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Session 3
Analysing The Marketing Environment
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The Companys Macroenvironment
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The Companys Macroenvironment
Demography is the study of human populations in
terms of:
oSize, growth rate and life expectancy
oGender
oRace/religion
oLocation
oAge distribution
oLiteracy levels
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Global Demographics
Global population around 7.18 billion.The five largest countries by population are:
o China 19.4%
o India 17.5%
o USA 4.5%
o Indonesia 3.4%
o Brazil 2,8%
Growth rate 1.14%; expected to reach 9 billion by 2050;
most population growth only in developing countries
Developed countries are graying due to rising longevity
and falling fertility
Migration to developed countries is slowing down
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India - Basics
Unit 2001 2011
Population Million 1029 1210.2
Density Per sq. Km. 313 382
Decadal Growth Rate % 21.5 17.6
Persons per Household Nos. 5.35 4.72
Females per 000 males No. 934 940
Life Expectancy Years 62.5 66.1
Literacy Rate % 64.8 74.0
Urban to Rural % 27.8 31.2
Towns Nos. 5161 7935
Villages Nos. 6,38,588 6,40,867
Growth rate drops to lowest level
since independence
Increasing literacy rates
Growing urbanisation
Top three states on basis of urban
population:
oMaharashtra
oUttar Pradesh
o Tamil Nadu
Top three states on basis of rural
population:
oUttar Pradesh
oBihar
oWest Bengal
Source : Census 2011 and 2001
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Household Distribution - India
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Number
per HH
Urban Rural Total
Millions % Millions % Millions %
1 2.85 3.6 6.19 3.7 9.04 3.7
2 7.53 9.5 16.45 9.8 23.98 9.7
3 12.55 15.9 21.11 12.6 33.66 13.64 20.80 26.4 35.18 21.0 55.98 22.7
5 14.59 18.5 31.68 18.9 46.26 18.8
6-8 16.25 20.6 45.15 26.9 61.40 24.9
9+ 4.30 5.4 12.06 7.2 16.36 6.6
TOTAL 78.87 100.0 167.83 100.0 246.69 100.0
Source : Census 2011
o Number of joint families around 18% all India
o Highest in Uttar Pradesh at 27% followed by Rajasthan at 25%
o Lowest in Andhra Pradesh at 10.7% with Tamil Nadu at 11.2%
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Urban India
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Town Nos.Pop. in
mns%
5 million plus 8 85.19 22.6
One million plus 38 64.69 17.2
5 lakhs to 1 million 45 36.04 9.6
2 lakhs to 5 lakhs 139 49.77 13.2
1 lakh to 2 lakhs 267 40.96 10.9
Less than 1 Lakh 7438 100.46 26.6
TOTAL 7935 377.11 100.0
Urban Population Growth
due to:o Natural growth
o Migration from rural
o Addition of census towns
Top 46 towns contribute tonearly 50% of the buying
power in urban
Towns with population of
less than 1 lakh treated as
peri-urban since they arecloser to the rural psyche.
Source : Census 2011
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IndiaBy Age
Class/Age Group 2010 2015 2020 % growthInfants (0 to 2) 73,520 72,751 69,887 -4.9
Kids (3 to 8) 146,893 144,442 142,123 -3.2
Tweenagers (9 to 13) 96,728 97,013 95,598 -1.2
Teenagers (14 to 19) 166,105 168,045 168,611 1.5
Twenties 210,948 225,744 234,422 11.1Thirties 169,949 188,582 205,548 20.9
Middle Aged (40 to 64) 262,485 297,996 333,405 27.0
Older people (65+) 58,215 68,053 84,282 44.8
Infants Baby skin care, toilet care and foods
Kids Toys and games, malted drinks
Tweens Pocket money, pester power,low ticket items
Teens Personal grooming products, music, mobiles, fast food, social networking
Twenties Clothing, footwear, smartphones, fine dining, motor cycles, cars, credit cards
Thirties Family orientation, leisure travel, housing, electronics and electrical appliances
Middle aged Move to social travel, health and nutrition, air travel
Older people Low disposable income, necessities, doting on grandchildren, medication, oral
care
Source: National Statistics and Euromonitor International
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IndiaLiteracy
Class TOTAL Urban Rural
Illiterate 26.0% 15.0% 31.0%
Up to Primary 17.6% 10.2% 20.8%
Middle 16.0% 12.7% 17.9%
High School 17.2% 20.3% 16.0%
Higher Secondary 9.9% 14.8% 7.7%
Graduate + 13.3% 27.0% 6.6%
TOTAL 100.0 100.0 100.0
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o Literacy rate for men is 82.1% while the same for women is 65.5%
o Kerala has the highest literacy rate (93.9%) Bihar lowest (63.8%)
o There are more places of worship in India than schools/colleges
Source: Census 2011
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SEC Classification - Urban
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Occupation
Education
Illiterate
Schooling Collegebut not
grad
Grad/PG
Upto 4
yrs5-9 yrs
HSC/SS
C Gen Prof
Unskilled Workers E2 E2 E1 D D D D
Skilled Workers E2 E1 D C C B2 B2
Petty Traders E2 D D C C B2 B2
Shop Owners D D C B2 B1 A2 A2
Businessmen/Industrialist
None D C B2 B1 A2 A2 A1
1 to 9 C B2 B2 B1 A2 A1 A1
10+ B1 B1 A2 A2 A1 A1 A1
Self Employed
Professional D D D B2 B1 A2 A1
Clerical/Salesman D D D C B2 B1 B1
Supervisory Level D D C C B2 B1 A2
Officers/ExecutivesJr. C C C B2 B1 A2 A2
Sr. B1 B1 B1 B1 A2 A1 A1
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SEC Classification - Rural
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EducationType of House
Pucca Semi Pucca Kucha
Illiterate R4A R4A R4B
Below SSC R3A R3B R4ASSC/HSC R2 R3A R3B
Some College Not Graduate R1 R2 R3B
Graduate/PG (General) R1 R2 R3A
Graduate/PG (Professional) R1 R2 R3A
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New SEC System
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Launched in May 2011 based on two variables:oEducation of Chief Wage Earner
oNumber of consumer durables owned from a list of
11 items. The items are electricity connection, ceiling
fan, LPG stove, two wheeler, colour television,refrigerator, washing machine, personal
computer/laptop, car/jeep/van, air conditioner and
agricultural land.
The new system has 12 grades ranging from A1 to E3and does not distinguish between urban and rural.
o What could be the advantages and disadvantages of the new system?
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New SEC System
14Source: MRUC Hansa
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Household DistributionNew SEC
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9.6
15.819.5
15.1
11.4
7.2
7.0
5.1
4.0
3.0
1.8
0.5
0.0 5.0 10.0 15.0 20.0 25.0
E 3
E 2E 1
D 2
D 1
C 2
C 1
B 2
B 1
A 3
A 2
A 1 Punjab has the highestpercentage population of SEC A
(A1+A2+A3) followed by
Maharashtra, Kerala and Goa.
Gujarat, Tamil Nadu and
Uttarakhand are average.The states with the lowest
percentage of SEC A are Bihar,
Madhya Pradesh and West
Bengal
Source: MRUC Hansa
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The Economic Environment
Global economy still to recover from the global financial crisisof 2008.
GDP growth recovered to 4% in 2010 but has dropped to 2.7%
in 2011 and 2.2% in 2012 with hopes of some recovery to 2.4%
in 2013. Impact of US government shutdown
Growth in developed countries slows down to 1.1% with
economies in transition at 3.5% and developing economies at
4.7%.
Europe is the worst hit with China and India slowing down
considerably.Low growth is leading to fiscal austerity and sovereign debt
risk leading to high unemployment
Multinational trade blocs becoming important.
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Economic Indicators - India
017
FY 08 FY 09 FY 10 FY 11 FY 12 FY 13
GDP (2004-05 prices) 38.97 41.59 45.16 49.37 52.44 55.03
Real GDP Growth (%) 9.32 6.72 8.59 9.32 6.21 4.96
Consumption (% of GDP) 67.4 68.6 69.1 67.2 68.0 67.1
Per Capita Income (Rs.) 35,430 40,605 46,492 54,151 61,564 68,757
Gross Domestic Savings (%) 36.8 32.0 33.7 34.0 30.8 31.8
Inflation Rate (%) - WS 4.8 8.0 3.6 8.6 8.8 7.8
Inflation Rate (%) - CPI 6.2 9.1 13.0 9.5 9.0 8.0
o Share of agriculture reduced from 16.81% in FY 08 to 13.68% in FY 13
o Share of manufacturing reduced from 28.74% in FY 08 to 27.03 in FY 13
o Share of services went up from 54.45% in FY 08 to 59.29% in FY 13
Source: MOSPI
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Income Distribution - India
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TotalHouseholds
in millions
TotalPopulation
in millions
HouseholdAnnual Income
(Rs.)
HouseholdAnnual
Savings (Rs.)
HouseholdAnnual
Expenditure (Rs.)
Rural 167.8 833.09 114,458 30,663 83,375
Peri-urban 21.2 100.46 240,625 63,889 176,376
Urban 57.7 276.65 287,548 80,488 206,675
TOTAL 246.7 1210.20 177,228 48,405 128,419
HH Earning
Rs.1,000,000
Rural 58% 24% 11% 4% 2% 1%
Peri-urban 32% 27% 21% 10% 7% 3%
Urban 30% 26% 21% 10% 8% 5%
TOTAL 47% 25% 15% 6% 4% 2%
Source: Census 2011 and Indicus Analytics
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Income Distribution
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Assam, Bihar, Madhya Pradesh, Meghalaya,Orissa, Rajasthan, Uttar Pradesh, Chhatisgarh,Uttaranchal and Jharkhand
Low IncomeStates
Andhra Pradesh, Himachal Pradesh, Karnataka,Kerala, Tamil Nadu, and West BengalMiddleIncome States
Goa, Gujarat, Haryana, Maharashtra, Punjab,Pondicherry, Chandigarh and Delhi
High Income
States
40% live in low income states, 30.6% in middle income
and 29.4% in high income
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Economic Indicators - India
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Urban Rural TotalMillions % Millions % Millions %
Electricity 73.09 92.7 92.81 55.3 165.90 67.2
Radio/Transistor 19.96 25.3 19.06 17.3 49.02 19.9
Television 60.49 76.7 56.00 33.4 116.49 47.2
Computer/laptop with Internet 6.52 8.3 1.19 0.7 7.71 3.1
Computer/laptop w/o Internet 8.20 10.4 7.45 4.4 15.65 6.3
Telephone Land Line 4.67 5.9 5.25 4.0 9.92 4.0
Mobile 50.74 64.3 80.46 53.2 131.20 53.2
Telephone Land Line + Mobile 9.26 11.7 5.50 6.0 14.76 6.0
Bicycle 33.08 41.9 77.49 44.8 110.57 44.8
Scooter/Motorcycle/Moped 27.79 35.2 24.07 21.0 51.86 21.0
Car/Jeep/Van 7.69 9.7 3.78 4.7 11.47 4.7
None of above (excl Electricity) 5.54 7.0 38.41 17.8 43.95 17.8
TOTAL 78.87 167.83 246.69
Sourc e : Census 2011
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The Socio-Cultural Environment
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Culture involves shared meanings, beliefs, morals,values and customs
This is shaped by family, education and friends
Marketers need to understand culture at two levels:
oCountry
oRegional
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The Socio-Cultural Environment - India
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Karmic transformation through:oActivation of ones destiny
oThe new currency of extrinsic values
oThe criticality of the last lap
oFinding extraordinarinessoMaking use of tradition
Marketers need to understand these changes in the
mindset of the consuming class
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Activation of Ones Destiny
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Age for owning a homeWorking women and impact on different areas of
apparel, professional institutes
The changing face of the Indian Idol
Metamorphosis into a world-class butterfly
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The New Currency
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From classical to popularAcademics to talent
JNU to IIM
Importance of looking good and the X factor not only
for oneself but the house and the automobile
From depth of knowledge to employment potential
From the interiors to the exteriors
Brahmin to Kshatriya
Lakhpati to Crorepati and beyond
From cash to credit cards
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The Criticality of the Last Lap
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Value of hanging in and seeing things through to theend
Chak De India
Growth of the Indian MNCs
The transformation of Tata from scale and trust to
also incorporate dynamism and innovation
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Finding Extraordinariness
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From being a collective to individualismFrom white to colour
From hidden wealth to flaunting it
Bunty Aur Babli
India Premier League
Changing approach to careers
Professionals to entrepreneurs
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Making Use of Tradition
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Expanding market for AyurvedaVedic Mathematics
Numerology
Divine intervention
Building ones own space in the house
The power of the middle class merit
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Natural Environment
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Deforestation and effect on mining
Water pollution
Noise pollution
Diesel to CNG
Hybrid cars
Organic foods
Green office buildings
Recycling
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Technology Environment
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From IT and CT to ICT to ICEDigital cameras and E-cinema
PC to laptop to mobile devices
From shopping to e-commerce to m-commerce
Business firms need to look at:oAccelerating pace of change
oUnlimited opportunities for innovation
o To spend on research or development
o Increased regulation of technological change
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March of the Knowledge Economy
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Knowledge handling the new mantraIntangible assets more important than tangible ones
Licensing fees and patents becoming a big source of
profits
Individuals sharing knowledge in groups changing
the rules of the game
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Politico Legal Environment
POLITICAL LEGAL
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Economics is a by product of
politics
Forms of government and
stability
From socialism to liberalisation
to pseudo-socialism
Pressure groups and lobbies
Corporate affairs
Consumer protection
Employee protection
Price and packaging laws
Controls on trade practices
FDI laws
Codes of practice in
advertising - ASCI
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The Companys Microenvironment
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Microenvironment consists of the actors close to thecompany that affect its ability to serve its customers
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The Companys Microenvironment
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All other functional groups who should also thinkconsumer
The Company
Timely supply of the right material of the right quality atthe right price
Suppliers
Channels, logistics, financial and marketingintermediariesMarketingIntermediaries
Gaining sustainable competitive advantage overcompetition
Competitors
Financial, media, government, citizen action, local,general and internalPublics
Consumer, Business, Government, InternationalCustomers
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Next Session
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Consumer Behaviour Concepts
Deliverables
o Consumer Behaviour Assignment by eachstudent
o Study of Chapter 5 with all caselets
o Review of handout by Jagdish Seth