The impact of environmental scanning on marketing strategy can be illustrated with reference to videotex technology. Videotex technology the merging of computer and communications technologies delivers information directly to the consumer. The consumer may instantly view desired textual and visual information from on-line databases on television screens or other video receivers by pushing the appropriate buttons or typing the proper commands. Possibilities for business and personal use of videotex are as endless as the imagination. Consumers are already utilizing videotex for shopping, travel, personal protection, financial transactions, and entertainment, in greater privacy and autonomy than ever before. With the mechanism for getting things done most efficiently and cost effectively, marketing strategists have begun to explore the implications of videotex on marketing decisions. Videotex will alter the demand for certain kinds of goods and services and the ways in which consumers interact with marketing activities. For the first time, the average consumer, not just the affluent consumer, can interact directly with the production process, dictating final product specifications as the product is being manufactured. As small-batch production becomes more costeffective, this type of consumer-producer interaction will become more common.

Product selection might also be enhanced by videotex, as sellers stock a more complete inventory at fewer, more central locations rather than dealing with many retail outlets. Because packages will no longer serve as the communications vehicle for selling the product, less money will be spent on packaging. Product changes can also be kept up-to-date. Information on videotex will be current, synthesized, and comprehensive. The user will have the power to access only desired information at the time it is desired. Advertising messages and articles will be available in index form. Direct consumer interaction with manufacturers will eliminate distribution channels. Reduced or zero-based inventory will reduce obsolescence and turnover costs. Centrally located warehouses and new delivery routes will become increasingly cost-effective. The remaining retail stores will be transformed into showrooms with direct-order possibilities via view-data-like terminals. Promotional material will become more educational and information-based, including the provision of product specifications and independent product evaluations. Interactive video channels will provide advertisers and interested shoppers with prepackaged commercials and live shopping programs. With more accurate price and product information, more perfect competition will result. Price discrepancies will be reduced. Consumers will engage in more preshopping planning, price-comparison shopping, and in-home shopping. The market segment concept will be more important than ever before. The individualizing possibilities of videotex will enable the seller to measure and reach segments with unparalleled accuracy and will also enable consumers to effectively self-segment. Advertisers and consumers will benefit from 24-hour, 7-day-a-week salespeople. Everyone will be better prepared through videotex to satisfy customers.

ENVIRONMENTAL SCANNING PROCEDURE

Like any other new program, the scanning activity in a corporation evolves over time. There is no way to introduce a foolproof system from the beginning. If conditions are favorable if there is an established system of strategic planning in place and the CEO is interested in a structured effort at scanning the evolutionary period shortens, of course, but the state of the art may not permit the introduction of a fully developed system at the outset. Besides, behavioral and organizational constraints require that things be done over a period of time. The level and type of scanning that a corporation undertakes should be custom designed, and a customized system takes time to emerge into a viable system. Listed below and on the next pages are the procedural steps that explain this relationship.

1. Keep a tab on broad trends appearing in the environment Once the scope of environmental scanning is determined, broad trends in chosen areas may be reviewed from time to time. For example, in the area of technology, trends in energy utilization, material science, transportation capability, mechanization and automation, communications and information processing, and control over natural life may be studied.

2. Determine the relevance of an environmental trend Not everything happening in the environment may be relevant for a company. Therefore, attempts must be made to select those trends that have significance for the company. There cannot be any hard-and-fast rules for making a distinction between relevant and irrelevant. Consider, for example, the demise of the steam locomotive industry. Management’s creativity and farsightedness would play an important role in a company’s ability to pinpoint relevant areas of concern. Described below is one way (for a large corporation) of identifying relevant trends in the environment:

• Place a senior person in charge of scanning.

• Identify a core list of about 100 relevant publications worldwide.

• Assign these publications to volunteers within the company, one per person. Selected publications considered extremely important should be scanned by the scanning manager.

• Each scanner reviews stories/articles/news items in the assigned publication that meet predetermined criteria based on the company’s aims. Scanners might also review books, conference proceedings, lectures, and presentations.

• The scanned information is given a predetermined code. For example, a worldwide consumer-goods company used the following codes: subject (e.g., politics); geography (e.g., Middle East); function (e.g., marketing); application (e.g., promotion, distribution); and “uniterm,” or keyword, for organizing the information. An abstract is then prepared on the story.

• The abstract, along with the codes, is submitted to a scanning committee, consisting of several managers, to determine its relevance in terms of effect on corporate, SBU, and product/market strategy. An additional relevance code is added at this time.

• The codes and the abstract are computerized.

• A newsletter is prepared to disseminate the information companywide.

Managers whose areas are directly affected by the information are encouraged to contact the scanning department for further analysis.

3. Study the impact of an environmental trend on a product/market An environmental trend can pose either a threat or an opportunity for a company’s product/market; which one it turns out to be must be studied. The task of determining the impact of a change is the responsibility of the SBU manager. Alternatively, the determination may be assigned to another executive who is familiar with the product/market. If the whole subject appears controversial, it may be safer to have an ad hoc committee look into it; or consultants, either internal or external, may be approached. There is a good chance that a manager who has been involved with a product or service for many years will look at any change as a threat. That manager may, therefore, avoid the issue by declaring the impact to be irrelevant at the outset. If such nearsightedness is feared, perhaps it would be better to rely on a committee or a consultant.

4. Forecast the direction of an environmental trend into the future If an environmental trend does appear to have significance for a product/market, it is desirable to determine the course that the trend is likely to adopt. In other words, attempts must be made at environmental forecasting.

5. Analyze the momentum of the product/market business in the face of the environmental trend Assuming that the company takes no action, what will be the shape of the product/market performance in the midst of the environmental trend and its future direction? The impact of an environmental trend is usually gradual. While it is helpful to be the “first” to recognize a trend and take action, all is not lost if a company waits to see which way the trend proceeds. But how long one waits depends on the diffusion process, the rate at which the change necessitated by the trend is adopted. People did not jump to replace their blackand- white television sets overnight. Similar examples abound. A variety of reasons may prohibit an overnight shift in markets due to an environmental trend that may deliver a new product or process. High prices, religious taboos, legal restrictions, and unfamiliarity with the product or service would restrict changeover. In brief, the diffusion process should be predicted before arriving at a conclusion.

6. Study the new opportunities that an environmental trend appears to provide An environmental trend may not be relevant for a company’s current product/market, but it may indicate promising new business opportunities. For example, the energy crisis provided an easy entry point for fuel-efficient Hondas into the United States. Such opportunities should be duly pinpointed and analyzed for action.

7. Relate the outcome of an environmental trend to corporate strategy Based on environmental trends and their impacts, a company needs to review its strategy on two counts: changes that may be introduced in current products/markets and feasible opportunities that the company may embrace for action. Even if an environmental trend poses a threat to a company’s product/market, it is not necessary for the company to come out with a new product to replace an existing one. Neither is it necessary for every competitor to embrace the “change.” Even without developing a new product, a company may find a niche in the market to which it could cater despite the introduction of a new product by a competitor. The electric razor did not make safety razor blades obsolete. Automatic transmissions did not throw the standard shift out of vogue. New markets and new uses can be found to give an existing product an advantage despite the overall popularity of a new product. Although procedural steps for scanning the environment exist, scanning is nevertheless an art in which creativity plays an important role. Thus, to adequately study the changing environment and relate it to corporate strategy, companies should inculcate a habit of creative thinking on the part of its managers. The experience of one insurance company illustrates the point: in order to “open up” line managers to new ideas and to encourage innovation in their plans, they are, for a while, withdrawn from the line organization to serve as staff people. In staff positions, they are granted considerable freedom of action, which enhances their ability to manage creatively when they return to their management positions.