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I. Executive Summary

The purpose of this report is to develop an understanding of how the digital camera industry operates in today’s society as well as several factors, which influence consumer behaviour in the buying process. This report uses Canon Inc as an illustration along with the discussion of each topic.

Firstly, this report will discuss the background and size of the digital camera industry. The digital camera industry is getting bigger with the technological advancements in society today. Marketers thus need to be aware of the needs of consumers in order to cater to specific target groups as also gain a competitive advantage. The company’s competitors and external environment are discussed for a deeper understanding of the factors influencing the company’s operations.

This report also describes the industry’s segmentation in general and will look at the two types of segmentation with digital camera market, which are demographic variables. However, main market segment is psychographic which focuses on customers’ lifestyle, interest, opinion, etc. Each variable highlights the most important where possible to demonstrate which has a more significant influence over industry results as a whole.

The report also presents both internal and external influences on buyer behaviour such as social class, opinion leadership, group influence as well as perception and personality. These are important variables that help marketers understand how customers are motivated to make purchase decisions and must be considered in order to better tailor products to suit their needs, increasing the satisfaction of products. Lastly, the report also states some recommendations of how Canon could improve its marketing activities.

II. Digital camera background

In the late 1990s, the first digital camera (DCs) was introduced and in the past 5 years, the demand in DCs has been strongly increasing (Businessline, 2007). Although DCs may be costly compared to film cameras, it substantially saves the cost of having to purchase film, which are not reusable. DCs have various benefits, for example, it is convenient as it can immediately display pictures taken. DCs have been continuously developed and are now available in smaller sizes with a wide variety of features and functions. In order to gain a better understanding of consumers’ behaviour, the factors that contribute to and shape a buyer’s decision-making process need to be discussed.

2.1 Digital cameras’ market and competitors

The market of DCs has recently become more global as it is growing. According to Businessline (2007), in the Asia Pacific market, the market for DCs is expected to continue growing more than 30 percent of the global market and the unit of shipment is also expected to reach 54.33 million in 2009. It also states that from 2004 to 2005, the DC market revenue in Australia and New Zealand was US$1.65 million. Canon is one of the leading brands in electronic devices with its stable 50-year-history as it has consistently been receiving outstanding reviews. In 2004, Canon was proven to be capable of producing well-designed cameras that produce impressive results as it became Europe’s market leader in colour printers and DCs, achieving overall European sales for DCs worth 17.4 billion pounds (Brand Strategy, 2007).

2.2 Digital cameras and Market environment

The relationship between DCs and the marketing environment is essential for marketers to understand as there are forces in place that can and will influence the success of any company’s marketing strategy. Canon’s marketing strategy has to be adapted with reference to these factors so as to ensure that it will stay relevant to its customers and will be able to compete aggressively in the DC market. With relation to the marketing environment, there are five factors to be considered; political, economic, social, technological and natural factor (P.E.S.T.N.).

2.2.1 Political

Political issues include government actions, regulations, barriers of entry and taxation. This issue is much considered in the global market, because each country has different rules and regulations. In order to operate the firm efficiently with appropriate strategies, Canon must understand the rules and regulations of each country where their retail shops operate. As rules and regulations are different in each country, this understanding will help Canon to adapt their strategies in different markets.

2.2.2 Economic

Economic issues concern inflation, unemployment rate and economic growth. There are two major economic concerns; changes in income and changes in consumer spending patterns. Since economic forces can be used to forecast future sales and determine the strategies which may be used during specific economic situations. According to the Australian Bureau of Statistics (ABS), GDP rose 0.9% seasonally adjusted (March 2007-June 2007) and final consumption expenditure rose 0.5 % seasonally adjusted (March 2007-June 2007). This may be because the country’s economy is stable. During this time, the company is expected to produce more in order to meet consumer demand. For Canon, the increase in GDP seems to affect their products in the market. However, only GDP may not be sufficient to forecast the market, and thus, marketers also need to look at other factors as well such as CPI, the country’s population and changes in customer value.

2.2.3 Social

According to Suchard and Polonski (1991), the socially conscious customers feel strongly that whatever they do, they will consider the social impact of their buying behaviour. Attitude towards specific product change through time and at any one time can differ between groups in society. Canon is cooperating with the Worldwide Fund and also works with the Red Cross as it realised that this can create positive attitudes in consumers toward the brand. Besides, Canon Europe’s recent initiative with footballers taking photos with Canon DCs and later auctioned for charity (Brand Strategy, 2007) as a strategy to increase its brand awareness and brand recognition, was developed with the belief that, by being socially supportive, consumers would pay more attention to Canon.

2.2.4 Technological

Technology has been developing rapidly over the last decade, and this challenges businesses in many industries including