PEST Analysis of Marketing Communication in Bangladesh

Executive summary

Marketing communications is nothing but the science and art of communicating information that the company wants to divulge to the public. The information could be related to the marketing of a product, talk about a new product launch or community initiatives taken by the company. The whole exercise is called a science and an art because though there are set rules and patterns to the manner in which communication should be drafted, the ability to communicate effectively is an art that only some can master. Even as just communicating may seem an easy task since that is what we do every day in our normal lives, there is a science behind what to communicate to whom and in what tone and manner. The process becomes more complex when the market to which one is communicating is an evolved market.

PEST analysis is a management technique that enables an analysis of four external factors that may impact the performance of the organization. These factors are: Political, Economic, Social, and Technological. PEST analysis is often conducted using brainstorming techniques. It offers an environment-to-organization perspective as opposed to the organization-to-environment perspective offered by SWOT analysis.

The business organizations in Bangladesh face a mixed environment while communicating with their target audiences. In some of the time they become facilities and benefits in this country which they may not get in other countries especially in the western counties. On the other hand, they may also face some burden in practicing marketing communication and using promotional tools too.

Introduction

Marketing Communications (or MarCom or Integrated Marketing Communications) are messages and related media used to communicate with a market. Marketing communications is the "promotion" part of the "Marketing Mix" or the "four Ps": price, place, promotion, and product.

Those who practice advertising, branding, brand language, direct marketing, graphic design, marketing, packaging, promotion, publicity, sponsorship, public relations, sales, sales promotion and online marketing are termed marketing communicators, marketing communication managers, or more briefly, marcom managers.

PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management. It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macroenvironmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations. The growing importance of environmental or ecological factors in the first decade of the 21st century have given rise to green business and encouraged widespread use of an updated version of the PEST framework. STEER analysis systematically considers Socio-cultural, Technological, Economic, Ecological, and Regulatory factors.

The form of marketing communication in Bangladesh is changing with the different aspects of its environment. The political effects, its rules and regulations affect the way the business organizations communicate with its target audiences. The economic condition of the country is also a big aspect which creates an impact on the marketing communication. The social conditions, bonds, culture and norms influence the objective of the marketing communication activities. The technology is another part of the environment which puts a tremendous effect on the marketing communication activities of the business organizations.

PEST Analysis- Political

The national laws and regulations change. This can affect the basic production or service and methods of communication. The rules and legislation for promotional activities are very flexible in Bangladesh. Although promotion of some of the products has been restricted or banned by the government to protect the citizens’ rights. There are so many acts and provision followed by the government and law enforcement authorities relating to the business and marketing communications which affects the business and marketing communications in particular. Among these:

·         The Printing Presses and Publication Act (PPPA) 1973

·         The Penal Code, 1860 (Modified up to the December 31, 1983)

·         The Code of Criminal Procedure, 1898

·         Official Secrets Act, 1923

·         The Special Powers Act of 1974

·         The Newsprint Control Order of 1974

·         Official Directives

The Advertising And Programme Act

This Act may be cited as the Bangladesh Broadcasting Act, 2003. The advertising and programme code for broadcasting media are the following:

The Advertising Code

(1) The Advertising Code shall address a range of issues relating to broadcast advertising, including the following:-

a)      all advertisements shall be clearly identified as such;

b)      no broadcaster shall carry advertisements for alcohol or for medicines which are available only with a prescription;

c)      advertising by private and community broadcasters shall be limited to 20% of total daily programming on any given channel and to 25% of any given hour;

d)     advertising by public broadcasters shall be limited to 10% of total daily programming on any given channel and to 12.5% of any given hour;

e)      except in accordance with this section or any regulations promulgated by the Central Election Commission [INSERT CORRECT NAME], no broadcaster shall carry any advertisement for or on behalf of any political party or candidate for election to political office; and

f)       subject to any regulations promulgated by the Central Election Commission [INSERT CORRECT NAME], the Authority may, by notification published in the Gazette, adopt regulations regarding political advertisements during elections, provided that any such regulations shall be based on the principle that parties and candidates should be granted equitable, non-discriminatory access to licensees.

(2) The Advertising Code may also set rules regarding programme sponsorship.

The Programme Code

The Programme Code shall, among other things, clarify in detail standards in relation to the following programming obligations:-

a)      to be balanced and impartial in news and current affairs programming and to strive for accuracy in these programmes;

b)      to encourage the development of Bangladeshi expression, including by independent producers, by providing a wide range of programming that reflects the attitudes, opinions, ideas, values and artistic creativity of Bangladeshis;

c)      to protect children against harmful material;

d)     to classify programmes, including films, according to the recommended age of viewers;

e)      to keep within accepted boundaries in relation to the portrayal of sexual conduct and violence;

f)       to promote tolerance and respect for religious and ethnic minorities, and disadvantaged groups;

g)      to respect privacy; and

h)      to respect religious views.

The government has relaxed and licensed many broadcasting and print media companies which has enabled the business organizations to promote their products and services with ease and at low cost.

Figure: Effective media regulatory mechanism

There are no rules or regulation regarding direct marketing in Bangladesh as it is not a widely used promotional tool in marketing communication although it is an emerging trend.

PEST Analysis- Economical

Effects on markets and communications: Industrial and consumer markets are directly and indirectly affected by the state of the economy. Closer to home, exchange rates, interest rates, unemployment, levels of disposal income etc. All affect how much money is around, how much will be spent and, in a sense, the size of many markets or industries.

Bangladesh is a low-income third world country. According to IMF, Mean wages was $0.58 per man hour at 2009 in Bangladesh.

During the recession almost every one cuts back on spending. Consumers spend less, companies spend less. Many organizations cut back on all types of spending, including marketing. The fall of demand cause the reduction in the growth in the marketing service industry like advertising and design.

The recent inflation in Bangladesh caused the business organization to improve their communication activities as well as reducing the cost of promotional activities. This has become a dilemma for the business organizations.

The income of the consumers of Bangladesh is little bit scattered. The    economy    of Bangladesh is    constituted    by    that    of    a developing country. Its per    capita    income in 2009 was est US$1,500 (adjusted by purchasing  power  parity)  significantly  lower  than India, Pakistan,  both which  are also  lower  than  the  world  average  of  $10,497.According  to the gradation by the International Monetary Fund, Bangladesh ranked as the 48th largest  economy in  the  world  in  2009,  with  a  gross  domestic  product  of US$224.889 billion. The economy has grown at the rate of 6 -7% p.a. over the past few years. More than half of the GDP belongs to the service sector; nearly half of Bangladeshis are employed in the agriculture sector, with RMG, fish, vegetables, leather   and   leather   goods,   ceramics,   rice   as   other   important produce.

PEST Analysis- Social

Companies  are  facing  the  challenges  of  adapting  effectively  to  the  changing environment  in the  context  of  globalization  and  in  particular  in the  export sector in  Bangladesh. Although Consumer Rights Movement, enforcement of government     regulations   and  a  structured   view  regarding  the  economic importance of Social responsibility  are not yet so widespread in the corporate world in Bangladesh, companies have gradually attaching  more importance to Social responsibility in the local market as well. They are increasingly aware that Social responsibility can be of direct economic value.   Companies  can contribute  to social and environmental  objectives, through integrating Social responsibility  as  a  strategic  investment  into  their  core  business  strategy, management  instruments  and  operations.   This is an investment, not a cost, much like quality management. So, business organizations can thereby have an inclusive financial, commercial and social approach, leading to a long term strategy minimizing risks linked to uncertainty. 

The social norms, roles and values are changing in Bangladesh which is having a great impact on the practice of the companies’ marketing communication. The parents are doing job. Kids are growing old younger and many adults are suffering information fatigue and therefore becoming fed up with marketing communications.

The adults are also changing. People are fed up with the traditional marketing communication. The companies are in continuous need for finding new ways to communicate with its customers effectively. The customers are overloaded with information. Their time and attention is being wasted as a result people no longer respond the way the used to. Attitudes towards issues change too.

Ethical issues are growing importance. People are now information oriented. They try to reasoning any cause. The customers are getting empowered.

So the business organization in need of being very conscious while practicing marketing communication today in Bangladesh.

PEST Analysis- Technological

Technology is another important factor one need to consider before entering in to Bangladesh market. As a low income economy Bangladesh is not well develop in IT sector. Although it's major cities like capital Dhaka or port city Chittagong and divisional headquarters are moderately developed but the rural areas are still developing. Bangladesh with its high illiteracy rate (18%), assume that it will take a long time to become a high tech country. According to Hussain ( 2004) only 7% of Bangladesh population where most of them are young generation ( generation Y) use internet for their daily needs. But recently government takes some initiative to improve its IT sector. Major Banks and financial institute develop their IT department and use internet banking for their daily operation. Although foreign money transfer still depend on traditional telegraphic transfer but now a day user can access their account from anywhere in the world through internet. For advertisement Bangladesh still depends on its newspaper and human advertisement and direct advertisement but with a growing technological improvement more and more consumers are attracted by television and online advertisement

ICT is a word that elaborates Information and Communication Technology. The word Telecommunication is a built in phenomenon in ICT which includes broadcast technology as well. As technology, ICT is most modern where silicon chips are the basic. For user Computers of various generations and versions are the tools of ICT use.

In Bangladesh, under the category media, Newspaper and Periodicals, News Agencies, and Broad Media that is Radio and Television exist with adequate financial and social power. Newspaper is the oldest and Web Portals of various news organizations and Web newspapers are the latest.

News agencies and services are not an old phenomenon in Bangladesh but not that much powerful in the society. The oldest one is state owned working as a mouthpiece of the government. The private sector list is not too short but mainly these news organizations are small enterprises.

Radio is also an old media in Bangladesh. Even before five years the state owned Bangladesh Beter was only radio service. Presently half a dozen FM stations are working; half of them have news bulletins. Few more FM and community Radio stations are in the line of operations.

Television is a tender age media segment of Bangladesh in comparison to the newspaper. Before 1995, only Bangladesh Television was only TV station that owned by the government. Presently a dozen of satellite Television Channels are in operation, those have news and current affairs segment and entertainment segment. . Unlike North America, where DirecTV offers  programming from several of their own satellites, almost every channel in Bangladesh is broadcast from the Telstar 10 satellite with the exception of ATN Bangla which is broadcast from Thaicom2/5. There are almost a dozens of TV companies are waiting to intervene in the infotainment market of Bangladesh. 

Web newspaper is a very new idea in the realm of media. In Bangladesh the independent Web newspapers are not that much of strong in terms of finance, manpower and social impact. But the web versions of few print media are widely visited by the viewers and readers.

Newspapers papers of Bangladesh were running through hand composed printing press technology then upgraded by lino and photocompose technology and offset printing press. Presently all of the publications in Bangladesh are digitizing their scripts through desktop technology. That is why use of computer in newspaper industry is mainly as desktop publication tools. The important newspapers authorities have provided computers to all newsmen and staffs. Most of the newspapers and periodicals have computer department to digitize the manuscripts and for further technical steps. There is no use of news software in the newspaper of Bangladesh so far.

News Agencies and services are always a bit advanced technology users compared to the Newspaper industry of Bangladesh. The State owned Bangladesh Sangbad Sangstha-BSS, also the largest of the country, are using computers in all desk and giving service to the subscribers through internet by using a licensed version of software. The United News of Bangladesh is also a user of modern ICT technology but there is lack of news software for newsroom management internally. They are also giving subscriber service through ICT use.  ICT use by all staff is yet to be ensured in this category of media in Bangladesh.

Bangladesh Beter, the state owned radio service has vast capacity in terms of coverage and ability but again similar to the BTV, they are not tech shabby. Private FM radio stations are a bit more technology loving. As a matter of broadcast and production they are using technology with the compatibility of modern time. In newsroom the NEWSBOSS is the popular software in Bangladesh. But both TV and Radio are not providing computer to every desk.

Web Newspapers are not a profit making business in Bangladesh yet. It needs less investment compare to the other media category that are making few people enthusiastic to organize or build up a news organization. In Bangladesh, even there is no government policy for the web newspapers. But it could be told that this segment of Bangladesh media is using total Web technology for their operation. But there is no use of newsroom management software here.

Financial management, MIS, HR management, Compliance management and other Management including stocks and inventory are the other segments of the media organizations where ICT could be used. But in the media of Bangladesh the use of ICT for proper management is truly poor. Small accounts software are used in a very few media organizations for financial management. HR or MIS software are using by a handful.

Conclusion

In Bangladesh direct advertisement, newspaper and television is very popular. In order to reach the target customers companies can use newspaper and television as well as online advertisement. It will help them to establish the brand value as well as increase sells revenue. But before that companies should consider government regulation and cultural aspect before launching the advertisement program. For example Bangladeshi people like to see their own people so it's better to use local marketing people for the advertisement. Another precaution companies should take is using female artist in advertisement. As a Muslim country Bangladesh is moderately conservative when presenting the female artist. For that companies can hire some local advertisement agency that has better understanding about this socio-cultural issue to handle the advertisement activities.