DEMOGRAPHIC ENVIRONMENT

DEMOGRAPHIC ENVIORNMENT

• Demography:- Is the study of human populations in terms of size, density, location, age, gender, race occupation, and other statistics.

• Demography is very important because it involves people, and people make up markets.

• The word population is growing at an explosive rate. This population explosion has been of major concern to governments and various groups.

• The less-developed regions of the world currently account for 76%of the world population.

• The explosive world population growth has major implications for business due to

growing human needs to satisfy.growing market opportunities.

• It is good to keep close track of demographic trends and developments in their markets, both at home and abroad.

IMPORTANCE OF DEMOGRAPHIC ENVIRONMENT

• Market is people in the sense that the demand depends on the people and their characteristics.

DEMOGRAPHIC BASES OF MARKET SEGMENTATION

• Age structure• Gender• Income distribution• Family size• Family life cycle• Occupation• Education• Social class• Religion• Language• Population size

• Baby boom: A major increase in the annual birth rates. It started after world war II and lasted until 1960’s. This segment of the market represents an opportunity.

• By mid 1970’s the birth rate had fallen sharply due to the smaller family sizes resulting from the desire to improve the personal living standards, from the increasing desire of women to work outside home and from improved birth control.

FALLING BIRTH RATE AND CHANGING AGE STRUCTURE

• The changes in the age distribution have a lot of implications for the business. The pharmaceutical companies may pay attention to the requirements of the aged population.

• Increasing proportion of the aged would have implications for the government, it may increase the welfare burden of the government.

• The already mentioned facts had generated changes in the family structure and the market.

• Nowadays people tend to marry less and have less children.

• Changes in the value system and roles assumed by the members of the family have great impact.

• The percentage of people living alone has increased considerably in the past years.

• The population shift have been from rural to urban areas

• Another population shift has occurred from less developed countries to industrialized countries.

• Movements from the cities to the suburbs.

• In general terms the concern for education has increased so the education itself has improved.

• Racial and ethnic diversity play a really important role.

MIGRATION AND ETHINCITY

• United states has been a great nation of immigrants and on the other side Japan which has never allowed any immigration whatsoever.

• Immigration has brought about very remarkable ethnic changes in various countries. A number of localities are concentrated by immigrant communities.

Gender Inequity..?Gender inequality refers to unequal treatment or perceptions of individuals based on their gender

It tries to understand the nature of gender inequality, and examines women's social roles, experiences, and interests

Gender inequality is still a huge issue today, where males are considered superior to females

Women had to fight to vote, for equal pay, and to have male dominant jobs, but still have lower incomes, fewer prestigious jobs.

Inequality in the HomeMost ads usually show women cooking or cleaning the house or bathrooms, etc.

Domestic abuse is another issue in the home, many women flee their homes due to this and end up living in poverty

women work all day, usually with less pay than their fellow male co-worker and are expected to do everything at home. Still clean the house, make the meals, do all the laundry, etc.

GENDER INEQUALITY AROUND THE WORLDLimited Access to Resources

Women are responsible for 60-80% of food production, but have limited access to resources such as land, credit and new technologies

Lack of Education

Education and poverty reduction go hand in hand. Progress is being made, but there are still less girls in school or finishing school. This also has to do with living in rural areas.

Access to Healthcare

Many women die in childbirth in the developing world and is usually completely avoidable if proper healthcare was available.

In the Workplace

Still more men than women in paid employment, business and politics. Women work two-thirds of the world’s working hours and earn only 10% of the world’s income.

Gender Based Violence

Gender-based violence is one of the most socially tolerated abuses of human rights worldwide. It is a contributor to poverty and ill-health and prevents many women, from reaching their potential.

Income distributionOften the single most important piece of information needed by international business about a country is its income level. Income level provides clues to the purchasing power of residents. The technological sophistication of local production processes, and the status of the public infrastructure.

The unequal distribution of household or individual income across the various participants in an economy. Income inequality is often presented as the percentage of income to a percentage of population.

Lorenz curve often used to represent income distribution

One important source of income statistics is the World Bank, which divides the world’s countries into high-income, middle-income, low-income categories.

High-income countries are those that enjoy annual per capital incomes of at least $ 9,266.

Middle-income countries have per capital incomes of more than $ 755 but less that $ 9,266.

Low-income countries have per capital income of $755 or less.

• Middle-income and Low-income countries are less attractive to international business because they offer less consumer demand and lack the public infrastructure necessary for reliable production and distribution of goods and services.

LANGUAGE

• Number of languages the world range from 4000 to 10000.• The African continent has the largest number of languages spoken.• Some of the same words of the same language have different meanings

or connotations in different place.• In the Spanish speaking Latin America the language vocabulary varies

widely. For example, while Tambo mean a roadside inn in several countries like Colombia , a diary farm in some countries like Argentina, in Chile stands for brothel.

• The difference between the American and British spellings are well known.

• India has numerous languages and their dialects, besides the 18 officially recognised languages, of the 1652 mother tongh listed by the census of India, 33 are spoken by people numbering a lakh or more.

• Languages also cause problems related to brand names and other names, marketing communication. For example, fords truck brand name fiera meant “ugly old women” in Spanish. Fords another product named Cliente has got another meaning in Mexico were clinte is a slang for street walker.

• Reebok unveiled a new women sneaker name “Incubus”, not knowing that in medieval folklore Incubus was a demon who ravished women in their sleep. Reebok was forced to discontinue the brand.

• The Arabic language is read from right to left and many Arabians sequence things from right to left.

• In the area of translation of advertisement etc. there are two important problems. The appropriate word is not there in some languages.

• The second problem is that literal translation many at time do not convey the right meaning. Sometimes they convey quite different meanings.

• Non verbal communication create equally, perhaps even more difficult problem.

• The same symbols and gestures may mean different things in different countries and sometimes different regions of the same country.

RELIGION• Religion is a system of shared beliefs and rituals that are

concerned with the realm of the sacred. Religion shapes and influences lifestyles, beliefs, values and attitudes and has a significant bearing on the behaviour of people with each other and with society.

• There are approximately 15000 distinct religions and religion movements in the world today.

• The leading religions of the world include Christianity, Hinduism, Islam, Buddhism, Confucianism, and Jainism etc..

• The Asian sub-continent has been the birth place of seven religions. Four of them originated in India ( Hinduism, Buddhism, Jainism, and Sikhism ), two in china (Confucianism and Taoism ), and one In japan (Shintoism).

HINDUISM • Hinduism is practised by more than 80% of India's

population and also in parts of Nepal, Bangladesh, and Bali.

• An important aspect of Hinduism is the caste system which has been the basis of social division in India since ancient times.

BUDDHISM• Buddhism began in India as a reform movement

against the tyrannies of Hinduism. Its origin may be traced to the enlightenment of prince Gautama as the Buddha at the age of 29.

• It is said that he rejected the plesures of a royal life to follow the path nirvana.

JAINISM• The Jain religion was founded by Mahavira, a

contemporary of Buddha.• It believes that the universe is self-regulated and

every soul has the potential to achieve divine consciousness through its own efforts.

• The path to salvage can be attained by following the path of right faith, right knowledge and right conduct.

• In the modern context, it is a small but influential religious minority with as many as 4.2 million followers in India.

• There are also successful, growing immigrant communities in North America, Western Europe, the Far East, and Australia.

ISLAM• Islam is the second largest religion in the world after

Christianity with about 1.57 billion followers comprising about 23% of the world’s population.

• The teachings of Islam are based on the Koran, a collection of Allah’s (god’s) revelations to Muhammad, who is viewed by Muslims as the messenger of God.

• Islam’s code of conduct contains formal prescriptive rules for all aspects of life including social relations, social behaviour, rules for the consumption of food and drink, and the role and acceptance of women in society.

RELIGION AND INTERNATIONAL BUSINESS

• Religion influences international business in many ways .

• Religious holidays and rituals can affect employee performance and work scheduling.

• When members of different religious groups work together , there may even be strife within the workforce.

• Managers must respect the religious beliefs of others and adapt business practices to the religious constraints present in other cultures.

• National institutions and business firms try to adopt practices that will satisfy religious decrees without undermining modern business practices.

• For instance, banks in Islamic countries issue shares to depositors and charge borrowers fee and commission to maintain profitability without charging interest, since bank interest is prohibited under Islamic law.

• Religion also affects work and social customs from the days of the week on which people work to their dietary habits and religious celebrations.

• Religion has a strong influence on work ethics.• It is believed that in china, Korea , and japan,

Confucian ideology is responsible for lowering the costs of business, helping in their economic success.

POPULATION SIZE

The size of the population is an important determinant of demand for many products.

There are countries with less than a lakh of people on the one hand and those with thousands of millions on the other hand.

Poor countries with small population are generally not attractive for business.

Advanced countries, particularly with large population, are generally attractive markets.

The major part of the international trade and foreign investment naturally take place between these nations.

Because of the large potential of these markets, competition is generally strong in them.

A rapidly increasing population indicates a growing demand for many products.

High population growth rate also indicates an enormous increase in labour supply.

Cheap labour and growing markets have encouraged many multinational companies to invest in developing countries.

FAMILY SIZE

As the family size increases, so does the consumption of products.

In such a case, the family pack or the economy refill packs works very well.

For large families, family income will be high,and thus, greater consumption of products.

FAMILY LIFE CYCLE

STAGES OF FAMILY LIFE CYCLE

Young and Single People at this stage tend to invest more in fashionable clothing and vehicles.

Newly Married Couples:The buying decisions focus on quality and not quantity.

Families in full nest 1 and 2

The purchase of these people are dominated by the children’s needs mostly.People having 2 kids are likely to save money and spend more in the future of their children.

Empty Nest Category: Spend money for their children who are away from home or spend money for their own vacations and hobbies and focus on savings for the retirement period.Solitary Survivor: Focus on savings and their purchases are dominated by accomodation and medication mostly.

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