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Carbon footprint is the amount of greenhouse gases such as carbon dioxide released in the atmosphere by human activity. It includes direct emissions which resulted from transportation, heating and fossil fuel combustion from manufacturing as well as emissions. This report showcase that what are the reasons due to which demand for reduction in carbon footprint is emerging. It extensively analyzes that what are the effects which would happen in the aviation industry due to the demand to reduce carbon footprint. It shows the effect on customers, manufacturers, suppliers and operators in the aviation industry and possible outcomes in future. Demand for Reduction in the carbon footprint of the business organizations can impact the competitive environment of the airline sector
It has been seen in history that when any particular industry has its growing period then the major focus of businesses in on profit and other factors like environment and safety are compromised. The airline industry is also an industry which is in its growing phase. This world is getting more globalized and transportation industry is flourishing. As the world economy is growing people now prefer to travel through the air due to the low price of tickets. It is estimated that out of total transportation around the world 11 per cent is contributed by the airline industry in 2017. This was the second largest market in the transportation industry. Civil aviation is experiencing a 3.5 per cent of compound growth rate annually (Business Wire 2018). Despite such high competition in sector and increase in rates of aviation fuel the growth of the industry is high.
It is a bit obvious that the aviation industry has neglected its carbon footprint for many years. A study conducted shows that direct emissions from aviation account for about 3 per cent of the total greenhouse emission in Europe and it was more than 2 per cent of the total global emissions. If the aviation industry would be considered as a country then it would rank in the top 10 emitters in the world (IATA 2019). It is expected that till 2020 the total emission by aviation industry would increase by 70 per cent as compared to 2005.
Now after so many decades the civil aviation industry is taking steps to reduce its carbon footprint. Most of the world's leading airlines have agreed on a framework to reduce the aviation's carbon footprint. This makes the aviation industry first commercial sector to take initiatives to reduce carbon footprint to tackle its effects on climate change.
It is important to highlight that how aviation industry has managed to be so cost-effective and what effects would be seen on the prices of tickets now after the initiatives have started to reduce the carbon emission by industry. A report on the effect of demand in lowering carbon footprint on airline industry projects that it is expected that with new standards in the industry ticket prices will rise. Some critics believe that there will be an increase of around 10 per cent in tickets price and some conservationist believe that it will only rise around 1.5 to 3 per cent (Hofer et al. 2010). The primary objective of this aviation policy is to reduce the carbon dioxide emission in the atmosphere. Proponents of this policy believe that this would increase the price of tickets and hence the numbers of passengers travelling by air will decrease.
This, in turn, will divert the passenger to the automobile and carbon production of automobile sector will increase. It is critical to evaluate what would be the net effect on the carbon emission of the transportation industry. One other expected possibility is that the passengers would adopt for railways. This will have a different impact on the carbon footprint of the earth. The aviation industry is very competitive and these new policies will have a significant impact on the industry. Technology is being developed so as to reduce the dependency of industry on fuels. The idea of electrically powered plans is decades behind the present demand in the aviation industry (Abbe and Smith 2016). The rate at which the customers of the aviation industry are growing is much faster than the rate of technological development. In the present condition, it is impossible to avoid the use of aviation fuel. It is estimated that around 25 per cent of the world travel would be done by air till 2020 and this figure will grow to around 36 per cent till 2050. The growth rate of aviation industry could be examined by the facts that there was only 9 per cent share of air transport back in 1990. If the industry is determined to reduce its carbon footprint then other connected industries will also feel the effect of it. The aviation fuel which is presently used would have to be cleaner in the future. Extra processes would have to involve in the refining of the fuel which will increase the cost of the fuel (Labonte 2015). Growth in the economy leads to high demand in passenger travelling through the air but demand for air cargo shipments grow even more. In 1990, 2.4 per cent of the total fossil fuel was consumed by the aviation industry and it was 12 per cent of the total fuel consumption by the transportation industry, second only to road transportation. In accordance to the growth of passengers preferring air travel and growth in fuel consumptions, it could be understood that why such a high carbon emission is being done by the aviation industry and need of regulation for the carbon footprint of the sector.
The aviation industry is much broader and airline operators are only a part of this sector. Another major part of this sector is manufacturers. There are many companies which are involved in the manufacturing of the aircraft but the majority of the commercial planes are manufactured by only two companies. These two companies are American based manufacturer Boing and France based group Airbus. The demand for reduction in carbon footprint will lead to an increase in the production cost of aircraft. Aeroplanes are much-customized product and hence they already cost very high and with new systems to be installed the cost will increase further (Axtman and Wilck 2015). Changes which have to be done in the design of the engine and other systems which have to be installed will cost much higher than the present cost of the aircraft. Maintenance cost of aircraft will also increase because the systems which will be used to absorb the greenhouse gases will have to be changed frequently.
The positive impact of the hike in the cost of aircraft manufacturing is that fewer companies over the globe would be able to afford it and in turn, it will reduce the competition in the global market (Huang 2016). This directly means that the number of aircraft in the air would decrease and the quality of the services would increase. This may be regarded as one of the most beneficial points of demand in the reduction of carbon footprint. The factors which could reduce the aviation's climate impact are the use of more efficient aircraft, use of new technology for efficient flight paths and reduce delay, use of sustainable lower carbon alternative fuels and investments in emission offsets.
It is also possible that demand for reduction in the carbon footprint from the aviation industry will lead to mergers of different brands to form bigger brands which will have a larger customer base and much more capital to invest in the market. Investment is already very high and mergers will increase the capital available to the organizations which could meet the new standards of the sector (Timmis 2015). This would be beneficial for the environment and it will help to meet the goals of reduction in carbon footprint which are set by the international aviation community. Big companies which would be formed after the mergers would also be more standard in their operations and it would be also easy for the government to regulate them according to their norms. The major benefit for customers would be that due to big organizations working in the industry the quality of the services will increase. Ethical forces of market play a major role in attracting customers. The new standards of the sector will lead to the sustainable and ethical use of natural resources and effect on the environment would also be minimum. Reach of airlines would also increase to places which are yet untouched due to less competition and more profit in organizations.
Other than aircraft manufacturers there are many big and medium-sized organizations which supply parts for its manufacturing. The major problem is that systems which have to be installed to reduce carbon footprint will also be supplied by vendors which will impart extra cost to the manufacturers. To maintain in the market manufacturers will have to cut some profits of them and this only create the problem because manufacturers share less profit than their suppliers but bear all the risk (Jakovljević 2018). This creates instability in the supply chain of aircraft manufacturing. The cost to reduce the carbon footprint of the aviation sector would have to be shared by each member at every level of the supply chain. This may also affect the structure of partnerships in the industry. To bear the cost of reducing greenhouse gas, all the levels of the supply chain will have to work in harmony and each member of the sector will have compromise with their revenues for sustainability of the environment.
Aviation industry experiences a hike in demand in vacation seasons. Due to ever low prices in history, people opt for long distance vacations with their friends and family to explore new places. Airline customers are benefiting from a combination of choice, competition, access and affordability. In the future due to carbon reduction practices, prices of tickets for trips will increase and fewer people will opt for long distance vacations. This means fewer tourists will be available for their business. International tourist places will surely see fall in tourists and in their earnings. People will then use railways or automobiles to travel to nearby places and the carbon footprint of the automobile sector would also increase. The present collaboration between airlines and airports will also change. The infrastructure of airports will also have to be improved in accordance with the new standard of the industry. This cost will be included in the tickets in the form of increased taxes by the government.
It could be expected that new standards of the industry will drastically alter the present situation of the sector. All the levels from suppliers, manufacturers to operators will be significantly affected. Whosoever want to sustain in this aviation market will have to change itself according to the new ethical values adopted by the industry. The pressure which is built on the industry will lead it to a bright and sustainable future. This will strengthen the aviation industry business and will help to make it the primary mode of transportation in the future which will also have a minimum impact on nature. The aim to reduce the carbon footprint of the aviation sector will definitely help to improve the climatic condition of the earth but it will also make it difficult for average consumers to use this extraordinary way of lifestyle. All the impacts which will be there due to these changes are the only prediction for future and definitely, there are many more factors which are not yet evaluated. These are the first steps of the aviation sector towards providing a better future for the next generations.
The retail clothing industry is considered as one of the booming industries in Australia as many global retail giants are making the entry in the country. The aim of the study is to analyze the effect of demographic change on the business operations of the retail organization H&M. The main aim of the company is to maintain a long term relationship with its customers. Therefore, the company majorly focuses on providing the products at the lower prices so as to attract more and more customers of the nation and the company majorly targets the youth customers and the company also has the broad product line.
The world changes very fat and with the evaluation of technology this changing process is even faster. Every business in the world has to consider contemporary changes which are happing to sustain in the market. Contemporary changes highlight the changes which are in effect today. Contemporary strategies and management issues have to be more focused than ever before in this ever-changing management environment. Contemporary changes in today's multinational are technological advancement, competition due to startups and changing consumer behaviour. One of the reasons for these contemporary changes is changes in the demographics of the population. Demographics itself means behaviour changes of population.There is a number of demographic factors which can affect the business. It includes numerous traits which are used in determining the buying behaviour of the customers as well as product preferences. Many organizations use demographic elements so as to identify their key customers. Targeting prospective customers with similar demographic traits helps the organization in maximizing their sales and profits. Demographic factors include age, gender, marital status, income, education and occupation. Income is one of the demographic factors which can affect the business.
The company’s products are designed by considering the level of income of the people. For example- premium products are designed to target high-level income of the customers whereas; people with comparatively lower income are most sensitive towards the prices of the products. Therefore, they may prefer to buy discounted products. Hence, companies can reach lower-income people through discount retailers and wholesalers. Age is the demographic component which can affect the growth of the business. The company’s products and services are more likely to appeal to certain groups. Many companies use market research surveys for collecting consumer demographic data. These market surveys can be conducted through emails, phone, and internet and so on. The structure of the study includes consumer behaviour, retail clothing industry of Australia, the overview of H&M group, a market strategy followed by H&M, the role of media in buying decision process and the impact of Demographic change on the Business
Customers are considered as the centre in the process of sale and marketing of any product or service and their preference can impact the growth of any business firm (Schütte and Ciarlante 2016). Therefore, satisfying the needs of the customers becomes the main aim for the marketer to work toward. The role of customer preference plays a very important role in the overall buying behaviour of the customers. Understanding consumer behaviour is very essential for organizations. Consumer behaviour is very complex because each customer has a different mindset towardspurchasing, consumption and disposable of the products. The main purpose of any business entity is to satisfy the needs and wants of the customers (East et al. 2016). H&M belongs to the group of retailers, which has examined and learned how to drive the market by consumer behaviour rather than driven by them. H&M tries to cater to the wants and needs of its customers by offering the products in the stores. The clothing within the H&M stores is divided into different section so that the customers can find the products easily. The customers majorly prefer to buy the products at comparatively lower prices. Most of the Australian customers majorly prefer quality products at lower prices and the company majorly targets the youth.
The overall retail clothing industry is changing due to cheaper prices, increasing variety of choices and increasing level of comfort across all age group of people (Yang et al. 2017). The clothing retail industry of Australia has faced many challenges over the last few years due to intense competition, income, and changes in the customer taste and preferences.Due to globalization, the cloth retail industry is one of the fastest growing industry as now the retail giants are able to selltheir products across the globe (Bailey et al. 2015). The retail clothing industry making a remarkable contribution to GDP and is experiencing a huge development. The market’s largest segment is in the women’s and girls’ clothing. Fashion is one of Australia's key creative and design industries and there are many exporters delivering their products and services across the globe. The Australian fashion industry has faced many challenges due to the low spending by the consumers, intense competition and continuously changes in the fashion trends.
International market can provide many opportunities for the growth of the country. H&M group is one of the largest fashion companies in the world. It was founded in the year 1957 by Erling Perrson . The company is headquartered in Stokholm, Sweden. The company provides the fast-fashion clothing for all the segments of the customers which include men, women, teenagers and children. The company has a presence in 63 countries across the globe. Factors whichmakes H&M different from the other retailers in the market is because of collaboration with the designers and celebrities, utilization of the natural resources, reduction of electrify consumption in its stores and providing garment recycling across the globe. The company is also focusing on creating a convenient and inspiring experience to its customers. The company is providing both online and offline stores to its customers so that shopping could be easy for the customers. Therefore, the company is integrating its physical stores with digital channels.The company is major focuses on new expansion opportunities. The Australian market is highly fragmented and only a few players are offering a broad product line for all the ages and for all the genders. The fashion life cycle is very short; the buyer always chases to purchase new products.For the product distribution channel, the company directly purchase the raw materials from the suppliers and selling the finished products directly to the retail outlets with a wide network for online sales. H&M is the largest brand within its portfolio, with providing products at the lower prices. But over the last few years, the prices of the product are steadily rising which has resulted in low sales and profits in the country Australia.
H&M is famous for proving chic, trendy styles and it manufactures 80 per cent of its retail industry in advance and the rest 20 per cent is based on the current changing marketing trends. The retail giant is able to provide the products at affordable prices are due to its strong supply chain relationships and its manufacturing strategies to reduce the lead times. H&M 60 per cent of the production takes place in Asia and the remaining production takes place in Europe. H&M 80 per cent garments are made in the developing countries Bangladesh, China, Mauritius and few at South East Asia. For the promotions of the products, the company mainly uses video advertisements, the concept of e-marketing and print advertisements. These promotion strategies help in creating the awareness of the products to the customers from different places.
The company uses differentiating targeting strategy in the market as the company is operating with different sub-brands with varied offerings.The brand has positioned itself by offering trendy styles and at affordable prices. The company is using a pricing strategy so as compete in the industry.H&M is not only creating diversifying its customer segment but it is also focusing on diversifying the product offering and retail strategy as well. As H & M is present in only 65 countries, it becomes easy for the company to be focused in its operational part and safeguards company from sovereign risks and cross country exposure. Still, in this technological world, people prefer to try cloths physically and H & M has a significant number of physical stores in all of its working countries. H& M has an extensive product line which is in competition with known retail brands in the industry and this creates high visibility in the market for the brand. H & M has the vision to serve new products every time to its customers and hence it changes its production line in every six to ten months.
Social media is mainly used by companies to create brand awareness of the product. It thus helps in building relationships with the existing and potential customers (Meng and Berger 2017). Social media has become a significant platform for all brands so as to target prospective customers. H&M also uses a digital platform for effective marketing of its brands and products. The company uses Facebook, Twitter and other such social platforms to engage their followers. Social media is a tool which helps many companies to attract new customers and retain the existing customers. H&M uses Facebook for its branding and regional marketing. It uses videos and pictures which give an inside glimpse of the store as well as showcase the latest styles available. There are six brands under H&M, and each brand caters to different market segments. E-marketing is a powerful tool which is used by different companies across the world. It is also known as an online marketing strategy.
H&M mainly target youth customers. The target customers of H&M belong to trendy and fashionable customers. H&M majorly targets women of lower middle class and working class. Therefore, the main aim of the company is to sell fashionable products at lower prices. The global brand with the centralized process,H&M products are not customized according to the need of the customers. Therefore, competitors who differentiate their products will be able to target specific customers and will be able to gain more profits and growth. Therefore, the customers of Australia prefer fast fashion, so the company should understand their needs and preferences (Bernini and Cracolici 2015). The companyuses cost leadership as well as a differentiation strategy. Therefore, it has to keep the lower production costs in order to achieve profits and growth. To lower the production costs, the company usually places the order with a large quantity in order to get the best prices. Large quantities of these inventories can result in high inventory costs. The company has to balance the low price strategy with fast fashion strategy. In each fashion season, many brands start announced their newly designed collections. Therefore, the new trend is created and people start following the new trends. Hence, Australian customers are Fast fashion followers and the customers majorly prefer to buy low-cost products due to the short life cycle of fashion trends. The company should also focus on providing quality products to the customers, as it provides low-quality products as compared to the other brands (Bernini and Cracolici 2015).
The customers of the country also focus on quality products. H&M should majorly focus more on building a strong online presence. The major number of customers prefers shopping through online sites. Hence, people are more influenced by shopping sites. Trends are appearing to be changing from a top-down fashion evaluation which is driven by social media so; the company should invest in more personal style (Pakdel 2016). The online experience of the customers is uninspiring and clunky this is due to the fact that H&M has skipped the storytelling part of the product which is considered very important in today's' era. The company needed to renovate the ways in showing the product online and the message as well. H&M mainly focuses on the pricing of the products whereas other brands are moving towards the concept of exchange for value. The company should develop a deeper understanding of the entire value proposition as it exchanges with its customers. In today's era, the value is measured beyond the prices of the products
It can be concluded from the study that the main competitive advantage for the retailer is to maintain an effective relationship with the customers. Therefore, this can help the company in obtaining information about the change and preferences of the customer needs.The study also focused on how social media affects consumers buying decision process. In the new retail industries, the experiences are considered more than the prices of the products. The company should majorly focus on the experiences of the customers so as to remain competitive in the industry. The current retail clothing industry is the fast fashion industry. Therefore, along with the price and quality, H&M should also focus on providing value to its customers. Fashion is all about aesthetics and visuals, therefore the company should consider a ‘show, don’t tell’, approach by putting their products on display. Due to advancement in technology, the customer’s tastes and preference are continuously changing; the company should majorly focus on satisfying the customers’ needs and wants. Therefore, the Australian customers not only prefer product at the lower prices but they also consider the value proposition. The overall retail industry in the country is also facing major challenges like changes in the trends, styles, changes in the income level and due to intense competition in the industry.
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