Scanning The Market

Environment

By: Karan Singh Chadha

Demographic Environment.... Decoding Diversity

Mainly based on: Size and growth rate of population

Ethnic and religion diversity

Age distribution

Education level

Household patterns

Introduction

Marketing is majorly dependent on the demography of a country

Marketer mainly monitors the population growth

Helps in marketing their product according to the demography of the population

Region with a higher youth population will have less demand for medicines & mobility aids

Effect on Marketing

Is the 2nd most populous nation in the world with a population of around 1.2 billion

Has the highest population of youth (less than 30 years of age)

Has one of the most diverse population

Next 20 years, the demography of the country is expected to be unchanged

Indian Trend

Current demography is tech-driven

Consists of large number of middle class population

Education standard of the population is constantly increasing

Growth expected in future will be dependant on many variables

Automobile

Changing demography is given rise to Organised Retail

Need of youth to have variety of goods under one roof

Growing demand for fashion accessories

Demographic distribution is tilted in favour of the consuming age group

Consumer is now conscious about their personality

Retail

Educational Institutes are opening up even in small cities

Air Hostess institutes like Frankfinn are a big success even in tier II cities

Animation courses offered by institutes like ANTS & MAAC are shaping up careers

Future holds a great potential because the youth is determined to excel

Education

Economic Environment.... Finding Wealth

To know the available purchasing power of the consumer

Based on: Current Income

Savings

Debt

Credit Availability

Introduction

Increase in real income is paramount for the market growth

Government’s impetus on development expenditure

Scarcity of resources available will affect the marketer

Increased incomes has blurred the lines of segmentation

Effect on Marketing

India, with a GDP of 1.87 trillion US dollars is at the 10th place in the world

It is at the 3rd place in GDP based on PPP valuation

Indian economy is expected to grow at an average of 7.5% for next 5 years

All this is resulting in rapid urbanization

Indian Trend

Increased income has created great demand for automobiles

Luxury car market has grown manifold

Increase in economic activity affects the need for commercial automobiles

Easy availability of loans has given thrust to automobile industry

Dependent on fuel economy

Automobile

Income growth has fuelled up consumption demand

Each household’s retail spending has increased by 70% in the last decade

Food retailing constitutes 1/3rd of the retail market

40% of consumption expenditure is on discretionary products

Retail

Expansion of primary educational institution chains even in tier II cities

Foreign Institutes are finding Indian economy to be potentially lucrative

Increase in real income has given an impetus for higher education

Greater importance is placed on better infrastructure of institutes

Education

Socio-cultural Environment.... Culture is the soul of Society

Socio cultural factors are customs, lifestyles and values of a society

To figure out the core beliefs & subcultures of a society

The views of individual/society towards a product/company

Introduction

Marketer targets the secondary beliefs of the consumers

Marketer should be aware of reference group, family & status of the consumer

Businesses must adapt to social & cultural changes to be relevant

Advertising is the area of business, most closely in touch with socio-cultural changes

Effect on Marketing

Shrinking size of Indian family has driven growth in FMCG & FMCD sectors

Senior citizens want to sustain better lifestyle without compromises

Youth has the freedom to choose a lifestyle

Independent women have created a whole new dimension for all market sectors

Indian Trend

Owning a vehicle has become a status symbol

Family influence is vital in determining the purchase of vehicle

Brand personality connect is a major influence

Finding potential customers in new segments like scooters & motorcycles

Automobile

Gradual shift from traditional channels to Supermarkets & Hypermarkets

Apparel retail is coming up with lot of variety to satisfy today’s fashion conscious youth

Lifestyle and preferences of people, that influence their choice of goods

Retail

Belief of age as a factor for learning is eliminated

Encouragement for courses in careers like DJ, RJ & News Reader

More importance on ethical education in curriculum

Social acceptance to provide education & awareness on sex

Education

Natural Environment.... Back to the lap of Mother Nature

We can’t survive without interactions with nature

Our exploitation of nature has given rise to pollution of environment

Depletion of natural resources needed as inputs by industries

This has forced Governing agencies around the world to impose restrictions

Introduction

Recognised the need of integrating environmental issues into firms strategic plans

Challenge to come up with alternative for non-renewable resources

Marketer can create a strong goodwill for their product if its eco friendly

Corporate understanding its social responsibility and setting goals accordingly

Effect on Marketing

Air pollution, water pollution & pollution of the natural environment are major challenges

The cost of environmental damage has been estimated at approximately $32 billion

India has made one of the fastest progress in the world, in addressing its environmental issues

Alternatives for non-renewable resources are encouraged by government

Indian Trend

Manufacturers are making fuel efficient vehicles in all segments

Hybrid vehicles have demand and govt. support due to environment friendliness

Govt. encouragement towards CNG based vehicles in metro cities majorly public transport

Research is carried out to create a commercially viable Solar Vehicles

Automobile

Retailers are trying to make their operations carbon neutral and reduce waste

Following the Reuse, Recycle & Repair slogan

Reducing unnecessary packaging resulting in cost cutting

Setting products standards, educating customers, and getting involved in green procurement practices

Retail

Saving paper given rise to E-books and online study material

Environmental education introduced as a compulsion in curriculum

Environmental responsibilities taken up by Green clubs of Institutions

Education

Technological Environment.... Fast forward to Future

Technological advancement stimulates the economy’s growth rate

It creates unlimited business opportunities

It increases the awareness about the product amongst consumers

Innovation’s long term consequences are not always expected

Introduction

Industries have to be adaptable for technological innovations

Reduces the cost of products, for e.g. A PC in 1983 with 8088,128kb memory, monochrome monitor was Rs 60,000

Increased importance to Research & Development department

Effect on Marketing

Cable TV didn’t exist in India in 1992, today it reaches 40 million Indian households

Death Rate in 1990 was 43.21 and now 7.58 per 1000, because of technological aid in Medical field

Online money transfer in banking sector

Whatsapp instead of SMS

Indian Trend

Hybrid engines are developed to reduce fuel consumption

Innovations like ABS & Air bags has increased the safety

Drivers comfort has increased with the introduction of power steering & Rear view cameras

Cars which incorporate automated driving are being conceptualised

Automobile

Advancement in IT has given space to online retail

CCTV has provided security to the store as well as aided in studying consumer behaviour

Barcodes has made inventory management & billing more efficient

Mobile applications have created a new avenue for shopping

Retail

Online video classes like NPTEL has increased the reach of education

Tie up with gadget manufacturers to provide inbuilt educational courses

Dish TV providers like Tata Sky have come up with child learning modules

Distance education has become more effective with the advancement of technology

Education

Political-Legal Environment.... Trying to be politically Correct

Consists of laws, regulations and restrictions

Taxation policies & Government stability

Pressure groups like PETA, influence various individuals and organisations

Sometimes these laws create business opportunities

Introduction

Deregulation helps in new players coming into the field

Regulations, sometimes help in creating new sectors

Bio fuel industry is big, because of insistence of Govt. to have a certain mixture ratio with diesel

Effect on Marketing

Deregulation in fields like insurance and airlines helped new players to enter the market

Law to include a certain mixture of ethanol in diesel used by Govt. helps Sugar Industries

Law to source 30% of raw materials locally has helped local producers

Indian Trend

The Indian car market was monopolised by HM and Fiat

The opening up of market by Govt. has now created a plethora of options for consumers

Supreme court made it mandatory for all 2-wheelers above 75 CC to have air-filters

Affected the sales of scooters adversely

Automobile

Allowing multi brand retail created the boom in organized retailing

Reliance Fresh, Big Bazaar and More mega store all entered the market

Allowing FDI has opened Indian Retail sector to foreign brands also

Brands like Walmart may enter Indian Retail Market

Retail

Government allowed private players to have their Universities

Universities like Amity University and LPU came up

Government’s thrust on education with schemes like SSA, KVPY

Availability of non-collateral & lower interest rate loans for higher education

Education

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