session 3&4 mmi

SESSION – 3SESSION – 3UNDERSTANDINGUNDERSTANDING

MARKETINGMARKETINGENVIRONMENTENVIRONMENT

Analyzing the Macro Analyzing the Macro environmentenvironment

Analyzing the Macro Analyzing the Macro environmentenvironment

Needs: Companies manage to create solutions to either untapped/ unmet Companies manage to create solutions to either untapped/ unmet

customer needscustomer needs.E.g.E.g. air travel industry in India – low fair airlines are drawing new

customers and increased usage rate. They provide cheap, no-frill air transport services.

Trends: Fad / Trend/ Megatrends. Fad: unpredictable, short-lived without social, economic and unpredictable, short-lived without social, economic and

political significancepolitical significance. E.g.E.g. kids toy made out of Krrish character got response because of timing of market placing; excitement was short lived.

Trend: direction or sequence of events that show momentum and direction or sequence of events that show momentum and

durability. More predictable than Fads. Reveals the shape of the durability. More predictable than Fads. Reveals the shape of the

future market structure/ opportunities.future market structure/ opportunities. E.g.E.g. increase in health consciousness and change in product consumption pattern.

Megatrends: large implications due to the social, economic, large implications due to the social, economic,

political and technological changes and for relatively longer political and technological changes and for relatively longer

periodperiod. E.g.E.g. Role of young population segments in the overall consumption pattern etc.

Needs: Companies manage to create solutions to either untapped/ unmet Companies manage to create solutions to either untapped/ unmet

customer needscustomer needs.E.g.E.g. air travel industry in India – low fair airlines are drawing new

customers and increased usage rate. They provide cheap, no-frill air transport services.

Trends: Fad / Trend/ Megatrends. Fad: unpredictable, short-lived without social, economic and unpredictable, short-lived without social, economic and

political significancepolitical significance. E.g.E.g. kids toy made out of Krrish character got response because of timing of market placing; excitement was short lived.

Trend: direction or sequence of events that show momentum and direction or sequence of events that show momentum and

durability. More predictable than Fads. Reveals the shape of the durability. More predictable than Fads. Reveals the shape of the

future market structure/ opportunities.future market structure/ opportunities. E.g.E.g. increase in health consciousness and change in product consumption pattern.

Megatrends: large implications due to the social, economic, large implications due to the social, economic,

political and technological changes and for relatively longer political and technological changes and for relatively longer

periodperiod. E.g.E.g. Role of young population segments in the overall consumption pattern etc.

PEST PEST framework forframework for Environmental Environmental AuditingAuditing

PEST PEST framework forframework for Environmental Environmental AuditingAuditing

Political/Legal factorsPolitical/Legal factors Political/legal structure Political alliances &

stability Monopoly restrictions Taxation policies Employment policies Foreign Trade

regulations Environment protection

laws Trade Union Laws RTI Act etc.

Economic factorsEconomic factors Business cycles Inflation rates Investment levels Employment & Health

standards GNP trends Nature of competition Trade blocks

Political/Legal factorsPolitical/Legal factors Political/legal structure Political alliances &

stability Monopoly restrictions Taxation policies Employment policies Foreign Trade

regulations Environment protection

laws Trade Union Laws RTI Act etc.

Economic factorsEconomic factors Business cycles Inflation rates Investment levels Employment & Health

standards GNP trends Nature of competition Trade blocks

Socio-Cultural Socio-Cultural factorsfactors

DemographicsDemographics

LifestylesLifestyles

AttitudesAttitudes

BehaviourBehaviour

PsychographicsPsychographics

Technological Technological factorsfactors

Industrial focus on Industrial focus on R&DR&D

Speed of technology Speed of technology transfertransfer

Shorter Product Life Shorter Product Life cyclescycles

Inorganic growthInorganic growth

Global forces affecting Marketing Global forces affecting Marketing EnvironmentEnvironment

Global forces affecting Marketing Global forces affecting Marketing EnvironmentEnvironment

Substantial growth in cross-national transportation, Substantial growth in cross-national transportation, communication and financial transactionscommunication and financial transactions – leading – leading to rapid growth of World Trade & Investment – to rapid growth of World Trade & Investment – Balancing of ‘disparities’ across developed & Balancing of ‘disparities’ across developed & developing economies.developing economies.

Movement of manufacturing capacity & operationsMovement of manufacturing capacity & operations to to lower-cost countries.lower-cost countries.

Rise of Trade blocksRise of Trade blocks like – EU and NAFTA. like – EU and NAFTA. Rapid adoption of Global lifestylesRapid adoption of Global lifestyles and cross- and cross-

cultural patterns.cultural patterns. Increasing cross-borderIncreasing cross-border organic/inorganic growths. organic/inorganic growths. DiversificationsDiversifications Enhancement of learning curvesEnhancement of learning curves of firms and of firms and

customers.customers.

Substantial growth in cross-national transportation, Substantial growth in cross-national transportation, communication and financial transactionscommunication and financial transactions – leading – leading to rapid growth of World Trade & Investment – to rapid growth of World Trade & Investment – Balancing of ‘disparities’ across developed & Balancing of ‘disparities’ across developed & developing economies.developing economies.

Movement of manufacturing capacity & operationsMovement of manufacturing capacity & operations to to lower-cost countries.lower-cost countries.

Rise of Trade blocksRise of Trade blocks like – EU and NAFTA. like – EU and NAFTA. Rapid adoption of Global lifestylesRapid adoption of Global lifestyles and cross- and cross-

cultural patterns.cultural patterns. Increasing cross-borderIncreasing cross-border organic/inorganic growths. organic/inorganic growths. DiversificationsDiversifications Enhancement of learning curvesEnhancement of learning curves of firms and of firms and

customers.customers.

MARKETING MARKETING ENVIRONMENTENVIRONMENT

TargetTargetConsumersConsumers

ProductProduct

PlacePlace PricePrice

PromotionPromotion

Purchasing

Purchasing

R&DR&D

Pro

ducti

Pro

ducti

on

on

MMark

etin

arket

ingg

CompetitorsCompetitors

IntermediariesIntermediariesP

ub

lics

Pu

blic

sS

up

pl i

er s

Su

pp

lier s

Demographic/Demographic/EconomicEconomic

Technological/Technological/NaturalNatural

Political/Political/LegalLegal

Social/Social/CulturalCultural

EngineeriEngineeringng

LogisticsLogistics

Fin

ance

Fin

ance

Acc

ounti

ng

Acc

ounti

ng

MacroenvironmentMacroenvironmentMacroenvironmentMacroenvironment

““The BIG Picture”The BIG Picture” DemographicDemographic EconomicEconomic NaturalNatural TechnologicalTechnological PoliticalPolitical SocialSocial CulturalCultural

““The BIG Picture”The BIG Picture” DemographicDemographic EconomicEconomic NaturalNatural TechnologicalTechnological PoliticalPolitical SocialSocial CulturalCultural

Worldwide Population GrowthWorldwide Population GrowthWorldwide Population GrowthWorldwide Population Growth

Population Age MixPopulation Age Mix Population Age MixPopulation Age Mix

Ethnic MarketsEthnic Markets Ethnic MarketsEthnic Markets

Household PatternsHousehold PatternsHousehold PatternsHousehold Patterns

Educational GroupsEducational GroupsEducational GroupsEducational Groups

Geographical Shifts in PopulationGeographical Shifts in PopulationGeographical Shifts in PopulationGeographical Shifts in Population

Shift from Mass to MicromarketsShift from Mass to MicromarketsShift from Mass to MicromarketsShift from Mass to Micromarkets

Demographic Demographic EnvironmentEnvironmentDemographic Demographic EnvironmentEnvironment

Global Demographic Global Demographic EnvironmentEnvironment


World population is growing at a faster rate. It exceeds World population is growing at a faster rate. It exceeds

6.6 billion and will grow to 8.1 billion by 2030.6.6 billion and will grow to 8.1 billion by 2030. Main contributors are countries like India and China.Main contributors are countries like India and China. Relatively high birth rates in Pakistan Relatively high birth rates in Pakistan (≤14 years

comprises 40% of the population; out of which 14% are ≤ 4 years i.e. approx 173 mn market) – P&G launched – P&G launched

Pampers (disposable diapers) in 2000.Pampers (disposable diapers) in 2000. Cloth nappies were mostly used and the concept of Cloth nappies were mostly used and the concept of

disposable diapers were nonexistent.disposable diapers were nonexistent. Larger % of birth takes place at home instead of Larger % of birth takes place at home instead of

hospitalshospitals..

P&G adopted the concept of ‘P&G adopted the concept of ‘Mobile clinicMobile clinic’ to provide ’ to provide

baby-care education. Market share shoot up drastically.baby-care education. Market share shoot up drastically.

World population is growing at a faster rate. It exceeds World population is growing at a faster rate. It exceeds

6.6 billion and will grow to 8.1 billion by 2030.6.6 billion and will grow to 8.1 billion by 2030. Main contributors are countries like India and China.Main contributors are countries like India and China. Relatively high birth rates in Pakistan Relatively high birth rates in Pakistan (≤14 years

comprises 40% of the population; out of which 14% are ≤ 4 years i.e. approx 173 mn market) – P&G launched – P&G launched

Pampers (disposable diapers) in 2000.Pampers (disposable diapers) in 2000. Cloth nappies were mostly used and the concept of Cloth nappies were mostly used and the concept of

disposable diapers were nonexistent.disposable diapers were nonexistent. Larger % of birth takes place at home instead of Larger % of birth takes place at home instead of

hospitalshospitals..

P&G adopted the concept of ‘P&G adopted the concept of ‘Mobile clinicMobile clinic’ to provide ’ to provide

baby-care education. Market share shoot up drastically.baby-care education. Market share shoot up drastically.

Global Economic Global Economic EnvironmentEnvironment


Food, housing and Food, housing and

transportation are major transportation are major

spending areas.spending areas.

Changes in economic Changes in economic

variables like income, cost variables like income, cost

of living, interest rates, of living, interest rates,

savings and borrowing savings and borrowing

patterns have brought patterns have brought

greater impact on markets.greater impact on markets.

Global economic crisis Global economic crisis

(2007-2009) subprime US (2007-2009) subprime US

loan crisis.loan crisis.

Food, housing and Food, housing and

transportation are major transportation are major

spending areas.spending areas.

Changes in economic Changes in economic

variables like income, cost variables like income, cost

of living, interest rates, of living, interest rates,

savings and borrowing savings and borrowing

patterns have brought patterns have brought

greater impact on markets.greater impact on markets.

Global economic crisis Global economic crisis

(2007-2009) subprime US (2007-2009) subprime US

loan crisis.loan crisis.

Low income Low income levellevel Higher percentage Higher percentage

spending on Foodspending on FoodHigher percentage Higher percentage spending on Foodspending on Food

Decline in Decline in spending on Food; spending on Food; spending on spending on housing remains housing remains constantconstant

Decline in Decline in spending on Food; spending on Food; spending on spending on housing remains housing remains constantconstant

Increase in Increase in spending on gas, spending on gas, electricity and electricity and public health care public health care & other services.& other services.

Increase in Increase in spending on gas, spending on gas, electricity and electricity and public health care public health care & other services.& other services.

Different spending patterns at Different spending patterns at

different income levelsdifferent income levels

Different spending patterns at Different spending patterns at

different income levelsdifferent income levels

More devoted More devoted towards savingstowards savingsMore devoted More devoted towards savingstowards savings

Further Further increasincreas

ee

Further Further increasincreas

ee

Engel’s Law: Proposed by Engel’s Law: Proposed by Ernst EngelErnst Engel



Kumbhakarna Syndrome:

Indian companies like Madura Garments (division of Aditya

Birla group) have targeted affluence of Indian Middle class by

regularly launching new brands. Introduce many foreign brands at

premiums price range of 2000 – 2,500 and older brands could only

fetch Rs. 750. Older brands lost their leadership positions.

Older brands of readymade premium shirts like Indus League,

Indus Nation, Ironwood and Raymond’s Park Avenue, Parx and

Manzoni commanded during pre-1990s.

Kumbhakarna Syndrome:

Indian companies like Madura Garments (division of Aditya

Birla group) have targeted affluence of Indian Middle class by

regularly launching new brands. Introduce many foreign brands at

premiums price range of 2000 – 2,500 and older brands could only

fetch Rs. 750. Older brands lost their leadership positions.

Older brands of readymade premium shirts like Indus League,

Indus Nation, Ironwood and Raymond’s Park Avenue, Parx and

Manzoni commanded during pre-1990s.

Economic EnvironmentEconomic EnvironmentMadura Garments: Madura Garments:

OverviewOverview

Economic EnvironmentEconomic EnvironmentMadura Garments: Madura Garments:

OverviewOverview 1989 – launched Louis Philippe1989 – launched Louis Philippe

1990 – Van Heusen1990 – Van Heusen

Post 1990:Post 1990:

Allen Solly (introduced concept Allen Solly (introduced concept

of ‘Friday dressing’ in India)of ‘Friday dressing’ in India)

EspritEsprit

Peter EnglandPeter England

Byford, Elements, and SF Jeans.Byford, Elements, and SF Jeans.

1989 – launched Louis Philippe1989 – launched Louis Philippe

1990 – Van Heusen1990 – Van Heusen

Post 1990:Post 1990:

Allen Solly (introduced concept Allen Solly (introduced concept

of ‘Friday dressing’ in India)of ‘Friday dressing’ in India)

EspritEsprit

Peter EnglandPeter England

Byford, Elements, and SF Jeans.Byford, Elements, and SF Jeans.

http://www.vanheusen.com.au/w1/i2/

NaturalNaturalEnvironment Environment

NaturalNaturalEnvironment Environment

HigherHigherPollutionPollution

LevelsLevels

HigherHigherPollutionPollution

LevelsLevels

Increased CostsIncreased Costsof Energyof Energy

Increased CostsIncreased Costsof Energyof Energy

Shortage of Shortage of Raw MaterialsRaw MaterialsShortage of Shortage of

Raw MaterialsRaw Materials

Changing RoleChanging Roleof Governmentof GovernmentChanging RoleChanging Roleof Governmentof Government

Natural Environmental Natural Environmental FactorsFactors

Natural Environmental Natural Environmental FactorsFactors

Natural EnvironmentNatural EnvironmentNatural EnvironmentNatural Environment Shortage of raw materials:Shortage of raw materials:

By 2030By 2030 More than 1 of 3 humansMore than 1 of 3 humans will not have water to will not have water to

drink.drink. Reduction inReduction in renewable resources renewable resources like forest will like forest will

create serious threat to the environment.create serious threat to the environment. Nonrenewable resourcesNonrenewable resources like Oil, coal and like Oil, coal and

minerals will pose serious problem of supply.minerals will pose serious problem of supply. Higher Pollution LevelsHigher Pollution Levels::

Disposal rate of chemicals and nuclear wastesDisposal rate of chemicals and nuclear wastes

worldwide poses a serious danger for the nature.worldwide poses a serious danger for the nature.

Dangerous chemical pollutantsDangerous chemical pollutants in the soil and in the soil and

food supply, plastics materials.food supply, plastics materials.

Shortage of raw materials:Shortage of raw materials:

By 2030By 2030 More than 1 of 3 humansMore than 1 of 3 humans will not have water to will not have water to

drink.drink. Reduction inReduction in renewable resources renewable resources like forest will like forest will

create serious threat to the environment.create serious threat to the environment. Nonrenewable resourcesNonrenewable resources like Oil, coal and like Oil, coal and

minerals will pose serious problem of supply.minerals will pose serious problem of supply. Higher Pollution LevelsHigher Pollution Levels::

Disposal rate of chemicals and nuclear wastesDisposal rate of chemicals and nuclear wastes

worldwide poses a serious danger for the nature.worldwide poses a serious danger for the nature.

Dangerous chemical pollutantsDangerous chemical pollutants in the soil and in the soil and

food supply, plastics materials.food supply, plastics materials.

Natural EnvironmentNatural EnvironmentNatural EnvironmentNatural Environment

Increased government intervention:Increased government intervention: Govt.’s of different countries vary in their concern Govt.’s of different countries vary in their concern

and efforts to protect environment.and efforts to protect environment.

German govt. have stringent regulations for Industry German govt. have stringent regulations for Industry

wastes. wastes.

In May 2005, GE launched $90 mn In May 2005, GE launched $90 mn

‘ ‘EcomaginationEcomagination’ campaign to create ’ campaign to create

products for a better world i.e. products for a better world i.e.

cleaner aircraft engines, cleaner aircraft engines,

locomotives, and fuel technologieslocomotives, and fuel technologies Increased costs of EnergyIncreased costs of Energy..

Increased government intervention:Increased government intervention: Govt.’s of different countries vary in their concern Govt.’s of different countries vary in their concern

and efforts to protect environment.and efforts to protect environment.

German govt. have stringent regulations for Industry German govt. have stringent regulations for Industry

wastes. wastes.

In May 2005, GE launched $90 mn In May 2005, GE launched $90 mn

‘ ‘EcomaginationEcomagination’ campaign to create ’ campaign to create

products for a better world i.e. products for a better world i.e.

cleaner aircraft engines, cleaner aircraft engines,

locomotives, and fuel technologieslocomotives, and fuel technologies Increased costs of EnergyIncreased costs of Energy..

Accelerating PaceAccelerating Paceof Changeof Change

Accelerating PaceAccelerating Paceof Changeof Change

Unlimited OpportunitiesUnlimited Opportunitiesfor Innovationfor Innovation

Unlimited OpportunitiesUnlimited Opportunitiesfor Innovationfor Innovation

IncreasedIncreasedRegulationRegulationIncreasedIncreasedRegulationRegulation

Issues in the Technological EnvironmentIssues in the Technological EnvironmentIssues in the Technological EnvironmentIssues in the Technological Environment

VaryingVaryingR & D BudgetsR & D Budgets

VaryingVaryingR & D BudgetsR & D Budgets

TechnologicalTechnological EnvironmentEnvironmentTechnologicalTechnological EnvironmentEnvironment

Political-Legal Political-Legal EnvironmentEnvironment


Regional GroupingsRegional Groupings European Union (EU)European Union (EU) NAFTANAFTA

ConsumerismConsumerism SafetySafety InformationInformation ChoiceChoice RepresentationRepresentation RedressalRedressal Consumer educationConsumer education

Ethics & Social Ethics & Social ResponsibilityResponsibility

Increased Legislation & Increased Legislation & EnforcementEnforcement

Regional GroupingsRegional Groupings European Union (EU)European Union (EU) NAFTANAFTA

ConsumerismConsumerism SafetySafety InformationInformation ChoiceChoice RepresentationRepresentation RedressalRedressal Consumer educationConsumer education

Ethics & Social Ethics & Social ResponsibilityResponsibility

Increased Legislation & Increased Legislation & EnforcementEnforcement



Political environmentPolitical environment relates to the relation

between governments and the business whereas

Legal environmentLegal environment relates to the laws and

regulations associated, more specifically, with

consumers and business practices.

Organizations can outperform other organizations

and can achieve sustainable competitive sustainable competitive

advantageadvantage, if they can manage their relationships

with the government and regulatory bodies better

than the competitors (Hillman, Keim and Schuler,

2004).

Political environmentPolitical environment relates to the relation

between governments and the business whereas

Legal environmentLegal environment relates to the laws and

regulations associated, more specifically, with

consumers and business practices.

Organizations can outperform other organizations

and can achieve sustainable competitive sustainable competitive

advantageadvantage, if they can manage their relationships

with the government and regulatory bodies better

than the competitors (Hillman, Keim and Schuler,

2004).



In certain countries, legislations (which are technical statements) are difficult to interpret and business firms hire “Industry Lobbyists” to build relations with the local government bodies by:

represent client (firms) to represent client (firms) to

government decision makers.government decision makers. Provide strategic advice to clients Provide strategic advice to clients

on how to design their political on how to design their political

campaign.campaign. To provide administrative To provide administrative

support to the clientssupport to the clients (Moloney and

Jordan, 1996).

In certain countries, legislations (which are technical statements) are difficult to interpret and business firms hire “Industry Lobbyists” to build relations with the local government bodies by:

represent client (firms) to represent client (firms) to

government decision makers.government decision makers. Provide strategic advice to clients Provide strategic advice to clients

on how to design their political on how to design their political

campaign.campaign. To provide administrative To provide administrative

support to the clientssupport to the clients (Moloney and

Jordan, 1996).

Government

Business FirmsBusiness Firms

Lobbying, Strategic affairs,Lobbying, Strategic affairs, political advisory firms, political advisory firms,

PR firms PR firms (Indian companies like Credence Consulting)

Microenvironment Microenvironment (Internal (Internal Environment)Environment)

Microenvironment Microenvironment (Internal (Internal Environment)Environment)

InfluencersInfluencers Intermediaries/Intermediaries/

ChannelsChannels

PublicsPublics

CompetitorsCompetitors

SuppliersSuppliers

The Internal The Internal EnvironmentEnvironmentThe Internal The Internal EnvironmentEnvironment

The Internal Environment has to The Internal Environment has to do with the other employees in do with the other employees in your company.your company.

It includes all departments It includes all departments within the company.within the company.

When all departments are pullingWhen all departments are pullingin the same direction, the in the same direction, the company has a legitimate company has a legitimate chance for success.chance for success.

Global Environment: Global Environment: OverviewOverview

Global Environment: Global Environment: OverviewOverview

marketing videos\Business Advice

Which emerging market may be rig

ht for you.flv

marketing videos\Emerging Market

s.flv

marketing videos\Business Advice

Which emerging market may be rig

ht for you.flv

marketing videos\Emerging Market

s.flv

INDIANINDIAN

MARKETING MARKETING

ENVIRONMENTENVIRONMENT

INDIANINDIAN

MARKETING MARKETING

ENVIRONMENTENVIRONMENT

Comparison of Macro-Economic Parameters†

Comparison of Macro-Economic Parameters†

GDP (Rs in billion) 27,600

GDP Growth 8.5%

Per capita GDP (Rs) 25,836

Forex reserves ($ bn) 107.44

Inflation (% change in WPI)

5.5%

Agriculture contrib. to GDP

23.6% China – 13.8%

Singapore – 0%

Industry contrib. to GDP

23.4% China – 52.9%

Singapore – 32.6%

Services contrib. to GDP

48.0% China – 33.3%

Singapore – 67.4%

Exports ($ bn) cont. to GDP

69.18%

China – 583.1%

Singapore – 174%

Imports ($ bn) cont. to GDP

89.33%

China – 552.4%

Singapore – 155.2%

† All figures are for 2004

Source: Capitaline & The World Factbook 2005

SOCIAL PARAMETERS: SOCIAL PARAMETERS: ComparisonComparison

SOCIAL PARAMETERS: SOCIAL PARAMETERS: ComparisonComparison

INDIAINDIA SINGAPORSINGAPOREE

CHINACHINA

Life expectancy 61 61 yearsyears

79.6 years 71.1 years

Infant mortality rate (per 1,000 births)

6767 3 31

Adult literacy (%) 5757 92 85

Population over 60 years (%)

7.77.7 11.1 10

All figures are of 2002 Source: World Health Report, WHO & UN

Indian Demographic Indian Demographic Environment:Environment:

Population Age Mix Population Age Mix

Indian Demographic Indian Demographic Environment:Environment:

Population Age Mix Population Age Mix RURALRURAL URBANURBAN

0-190-19 Age

group

3.46 million (Persons) 1.81 million (Males) 1.64 million (Females)


20-59 20-59 Age

group



60+60+ Age

group



TOTALTOTAL4.63 million (Persons) 2.43 million (Males) 2.20 million (Females)



† Source: Census 2001Note: 5454%% of India’s population is <25 years; and

80%80% of India’s population is <45 years

Indian Demographic Indian Demographic Environment: Environment:

Household patternHousehold pattern

Indian Demographic Indian Demographic Environment: Environment:

Household patternHousehold patternHousehold Household pattern in pattern in

IndiaIndia

Total Total Number of Number of Households Households

(in (in million)million)

Type of Census Houses (%)Type of Census Houses (%)

PermanePermanent nt

(Pakka)(Pakka)

Semi-Semi-permanepermane

ntnt

TemporarTemporary y

(Kaccha)(Kaccha)

TotalTotal 1.91 1.91 millionmillion

51.851.8 30.030.0 18.118.1

RuralRural 1.38 1.38 millionmillion

41.141.1 35.735.7 23.123.1

UrbanUrban 0.53 0.53 millionmillion

79.379.3 15.415.4 5.25.2† Source: Census 2001 (Household survey)

Income DistributionIncome DistributionIncome DistributionIncome Distribution

Indian Economic Indian Economic EnvironmentEnvironment


Income ClassIncome Class 1995-19961995-1996 2006-20072006-2007HouseholdHousehold

ssEstimated Estimated PopulationPopulation

HouseholdsHouseholds Estimated Estimated PopulationPopulation

The Rich 1.2 mn1.2 mn 7 mn7 mn 5.2 mn5.2 mn 30 mn 30 mn ( 328%)( 328%)

The Consuming Class

32.5 mn32.5 mn 186 mn186 mn 75.5 mn75.5 mn 432 mn 432 mn ( 132%)( 132%)

The Climbers 54.1 mn54.1 mn 312.2 mn312.2 mn 81.7 mn81.7 mn 472 mn 472 mn ( 51%)( 51%)

The Aspirants 44 mn44 mn 253.9 mn253.9 mn 20.2 mn20.2 mn 117 mn 117 mn ( 54%)( 54%)

The Destitute 33 mn33 mn 190.4 mn190.4 mn 16.5 mn16.5 mn 95 mn 95 mn ( 50%)( 50%)Categories of Indian ConsumersCategories of Indian Consumers† :• DestituteDestitute (Annual HH Income of Rs. 16,000) – not active participants in market exchange for wide range of products.

• AspirantsAspirants (Rs. 16,000-Rs. 22,000) – new entrants into consumption systems due to increase in real income.

• Climbers Climbers (Rs. 22,000-Rs. 45,000) – have desire, willingness to buy but limited cash.

• Consuming ClassConsuming Class (Rs. 45,000-Rs. 2,15,000) – majority of consumers; have money & willingness to spend.

• RichRich (above Rs. 2,15,000) – have money and owns wide range of products.

† Consumer class classification is based on National Council of Applied Economic Research (NCAER)

Source: The Marketing White Book 2003-04, Business World.Source: The Marketing White Book 2003-04, Business World.

Indian Social and Indian Social and Cultural EnvironmentCultural Environment


30 different languages30 different languages and over 200 mother 200 mother

tonguestongues in India – Cultures & Sub-culturesCultures & Sub-cultures.

Regional differencesRegional differences in language, customs, social systems, values, habits, religions and caste systems.

Customised research on consumption Customised research on consumption

behaviour and attitudesbehaviour and attitudes – towards products & services – cultural diversity and regional cultural diversity and regional

differencesdifferences.

Changing role of Women segment in India.

30 different languages30 different languages and over 200 mother 200 mother

tonguestongues in India – Cultures & Sub-culturesCultures & Sub-cultures.

Regional differencesRegional differences in language, customs, social systems, values, habits, religions and caste systems.

Customised research on consumption Customised research on consumption

behaviour and attitudesbehaviour and attitudes – towards products & services – cultural diversity and regional cultural diversity and regional

differencesdifferences.

Changing role of Women segment in India.

Indian Food IndustryIndian Food IndustryIndian Food IndustryIndian Food Industry

Food industry – catering to ‘Food industry – catering to ‘tastes for foodtastes for food’ ’

approach.approach.

Fast lifeFast life – no time for healthy home made food – – no time for healthy home made food –

packaged/instant-meal approachpackaged/instant-meal approach..

Diversity and complexity of flavoursDiversity and complexity of flavours/ and / and mealsmeals

across India.across India.

Very low – per capita consumptionVery low – per capita consumption on on

chocolates, soft drinks & chipschocolates, soft drinks & chips – compared to the – compared to the

world markets.world markets.

Food industry – catering to ‘Food industry – catering to ‘tastes for foodtastes for food’ ’

approach.approach.

Fast lifeFast life – no time for healthy home made food – – no time for healthy home made food –

packaged/instant-meal approachpackaged/instant-meal approach..

Diversity and complexity of flavoursDiversity and complexity of flavours/ and / and mealsmeals

across India.across India.

Very low – per capita consumptionVery low – per capita consumption on on

chocolates, soft drinks & chipschocolates, soft drinks & chips – compared to the – compared to the

world markets.world markets.

Healthcare IndustryHealthcare IndustryHealthcare IndustryHealthcare Industry

Parallel Industry – Parallel Industry – gyms, dieticians and gyms, dieticians and

health/diet foodshealth/diet foods – to take care of irregularities – to take care of irregularities

and problems with weight due to Food and problems with weight due to Food

Industry. Industry.

Survey InsightSurvey Insight – In case of joining a gym – – In case of joining a gym – 42%42%

people do not continue for more than 3 weeks people do not continue for more than 3 weeks

– though they opt for the annual package.– though they opt for the annual package.

Parallel Industry – Parallel Industry – gyms, dieticians and gyms, dieticians and

health/diet foodshealth/diet foods – to take care of irregularities – to take care of irregularities

and problems with weight due to Food and problems with weight due to Food

Industry. Industry.

Survey InsightSurvey Insight – In case of joining a gym – – In case of joining a gym – 42%42%

people do not continue for more than 3 weeks people do not continue for more than 3 weeks

– though they opt for the annual package.– though they opt for the annual package.

Indian Retail Industry- Indian Retail Industry- formatsformats

Indian Retail Industry- Indian Retail Industry- formatsformats

Traditionally, in India retail formats were

designed to display and carry clothes for ‘display and carry clothes for ‘body body

in shapein shape’’ but now most of the varieties are

for oversize clothesoversize clothes, says Ajay Chandwani,

CEO, Percept Retail stores.

At stores – categories and levels in each categories and levels in each

categories ‘assortments’categories ‘assortments’ – are more often

designed by manufacturers/ retail groups

rather than based on shoppers response.

Traditionally, in India retail formats were

designed to display and carry clothes for ‘display and carry clothes for ‘body body

in shapein shape’’ but now most of the varieties are

for oversize clothesoversize clothes, says Ajay Chandwani,

CEO, Percept Retail stores.

At stores – categories and levels in each categories and levels in each

categories ‘assortments’categories ‘assortments’ – are more often

designed by manufacturers/ retail groups

rather than based on shoppers response.

Indian Impulse marketIndian Impulse marketIndian Impulse marketIndian Impulse market

Research by Amul Ice Creams – customers prefer ‘health’ benefit of milk from the ice creams – thus, campaign “real milk, real ice cream” initiated.

Most consumers take just 4 seconds4 seconds to browse over food packaging – before making a choice of the brand.

Indian consumers go through 3-step 3-step processprocess of eat-treat-retreateat-treat-retreat.

Research by Amul Ice Creams – customers prefer ‘health’ benefit of milk from the ice creams – thus, campaign “real milk, real ice cream” initiated.

Most consumers take just 4 seconds4 seconds to browse over food packaging – before making a choice of the brand.

Indian consumers go through 3-step 3-step processprocess of eat-treat-retreateat-treat-retreat.

Indian Impulse Indian Impulse market market cont…cont…

Indian Impulse Indian Impulse market market cont…cont…

Biscuits like Marie – grab ‘n’ go approach Biscuits like Marie – grab ‘n’ go approach

(planned purchase) – strategies of (planned purchase) – strategies of

companies are to replenish.companies are to replenish.

Cookies – planned and browsed for – Cookies – planned and browsed for –

strategies are to enhance category strategies are to enhance category

interaction.interaction.

Ice creams – largely impulse – strategies Ice creams – largely impulse – strategies

are to drive more impulse purchase.are to drive more impulse purchase.

Biscuits like Marie – grab ‘n’ go approach Biscuits like Marie – grab ‘n’ go approach

(planned purchase) – strategies of (planned purchase) – strategies of

companies are to replenish.companies are to replenish.

Cookies – planned and browsed for – Cookies – planned and browsed for –

strategies are to enhance category strategies are to enhance category

interaction.interaction.

Ice creams – largely impulse – strategies Ice creams – largely impulse – strategies

are to drive more impulse purchase.are to drive more impulse purchase.

Consumption & Consumption & HappinessHappiness

Consumption & Consumption & HappinessHappiness

Consumers are comparatively more Consumers are comparatively more

satisfied with their lives compared to satisfied with their lives compared to

previous generation.previous generation.

More likely to believe that their lives have More likely to believe that their lives have

improved. improved.

Much more likely to expect improvements Much more likely to expect improvements

from the present situations in the future.from the present situations in the future.

Consumers are comparatively more Consumers are comparatively more

satisfied with their lives compared to satisfied with their lives compared to

previous generation.previous generation.

More likely to believe that their lives have More likely to believe that their lives have

improved. improved.

Much more likely to expect improvements Much more likely to expect improvements

from the present situations in the future.from the present situations in the future.

Gender behavioural Gender behavioural differencesdifferences

Gender behavioural Gender behavioural differencesdifferences

When Men try a garment – 80% times When Men try a garment – 80% times

they buy whereas women try varieties, they buy whereas women try varieties,

take time and reject/ do not buy most take time and reject/ do not buy most

of the times.of the times.

Women in US don’t like bending down Women in US don’t like bending down

for categories at the lower portion of for categories at the lower portion of

the rack – products kept at comfortable the rack – products kept at comfortable

heights, their sales grew exponentially.heights, their sales grew exponentially.

When Men try a garment – 80% times When Men try a garment – 80% times

they buy whereas women try varieties, they buy whereas women try varieties,

take time and reject/ do not buy most take time and reject/ do not buy most

of the times.of the times.

Women in US don’t like bending down Women in US don’t like bending down

for categories at the lower portion of for categories at the lower portion of

the rack – products kept at comfortable the rack – products kept at comfortable

heights, their sales grew exponentially.heights, their sales grew exponentially.

Rural IndiaRural IndiaRural IndiaRural India Increasing affluence and easy availability of credits Increasing affluence and easy availability of credits

creating growing capacity to spend.creating growing capacity to spend. Urban Cable operators are signing up with rural Urban Cable operators are signing up with rural

subscribers – Guwahati is the 2subscribers – Guwahati is the 2ndnd highest subscribing highest subscribing city after Ludhiana.city after Ludhiana.

6,50,000 villages – average population of 1,100 villagers 6,50,000 villages – average population of 1,100 villagers across India.across India.

India’s 700 million villagers account for the majority of India’s 700 million villagers account for the majority of consumer spending in India – more than $ 100 billion a consumer spending in India – more than $ 100 billion a year.year.

75% of rural market is still untapped.75% of rural market is still untapped. Forecast – By Forecast – By 2009-102009-10, Urban HH number will grow by , Urban HH number will grow by

4% while rural HHs are expected to grow by 11%.4% while rural HHs are expected to grow by 11%. Today, Today, 25% of Urban India is spending as much as 75% of

rural India – shows still untapped potential of rural – shows still untapped potential of rural market.market.

Increasing affluence and easy availability of credits Increasing affluence and easy availability of credits creating growing capacity to spend.creating growing capacity to spend.

Urban Cable operators are signing up with rural Urban Cable operators are signing up with rural subscribers – Guwahati is the 2subscribers – Guwahati is the 2ndnd highest subscribing highest subscribing city after Ludhiana.city after Ludhiana.

6,50,000 villages – average population of 1,100 villagers 6,50,000 villages – average population of 1,100 villagers across India.across India.

India’s 700 million villagers account for the majority of India’s 700 million villagers account for the majority of consumer spending in India – more than $ 100 billion a consumer spending in India – more than $ 100 billion a year.year.

75% of rural market is still untapped.75% of rural market is still untapped. Forecast – By Forecast – By 2009-102009-10, Urban HH number will grow by , Urban HH number will grow by

4% while rural HHs are expected to grow by 11%.4% while rural HHs are expected to grow by 11%. Today, Today, 25% of Urban India is spending as much as 75% of

rural India – shows still untapped potential of rural – shows still untapped potential of rural market.market.

session 3&4 mmi

Documents