External Environment Analysis for the Development of a New Snack - Coursework Example

External Environment Analysis for the Development of a New Snack’ Submitted by: Submitted 0 Introduction The development of new snack products for children has recently become a topical issue due to concerns arising from advertising and marketing techniques of these products. More so, the nutritional content of snack products for children has also been called into question. Eagle (1998) highlighted that there is a general misunderstanding with regards to children’s capability to understand and process snack product marketing techniques. Eagle (1998) also presented evidence that children as young as four years of age were able to understand the commercial process and intent of advertising. This puts pressure on the manufacturers of children’s snack products to rethink their advertising and marketing strategies for this market group, and it also alters the process of product development by introducing new factors into their external environment analysis. The British Medical Association (2005) has also expressed its concern with regards to the increasing levels of childhood obesity in the country, which are a result of poor nutrition and exercise. Snacks probably of concern to the BMA as well as a result of their advertising and marketing which is targeted at children. This is supported by research conducted by the BMA (2005), the EU and the University of Strathclyde which demonstrated that marketing is influential in the decisions made to purchase particular foods. Another finding of this research was that children were not able to assess the nutritional quality of foods advertised to them, which further supported the actions of other European countries who have taken a step further by prohibiting advertising aimed at children (BMA 2005). The systematic review conducted by the University of Strathclyde highlighted that food advertising to children in the UK was higher, the food advertised was less healthy and that food promotion was affecting children’s preferences, behaviour and consumption (BMA 2005). This brief summary of the UK highlights the potential problems faced by those involved in the development and production of snack products for children, as increasing public pressure and regulation is bound to affect the external environmental analyses that are undertaken, which will adversely affect profits and revenue. To further understand the potential risks faced by children’s snack product developers, it is necessary to undertake a brief analysis of the external environment in this industry. 2.0 The External Environment Analysis The external environment analysis is important for organisations as product development is often influenced by the needs of the consumer and the ability of the organisation to meet the consumers’ needs (Brassington and Stephen 2005). In other words, the external environmental analysis prioritises the most important influences in the product market. For organisation involved in the production of snacks for children, the external environmental analysis is even more important, as their target market is one which does earn income, which means that the focus is then placed on those able to purchase the products, such as the parents. This analysis also defines the scope for the organisation, with which they can influence the needs of children by targeting their parents and other channels which children are often exposed to. Therefore it would follow that parents and marketing channels will prove to be the most influential in meeting their goals. However, recent consumer and government pressure is forcing children’s snack producers to re-evaluate their external environment analysis. As the analysis will focus on external influences, the most appropriate tool is the PEST analysis which stands for Political, Economic, Social and Technology (Sullivan and Adcock 2002). 3.0 Children’s Snack Product Market In the UK advertising snack products to children has fallen by approximately 15%, which represents a fall in expenditures of £236 million (FDF 2005). This is indicative of a profitable market segment, as the lower figures could be attributed to pressure on the manufacturers of children’s snack products to cut down on advertisements. Cadbury Schweppes has taken the steps to not advertising during children’s television programmes, and has not done so since 2001 (FDF 2005) which demonstrates their anticipation of the external environmental factors. Campbell’s and Coca Cola have taken the approach of not advertising to those under the age of 12 years by not advertising on programmes or channels that are targeted towards this group, and they do not use any celebrities to endorse their products that would appeal to this age bracket (FDF 2005). These examples demonstrate the general actions that have been taken in the industry to meet consumer demands for healthier eating for children. 4.0 Factors to Consider Political Regulations are becoming strict regarding the nutritional value of snacks and advertising to children. UK’s Food Standards Agency (FSA) has endorsed in 2005 the initiative of the Food and Drinks Federation regarding the inclusion of a more rigid Guideline Daily Amounts (GDA) (FDF 2005). This will enable the consumer to discern how much a particular content of the snack is recommended for daily consumption. This move is another step to stop the childhood obesity crisis in the UK. Economic A study conducted by Mintel reports that that salty snacks are facing serious threats in the UK. The market analyst valued this market at £2.0 billion in 2007, a four percent decline in constant terms since 2002. The market, which Mintel calculates through sales in food, drug and mass merchandiser outlets, has seen a general decline in the consumption of crisp snacks, cheese snacks and popcorn. Sales for these products went down by six percent since 2003, while potato chip consumption remained stagnant. The main factors at play were said to be competition from healthier alternatives. (Mintel 2007, p. 2-3) Social According to the 2006 survey conducted by Datamonitor, a leading snack industry analyst, there is an increasing tendency for people to seek healthier options. The market analyst surveyed 1,000 consumers in the UK. Of the respondents, 24.4 percent indicated that over the past 12 months they had been "much more" likely to look for food and drink that is both convenient and healthy while 36.7 percent said they had become "slightly more" likely to be concerned about health on that same period. (DataMonitor 2006, p. 12-15) This is significant as some of the snack advertisements were directed towards parents, and if parents are becoming aware of the nutritional value and content of snacks, then they will contribute to the decline in sales. The results of Datamonitor supports past studies such as that of Barnes Report (2007) Facts which found that 33 percent of consumers say they do not have time to prepare healthy meals and as such are looking for on-the-go options (p. 22). The market analyst valued this market at £2.0 billion in 2007, a four percent decline in constant terms since 2002. According to Datamonitor, "health" has become a growing product claim among typically unhealthy snack categories such as confectionery and savoury snacks. These are now moving beyond focusing just on reduced fat or sugar, and on to functional benefits such as added vitamins or antioxidants. (DataMonitor 2006) Technological Organisations involved in the manufacture of children’s snack products are also facing pressure from the increasing use of technology that is being used by central government to educate children about the dangers of eating too many snack products (Growing Kids 2007). Such measures have come about in response to the discovery of websites set up by snack producers as marketing tools (BBC 2007). As more children have access to the internet and increase their proficiency in its use, traditional advertising and marketing methods may be ineffective. The use of technology demonstrates how this issue is important to both parties, as both are employing the same methods to raise awareness of their causes. The internet technologies also enable the collection of research data on the consumption of snack foods (Gregory et al 2000) which will place snack producers at a risk as this information can be used to implement new legislation and regulations to curb the marketing presence of snack products. 5.0 Conclusion The snack industry has only come under close scrutiny in the UK as a result of the trend in childhood obesity, which has raised awareness of the nutritional value and content of snack products. It has also raised awareness of the methods used to increase demand by the producers of these snacks, leading to increased involvement by the government. The increased knowledge on nutritional values and content can be considered to be the main external environmental factor in the snack industry for children. As highlighted by the BMA, children do not have the capacity to make decisions on this aspect of snacks, however, their parents and those that are care for them need to be able to make informed choices. References: Aaker, David (1998). Developing Business Strategies. UK: John and Wiley Publications. BBC (2007). Fast Food Brands Hit Kids Online. http://news.bbc.co.uk/1/hi/technology/6905072.stm Brassington, F. and Stephen, P. (2005). Principles of Marketing. 2nd Edition, Pearson Higher Education. British Medical Association (2005). Preventing childhood obesity: a report from the BMA BoardofScience. http://www.isrm.co.uk/reference/documents/childhoodobesity_000.pdf DataMonitor (2004). Savoury Snacks in the UK to 2008. UK: DataMonitor Publications. http://www.just-food.com/store/product.aspx?ID=56738&lk=sup DataMonitor (2006). Savoury Snacks in the United Kingdom. UK: DataMonitor Publications. http://www.bl.uk/collections/business/pdf/fast_food_and_snacks_industry.pdf Eagle, B. (1998). Parenting, Purchasing and Commercial Pressure. Papers from the Third Annual Conference. Food Advertising Unit- Food Advertising Committee of the Advertising Association, London. http://www.fau.org.uk/091298_proceedings.pdf Food and Drink Federation (2005). Food and Health Manifesto – Delivering on our commitments. http://www.fdf.org.uk/manifesto Food Monitor (2005). New UK Nutrition guidelines target obesity crisis. Retrieved Dec. 5, 2007 from http://www.foodnavigator.com/news/ng.asp?n=63927-obesity-nutrition-fat Gregory J et al. (2000) National Diet and Nutrition Survey: young people aged 4 to 18 years. Volume 1: Findings. London: The Stationery Office. http://www.nutrition.org.uk/home.asp?siteId=43§ionId=1434&subSectionId=1421&parentSection=302&which= Growing Kids (2007). http://www.growingkids.co.uk/HealthySnacks.html Mintel International Group Ltd (2007). Crisps and Snacks - UK - May 2007. UK: Mintel Publications. http://www.the-infoshop.com/study/mt52602-crisps-snacks.html Pettit, S. and Brassington, F. (2003). Principles of Marketing. UK: Financial Times/Prentice Hall. Research and Markets (2007). Snapshots UK Snack Food 2007. UK: Snap Data International Group. http://www.researchandmarkets.com/reportinfo.asp?report_id=548697 Sullivan, M., and Adcock, D. (2002). Retail Marketing. Thomson Read More