Social Factors Affecting Business
There is no doubt that the society is continually changing. The tastes and fashions are a great example of this change. One of the most significant differences is the growing popularity of social media. Social networking sites like Facebook have become very popular among the younger people. The young consumers have grown used to mobile phones and computers.
The younger generation prefers to use digital technology to shop online. Older people will perhaps stick to their traditional methods. The effect of changing society is an often discussed. You must also understand that these changing factors have a toll on businesses too. Changes in the social factors can impact a firm in many different ways.
Companies often focus on these changes in depth. To do so, they employ environmental analysis such as PEST analysis. STEP is a variation of PEST. Extended versions include PESTLE, STEEP and STEEPLE analysis. The “S” in all these analyses indicates social or socio-cultural factors. Other factors you should assess are political, economic, technological, environmental, ethical and legal.
Businesses choose an environmental analysis depending on the nature of operations. However, all of them study the social factors.
In the social step for these analyses, you have to look carefully at the social changes. You will also have to look into the cultural changes which take place in your business environment. Market research is a critical part of this step. It is vital to see the trends and patterns of the society.
To understand the impacts better, you might need to study the factors in details. Most companies analyze the population growth and age structure. They also show interest in consumer attitudes and lifestyle changes. Your analysis can show if there are faults in your marketing strategy. It can also help find new ideas.
Below is a list of social factors which impact customer needs and size of markets:
- Buying habits
- Education level
- Emphasis on safety
- Religion and beliefs
- Health consciousness
- Sex distribution
- Average disposable income level
- Social classes
- Family size and structure
- Attitudes toward saving and investing
- Attitudes toward green or ecological products
- Attitudes toward for renewable energy
- Population growth rate
- Immigration and emigration rates
- Age distribution and life expectancy rates
- Attitudes toward imported products and services
- Attitudes toward work, career, leisure and retirement
- Attitudes toward customer service and product quality
The social aspect focuses on the forces within the society. Family, friends, colleagues, neighbors and the media are social factors. These factors can affect our attitudes, opinions and interests. So, it can impact sales of product and revenues earned.
The social factors shape who we are as people. It affects how we behave and what we buy. A good example is how people’s attitude towards diet and health is changing in UK. Because of this, UK businesses are seeing some changes. More people are joining fitness clubs. There is also a massive growth in demand for organic food.
Products often take advantage of the social factors. The Wii Fit, for instance, attempt to deal with the society’s concern about children’s lack of exercise.
Population changes are also directly affecting organizations. The supply and demand of goods and services in an economy can change with the structure of the population. Decline in birth rates mean demand will decrease. It also indicates greater competition as the total consumers fall.
World food shortage predictions can lead to call for more investment in food production. An increase in the world’s population can have the same effect. African countries like Uganda are facing food shortage. They are reconsidering rejection of genetically modified foods now.
Organizations should be able to offer products and services which aim to benefit people’s lifestyle. The offerings should complement customers’ behavior. Not reacting to changes in the society can be a costly mistake. They might lose market share. Demand for their products and services will fall.
I have added some examples of how renowned companies use the analysis. Read below to see how social changes affect Pepsi Co and Nokia.
Social factors which impact Pepsi Co
Analysis shows that social factors impact the beverage company greatly. The key reason behind this is perhaps that Pepsi is a non-alcoholic beverage. It has to maintain the strict differences in cultures around the world.
It is essential that Pepsi communicates its image as a global brand to change people’s perception. The company expects its buyers to be able to think of their drink as something which connects the world together. The social implications are visible in marketing campaigns most of the time.
For example, the religious festivals featured in TVC ads vary based on cultures. Pepsi has to value all the festivals in order to relate to their market. Reacting to the social factor can help Pepsi cash upon the opportunity.
Social factors which impact Nokia
Before Microsoft acquired Nokia, it was operating mostly in the Western market. It was important to fully understand the social factors in these markets. The main issues were the culture of the society. Nokia had to make efforts to keep its products updated as the buyers saw it as a fashion icon.
Recommended: SWOT analysis of Nokia
Consumers are always seeking the best looking smartphones. This is because people tend to judge each other’s fashion sense based on choice of mobile phone.
The rising trend in smartphones means when buyers purchase new mobile phones, they are less inclined toward standard mobiles phones. The social trend is to buy smartphones. Nokia’s task was to be aware of this. Upon finding out, the company decided to channel most of its efforts in developing new smartphones. The new phones would also compete with their rivals’ products. This is how companies keep up with the social trends of their consumers.