FYI

1. Business Environment
Lecture 6
Social-Cultural
Factors
Affecting the
Business
Environment

2. Business
environment
lecture 6
Agenda:
The social environment
Describe trends in the
social environment
Explain how these trends
can affect a business
Illustrate how each impact
arising from the social
environment can be
addressed.

3. External Micro
and Macro
Environment
To recap:
In lecture 1 - 3, we talked
about the internal and
external micro factors.
In the external macro
environment, we use the
PESTE framework.
So far, we talked about P
(political/legal) and E
(economic).

4. The social
environment
For definition purposes,
what does it include?
Social factors affecting
businesses would include
the DEMOGRAPHICS of
the country in question.
What else can you think of?

5. Social Factors -
Identify a social factor & discuss the
possible impact on a business/es
& share with class
ACTIVITY 1

6. Social Factors
Some Examples

7. Social factors which impact customer needs and size of
markets:
 Lifestyles
 Buying habits
 Education level
 Emphasis on safety
 Religion and beliefs
 Health consciousness
 Sex distribution
 Average disposable income level
 Social classes
 Age distribution and life expectancy rates
 Family size and structure
 Minorities
Business environment –
Social-Cultural Factors

8. Social factors which impact customer needs and size of
markets:
 Attitudes towards
 differences in gender (sexism) & age (ageism)
 saving and investing
 green or ecological products
 renewable energy
 imported products and services
 work, career, leisure and retirement
 customer service and product quality
 The social aspect focuses on the forces within the society.
Influences from family, friends, colleagues, neighbors and
the media are social factors.

9. Lifestyles
The term refers to the way people live and how they
spend their money. This means that two individuals with
the same occupation could have two different lifestyles.
Examples of lifestyles could include:
 Yuppies (young urban professionals),
 DINKs (double income no kids),
 Alternative lifestyles (same- sex relationships), LGBT.
An obvious trend would be towards marketing products
to these high spending segments.

10. Social Class
A social class refers to the idea of grouping
people together with similar social status. This
could include education, income or occupation.
Social mobility refers to movement between
groups.
Eg.
Choice of expensive cars, high-end smartphones,
branded bags & shoes…
are seen as indicators of status (status symbols)

11. Demographics
Demography is the study of a population in terms of overall size
and structural characteristics,
eg. generational cohorts
 Baby boomers, 1946-1964
 Generation X (baby busters), 1965 – 1980
 Generation Y (echo boomers / Millennials), 1981 – 2000
 Generation Z , (Net Gen), 2000 onwards…
https://communityrising.kasasa.com/gen-x-gen-y-gen-z/

12. Demographic Trends
1. Aging population
2. Lower birth rates
3. More women in the workforce
4. More women delaying marriage and childbirth
5. Fewer marriages
6. Better living standards leading to falling death
rates at earlier ages
7. More migration due to liberalisation

13. Other social influences
Reference groups refer to people we interact with
such as social and sports clubs, religious
organisations, trade unions.
 Some reference groups such as family may have an
important relationship with our consumption patterns.
 Note that these can change according to the family life
cycle (ie individuals change from being a child to a
parent with different responsibilities).

14. Culture
Culture refers to a complex set of values, customs,
systems and artefacts handed down from generations
through the process of socialisation.
A trend would be to understand the specific culture of the
market and tailor the products accordingly.

15. Culture
Examples include who:
1. Who decides what is bought?
2. Choice of colours (eg black is considered the
acceptable formal attire)
3. How business is conducted (are bribes the norm?
length of negotiation? handshake?)
4. Means of communication (single language?)
5. Common topics of conversation (eg weather, sports)

16. Sub-Culture
A society is rarely homogenous. Within every culture
are sub-cultures comprising individuals with shared
values or situations. These could include nationality,
ethnicity, religion, age, class or attitudes towards politics,
freedom of speech, women’s rights etc.

17. Social Factors Trends Over Time

18. 1950s - Previously women focused on household products
 Most notable cultural changes in the past 30 years
 Buying patterns of men & women converging
 1950s - Previously women focused on household products eg.
Laundry detergent

19. 1970s – 1980s - Ads began to build bridge between male &
female

20. Social Factors - Demographic
Trends Over Time

21. http://www.goldmansachs.com/our-thinking/pages/millennials/
(no longer available)
…their unique
experiences will
change the ways we
buy and sell, forcing
companies to
examine how they
do business …

22. Spending habits of Singapore Millennials
(Paypal July 2016)
http://www.marketing-interactive.com/infographic-spending-habits-singapore-millenials/

23. Spending habits of Singapore Millenials (Paypal July 2016)
http://www.marketing-interactive.com/infographic-spending-habits-singapore-millenials/

24. Spending habits of Singapore Millennials
(Paypal July 2016)
http://www.marketing-interactive.com/infographic-spending-habits-singapore-millenials/

25. Social Factors – Social Media
Trends Over Time

26. 2019 SOCIAL MEDIA TRENDS
 Focus now on regaining back trust after fake news, leakage of
private info, …
 Create stories & moments to engage & sell
 Employee-created content receives eight times more engagement
than content shared from the company itself.
 Vertical videos, Live videos, VIDEOS, VIDEOs…
 Chatbot – the superhot trend in 2019 (SEJ, 16 Jan 2019)
 Work with nano influencers (ordinary digital citizens with
1,000 to 5,000 followers) in FB or LinkedIn

27.  In 2019, social media will shift even more toward 1:1
interactions, rather than 1:many broadcasting that many brands
and businesses have been doing, said Kevan Lee, VP of Marketing
at Buffer.
 By making sure you have the right monitoring and tracking tools
in place, according to Debbie Miller, President of Social Hospitality.
..so that businesses can participate in conversations with their
customers (and potential customers) to cultivate more authentic
relationships with those folks, and, again, stand out among the high
number of brands that don’t.”
Source: https://www.searchenginejournal.com/2019-social-media-trends/286029/

28. BREAK TIME

29. Other Social Factors
in Singapore’s other demographic groups

30. SINGAPORE CONSUMER LIFESTYLES
TRENDS & IMPACT ON BUSINESSES
Consumer Segmentation:
 Kids
– enrichment classes start earlier
- child-friendly F&B outlets a hit with parents
- Tuition craze continues
- Overseas school trip now a norm for tweens (Pri. School kids)
 Adults
- Young adults seek luxury items
- More couples seeking IVF treatment as govt co-funding subsidy from
50% to 75%
- More 50s and older go back to school
- Late-lifers are shopping more online (Google Barometer (2014): 78% of
those aged 55 & above use internet daily)
Source: GMID /
Passport

31. SINGAPORE CONSUMER LIFESTYLES
TRENDS & IMPACT ON BUSINESSES
Source: GMID /
Passport
Eating & Drinking:
 80% of consumers prefer to dine at home but hassle of cooking
is putting off many professionals & small families (Electrolux
Asia Pacific 2014).
  more health-conscious (ie. greater demand for organic food,
less sugar, less salt, )
 Korean food still making waves in F&B, ie. Bingsu (shaved ice)
similar to ice-kacang, but consumers willing to pay 5 to 6 times
more)
 In Jan 2015, there were 30 cocktail bars in SG, up from less
than 10 four years ago.

32. SINGAPORE CONSUMER LIFESTYLES
TRENDS & IMPACT ON BUSINESSES
Source: GMID /
Passport
Grooming & Fashion:
 Consumers still buying Korean cosmetics due to Korean Wave
(Hallyu – Korean popular culture) with actress Song Hye-Kyo for
Laneige & actor Lee Min Ho for Etude House
 Men are taking grooming more seriously & spending more,
 ie. Browhaus & Spa Esprit Group’s waxing studio have seen
20% y-o-y increase in male customers; Urban Homme by Mary
Chia Holdings have seen steady rise in business since 2003
when first opened;
 online concept store WhatHeWants has more than 700m
grooming products for men

33. Lifestyles
Example of how knowledge of lifestyle
can be utilized

34. Case Study
https://www.techinasia.com/food-delivery-
startup-brings-breakfast-singapore
Deliveroo is a company that
delivers breakfast to the CBD
area in Singapore.
Established in the UK in 2013,
it has operations in Europe,
Australia, Dubai, Hong Kong
and Singapore
Besides delivery it does
marketing and order taking. It
also provides the opportunity
to order from restaurants that
do not usually do take away
service.

35. Town Hall Hotel in Bethnal Green (UK)-
Singaporean hotelier Loh Lik Peng’s £20 million
(about US$31 million) renovation of the former
town hall—a baroque Edwardian pile built in
1910 that for decades slumbered in derelict
NOW - a perfect balance of white marble, stained-
glass windows, polished teak, 21st-century mod
cons, and vintage Scandinavian furniture.
Until just a few years ago, this area was shunned
for its rough- and-ready working-class credentials.
These days, hipsters throng up the steps to dine at
the hotel’s Michelin-starred restaurant, Viajante, a
light-filled dining room of blond wood and pastel
shades
7 boutique hotels and 20
restaurants in Singapore,
London, Shanghai and
Sydney, such as the latest
Wanderlust Hotel, Hotel
1929, New Majestic Hotel,
Burnt Ends, Esquina,
Meatsmith, Salted and
Hung, the man behind
Unlisted Collections, serial
entrepreneur Loh Lik Peng
needs no introduction.
Applying Innovation/Creativity & Conservation together

36. Social Factors Differences Across
Geographic Locations
(eg USA vs Germany)

37. Why did Walmart fail in Germany
 Walmart (US retailer) – one of world’s most successful
retailers
 Winning formula – low prices, tight cost controls, non-
union employees & superb inventory management
 Highly successful in Mexico, but failed in Germany
 Germany – exited in 2007 after 10 years of losses

38. Why did Walmart fail in Germany
 Acquired 2 big German retailers: Wertkauf (profitable with 21 stores)
& Spar chain (74 hypermarkets)
 Cause of failure in German market
 First CEO, Ron Tiarks, American, brought a number of US
managers with him
 He did not speak German & mandated English as official
language for management
 CEO ignorant regarding complexities of retailing in Germany
esp the different legal & institutional framework
 Ignorant of shopping culture in Germany & also ignored
strategic advice offered by former Wertkauf executives

39.  Because Walmart stress on low-price, competitors
characterised it as “American Junk”
 German culture – quality is valued
 Main German rival – Aldi – offers low price but high
quality
 Germans shoppers complained harassed by greeters
 Walmart provide “baggers” (standard practice in US), but
German do not like their groceries handled by strangers

40.  Cashiers suppose to smile at shoppers, male German
shoppers took it as a turn on as German do not usually
smile at strangers
 German employees found to start the day with a Walmart
chant and exercise, embarrassing & silly
 Code of conduct cautioning against improper supervisor-
worker behaviour was a standard practice in US to prevent
sexual harrassment, but German staff took it as a ban
against office romance & an encouragement to rat on
fellow colleagues

41. Summary
Wrapup
 Clearly social factors have a great impact on
businesses (sales of products & services), especially
retail sales.
 Offerings should complement customers’ behavior.
 Not anticipating changes in trends, especially social
factors-related trends can be a very costly mistake to
the existing businesses in a competitive market.

42. Summary
Break
Summary
The social context of business includes social class, lifestyles
and reference group influences. These factors affect
consumption patterns.
The cultural environment of business comprises forces that
shape attitudes, values, perceptions, preferences and
behaviour. Societies also have sub-cultures. Businesses
need to be sensitive to people.
Demographic, social and cultural factors can be illustrated
through market segmentation.

43. The social environment
Learning outcomes:
By the end of this session, you would have been able to:
Describe trends in the social environment
Explain how these trends can affect a business
Illustrate how each impact arising from the social environment
can be addressed.
References:
Worthington & Britton
The Business Environment
Chapter 6