can try to promote some items over others to those that cannot usually buy their pieces. Lastly, not only does Ukamaku sell certain styles of clothes and accessories that are subjective to taste (like anything else in this industry), but most of their products are targeted to women. Thus, the company needs to find females that are wealthy and interested in fashion enough to comprehend what Ukamaku is attempting to sell, with the freedom and power to actually buy their products.


 * <span style="font-family: Tahoma,Geneva,sans-serif;">Technology **

<span style="font-family: Tahoma,Geneva,sans-serif;">The technological environment also tremendously affects Ukamaku. As part of the e-commerce field, the business depends on people’s ability to access the Internet and pay for their transactions, as well as having basic technological infrastructure in their office and possible methods of transportation for shipping their products. First and foremost, in order to be able to sell their products online, the target market would need to have access to the web in order to see what Ukamaku sells.

<span style="font-family: Tahoma,Geneva,sans-serif;">The capacity to access the web many times depends on telecommunication companies’ infrastructure throughout the country to be up and running. Sometimes, having simply access to the Internet may not be enough if their connection is poor. This is the case of rural versus urban areas, where in countryside, “It would take a person with dial-up Internet literally years to reach the level of use many people living in urban centers”1. Unfortunately, this picture would only change if policies are created to inspire updated infrastructure.

<span style="font-family: Tahoma,Geneva,sans-serif;">Ukamaku themselves also need to be connected so they can maintain their website. It is through the web that the company also networks and builds their customer base via social media links and fashion communities. An appropriate technical infrastructure allows the company to be the most efficient as possible while simultaneously offering a stable and secure platform to conduct sales. Without access to the Internet, it would be impractical to try to expand internationally and virtually impossible to market themselves on a global scale. <span style="font-family: Tahoma,Geneva,sans-serif;">Besides having capability of entering the worldwide web, end-customers also need to be able to pay for their purchases online. Ukamaku currently allows clients to pay with their credit cards; specifically Visa and Mastercard. One of the benefits for doing so is that these are the two most accepted credit card types worldwide2. For the future, however, it would be advantageous to also permit payments through Paypal and debit cards (like Interac within Canada).

<span style="font-family: Tahoma,Geneva,sans-serif;">Furthermore, as an e-commerce business, Ukamaku depends transportation for shipping their products. More specifically, technologies can affect the speed at which something is delivered. For example, faster trains or larger cargo airplanes signify faster transport. Faster shipping is a quality that could be used in Ukamaku’s advantage when promoting their services. In addition, improved technology may bring financial benefits as well, since more methods of transportation creates competition in the sector and in turn drives shipping costs down. Furthermore, better transportation is also useful for expanding overseas. Ukamaku would be able to reach more areas while delivering to already accessible regions faster. In terms of product, Ukamaku in itself would change their offered products. However, designers with innovative inspirations might find new ways of creating their designs.