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Environment analysis

1-Tracking environments 2- developments in macro environment

Macro environment analysis


Marketing is to recognise and respond to unfulfilled needs, profitably. Tell me some unfulfilled needs of masses? Tell me some products, which if developed could revolutionaries the civilization and lifestyle of masses

Macro environment analysis


Some universal unfulfilled needs are treatment of cancer, age substitute of petroleum products, affordable & viable electric cars, cheap helicopters Knowledge capsules Food capsules Compact steam engines- like oil engines Storage of energy, electricity

McKinsey believes that macroeconomic factors, will shape the business in the coming years
Population migrations- from rural and less developed countries Countries with higher birth rates could be future markets Low birth rate countries will depend on migrations- lead to global work force markets Labour intensive industry have been shifting to developing nations Now labour intensive parts of IT is shifting Asia shall become manufacturing & IT hub Internet- more informed & Interactive customers Deregulations and internet leading to borderless nations shifts in centers of economic activity- globally, within region and within country13% of world GDP is in Asia (minus Japan), 30% in Europe By 2025 both will be equal Bangalore is new business hub. Gujarat & Andhra picking up Metro suburbs are future consumer markets

Business could prosper only by following Needs and Trends Fad Fashion Trend Megatrend

Trend- is a direction or sequence of events with momentum, durability and predictability. Like fast food, mega stores, multiplexes, jeans, fitness gyms, higher education

Macro environment analysis


Fashion- presently popular trends/styles- like mega stores- reliance fresh, west end, PVR, Waves, dominos, fitting jeans Old Styles could repeat as it is or with modifications as fashion after a gap- fitting dresses

Macro environment analysis


Fads- unpredictable, short lived trend of no social, economic or political significance. High profit high risk products Party/performance wears, specially celebrities Facial piercing rings Unusual wide tires Multicolor bunched spiky hair styles

Macro environment analysis (contd.)


Mega trends- broader & wider trends major social, political and economic changes. Slow to form but stay longer 5/10 years- shape and change market places government subsidies for diesels higher education and India as hub for intl work force, Revolutions for democracy migrations, Population shift Regional parties in states nuclear power, terrorism, internet, Globalisation, deregulation regional cooperation, ethnic conflicts, low birth rates

Domestic and international marketing environments


Overseas Environmental Challenges (Uncontrollables) Domestic Environmental Challenges (Uncontrollables) Economic Economic (Controllables) Product Legal Political

Marketing Challenges in country Y

Competition

Marketing Challenges in country X Political Marketing Challenges in country Z Political

Place

Consumer

Price Socio Cultural

Promotion Competition Infrastructure Logistics

Legal

Geography

???
Tell me some recent environmental changes going to affect market structures?

Environmental Forces- Within the rapidly changing global picture, marketers must monitor six major environmental forces: Demographic Political-Legal Economic

Technological Natural

Socio-Cultural

Macro environment analysis (contd.)


Company & its stakeholders operate in same environment- Share Changes in mega trends & trends in environment, pose opportunities and threats economic meltdowns of 2008 in US affected all
holders, suppliers, customers & competitors,

Environments and its changes are non controllable, companies need to monitor and adjust Environment affect customers so markets, and so companies and these interact amongst themselves to create complex forces

Some links for govt. data

http://business.gov.in for any information related to business, banking, economy, and all types of statistics http://business.gov.in/indian_economy/studies for economic surveys http://business.gov.in/outerwin.htm?id=http://m for all types of statistics

In the demographic environment, marketers must monitor worldwide population patternsbecause people make up markets Marketers remain interested in Size and growth rate of populations in cities, regions, and nations. Age distribution ethnic mix. Educational levels. Household patterns. Regional characteristics & Geographical shifts

demographic environment- higher population and their locations important


Size and growth rate of populations in cities, regions, and nations. Age distribution ethnic mix. Educational levels. Household patterns. Regional characteristics & Geographical shifts

worlds population- 6.1 billion in 2000 and will exceed 7.9 billion by 2025. explosion has been a major concern. Population growths directly enhance number of customers. Demographic trends are reliable yardsticks Marketers need to watch places- regions and patterns of growth A growing population does not mean growing markets unless these have purchasing powers

Dynamics of Population Trends


Controlling population growth-

Most important deterrent to population control is cultural attitudes to large families Most growth is in poor areas. Less developed countries account for 76% of world population and grow @2%. 58% of worlds population is in Asia

developed countries house 24% and grow @ 0.6% Areas which could afford population growth have negative growth- Career in woman big reason Developed countries are major consumer markets due to higher per capita and expendable incomes

Dynamics of Population TrendsPopulation decline and aging


Population growth in developed countries is below the rate needed to maintain present levels fertility rate of about 2.1 children per household.

No developed country has sufficient internal population growth to maintain itself

Under developed countries and Asia are future markets One child rules, six pocket syndrome and little emperors have strengthened children product markets of china

Birth rate per 1000 women

World Population and Life Expectancy at Birth by Region, (millions)


Insert Exhibit 3.4

Dynamics of Population Trends


Rural/urban/suburban shifts- cities in spite of dense populations attracting migrations desire for greater access to education, health care, and improved job opportunities Affordable living- sub-urban

South Asia is 3.8% of world by area but house about 25% of world population India is 2.4% of world by area but house about 16.7% of world population US is about 3.5 times to India in area but house about 28% of Indian population

Rural and Urban Population, 20052030 (millions)


Insert Exhibit 3.5

Dynamics of Population Trends (continued)


Worker Shortage and Immigration
The free flow of immigration will help to ameliorate the dual problems of explosive population expansion in less-developed countries and worker shortage in industrialized regions. Europe will need 1.4 billion immigrants over the next 50 years. Japan and the U.S. will need 600 million immigrants between now and 2050.

Migrations and population shifts


Expansion of Europe in 2004- caused huge immigrations from eastern Europe to UK On August 27th Eurostat, the European Unions statistical service, predicted that by 2060 Britain would be the EUs largest country, with a population of 77m compared with around 61m today Germany, the current top dog, will see its 82m citizens dwindle to 71m over the same period. Britains boom will be fuelled by a mix of
immigration and a comparatively high birth rate mainly a consequence of the higher birth rates in immigrants

Demographics- hard to predictChange in British demography


Average overall population densitypeople per kilometer square is 251 in western Europe 392 in UK secondhighest density in Europe 395 in tiny Netherlands

Renewed immigrant pressure may persuade Britishers to consider demography in their planning, In 1940s projections showed just 35m people living in Britain by 2000. no one could assume baby boompost war.

Demographics- hard to predictChange in British demography


In 2001 British women were having an average of 1.6 children each, a record low. Rose to 1.9 in 2008, all time high in 25 years. reasons not knownmay be high birth rate in immigrants

immigration flows depend heavily on economic circumstances, political conditions and migration law. could change any time. So demography is hard to predict. 2008 meltdown have caused change in immigrations

Asia will become most populous and potent market by 2050


Population By 2025 in M estimates by UN for India 1395 By 2050 in M

1593

china

1441

1392

Shift in US Demographic structure(Economist 08/2008)

Shift in US Demographic structure(Economist 08/2008)


US Census Bureau have revised its estimates AMERICA'S minorities will be the new majority in 2042, Earlier it was projected to happen in 2050

Non-Hispanic whites now represent nearly two-thirds of America's population of 305m. By 2042- Non-Hispanic whites will represent less than half of the 440m total. The Asian and Hispanic populations will rise to 9% and 30%, America will look like present-day Texas, Hawaii, New Mexico and California

Most of developed countries are facing negative population growth


After 2015, deaths are expected to out number births in Europe- EU report released on 27th August 2008. So population growth shall depend upon immigrants Singapore is fighting with negative growth have schemes to stimulate population growth specially for working women Population growth is dependent on immigrants

China is the main source of immigrants to rich countries- AP


AROUND 4m people moved to OECD countries in 2006, 5% more than 2005- (OECD's annual migration report.) Reasons for immigrations 44% - Joining family members and 14%- seeking employment

America is most popular destination, taking 1.3m migrants out of total 4m China provides the biggest share of legal immigrants to OECD countries (Britain and Ireland do not monitor nationalities of immigrants). Chinese migrants made up the biggest group in South Korea, Japan and Canada, and the second largest in America after Mexicans.

Source of immigration to OECD


.

Organisation for Economic Cooperation and Development


Twenty countries originally signed the Convention on 14 December 1960. Ten countries joined latter: NETHERLANDS: 13 November 1961 AUSTRIA: 29 September 1961 BELGIUM: 13 September 1961 CANADA: 10 April 1961 SPAIN: 3 August 1961 SWEDEN: 28 September 1961 SWITZERLAND: 28 September 1961 TURKEY: 2 August 1961 UNITED KINGDOM: 2 May 1961 UNITED STATES: 12 April 1961 PORTUGAL: 4 August 1961 DENMARK: 30 May 1961 NORWAY: 4 July 1961 FRANCE: 7 August 1961 LUXEMBOURG: 7 December 1961 GERMANY: 27 September 1961 GREECE: 27 September 1961 ICELAND: 5 June 1961 IRELAND: 17 August 1961 ITALY: 29 March 1962 JAPAN: 28 April 1964 FINLAND: 28 January 1969 AUSTRALIA: 7 June 1971 NEW ZEALAND: 29 May 1973 MEXICO: 18 May 1994 CZECH REPUBLIC: 21 Dec. 1995 POLAND: 22 November 1996 HUNGARY: 7 May 1996 KOREA: 12 December 1996 SLOVAK REPUBLIC: 14 Dec. 2000

demographic environment- Age


distributions- old age populations are rising world over
Size and growth rate of populations in cities, regions, and nations. Age distribution ethnic mix. Educational levels. Household patterns. Regional characteristics & Geographical shifts
Britain will also remain youthful, by EU standards. share of people over 65 will rise from 16% to 25% by 2060, but fewer greybeards than anywhere else in Europe except Luxembourg. Britain will suffer less stress on its pensions and socialsecurity systems than fasterageing other EU countries. Yet not all Britons revel in the idea of millions of new citizens

demographic environment- Age


Size and growth rate of populations in cities, regions, and nations. Age distribution younger people are powerful markets ethnic mix. Educational levels. Household patterns. Regional characteristics & Geographical shifts

distributions- old age populations are rising world over


Median age in 2005 Pakistan 20.3 B. Desh 22.2 India- 23.8- will cross 30 by 2025 Sri Lanka 29.5

In Indian population 15% less than 6 yrs 34%- 12 to 25 yrs 24%- 25 to 34 yrs 14%- above 54 yrs

demographic environment- Age


distributions Size and growth rate of populations in cities, regions, and nations. Age distribution ethnic mix. Educational levels. Household patterns. Regional characteristics & Geographical shifts National populations vary in their age mix and behaviour- can be subdivided into six age groups:
Preschool School-age children Teens Young adults age 25 to 40 Middle-aged adults age 40 to 65 Older adults ages 65 and up

Population Age Groups


.
65+ 40-65 25-40 Teens School-age Preschool

demographic environment- 2

(contd.)
Population age mix The biggest age group population shape the market Better nutrition and medical care enhancing aged population ratio. disabilities and aged populations- market for home delivery products This century will be silver century- more grey haired people. Career consciousness in women & low fertility in reducing toddlers ratio India & south Asia still could lead in young population Cohorts are groups of individuals- born during the same time period, travel life together Young people differ in attitude, aspiration and so in consumption- mobiles, cold drinks

Secondary Commercial Data Sources- two page assignment- study any 4- what they do and what is their latest report
AC Nielsen ORG MARG CMIE TAM Media Research Euromonitor International Gallup Pakistan

NCAER

Ethnic and Other Markets


Size and growth rate of populations in cities, regions, and nations. Age distribution ethnic mix. Educational levels. Household patterns. Regional characteristics & Geographical shifts

Ethnic groups have certain distinct wants and buying habits- could cause a new mega trend Religions in India, increase in Hispanics in US, immigrants in UK, working class in Punjab, Mumbai, Bangalore, to cause major shift in the market structure. Marketers to be careful not to over generalize consumers could be different within ethnic group

Educational groups
Size and growth rate of populations in cities, regions, and nations. Age distribution ethnic mix. Educational levels. Household patterns. Regional characteristics & Geographical shifts five groups- illiterates, sub matric, below graduates, graduates and professionals Literates- vary to gender, area country- easy to communicate (based on 2001 census) 90% or more- kerala 80% or more- UTs and Goa 70% or more- North east states (except Arunanchal) plus Maharastra, Gujarat, Haryana, Punjab Less than 50%- Bihar (47%) 50-68%- all other states

Household Patterns
Size and growth rate of populations in cities, regions, and nations. Age distribution ethnic mix. Educational levels. Household patterns. Regional characteristics & Geographical shifts

conventional household consists of husband, wife, and children In US, one out of eight households is "diverse or nontraditional. Catching in India too. It includes:
Childless married couples Singles with children Unmarried couples gays/lesbians, indian court accept them

Household Patterns

Household patterns
Conventional patterns have been joint families with conservative expenditure even in affluent societies and business families Trend is of Nucleus families specially in salary earners- with western life style and liberal spending Higher education and better job opportunities causing movements and nucleus families. About a million working in middle east with families behind liberal spending

MobilinkDisney D 100 Mobile Phonehelps working couples to keep in touch with kids

Household patterns
Rural men working in distant cities living single- minimum spending Career conscious men and women living single or in groups- conservatives. Do not need status, decorated houses Working parents- resulting in sending school goers to boarding. Reducedbuying for children, entertainment, partying and spending

Geographical
Trend is to opt- metros, cities, developed countries making urban markets & developed countriesstronger markets Real estate costs in big cities directing population to suburban more residential, shopping and schools required in suburban Higher education and better jobs causing movements inter and intra country Real estate costs, environmental regulations forcing industry to rural areas around big cities. This industrial relocation enhancing standards in surroundings

Geographical (contd.)
Needs of hills, plains, coastal areas, rural areas, urban areas have different requirements of clothing People living in metros and flats require less furniture, out door equipments, cars but more of luxuries, air-conditioning, decorations, home theaters People in expensive cities like Mumbai and Delhi settle with smaller flats and office spaces People in cities have more avenues to spend on entertainment and quality outside dining

Economic environment
Income levels more important than population. Spending habits more important than income levels credit availability enhance spending & consumption of high value items, appliances Savings and debt levels direct spending on entertainment, appliances, high value purchases cities have more power compared to rural.

Willingness to spend and income levels more important than population (source-UN Stasticial report)
country Populati GNP per Consumi Food % Clothing Housing furnishin medical transport on in Mn capita in ng index % % g usd
US Japan Germany France UK Brazil India Belgium Mexico Phil 270 126 82 59 59 166 980 10 96 75 29340 32380 25850 24940 21400 4570 430 25380 3970 1050 7921800 4079880 2119700 1471460 1262600 0758620 0421400 0253800 0381120 0078750 53.5 19.7 37.4 60 13.1 6.8 8.2 5.3 11.1 17.7 12.6 3.1 4.9 10.7 12.4 13.5 2.4 10.6 4 7.5 13.1 9.1 2.3 13.3 20.8 23.6 19.4 21.1 7.7 6.1 8.6 6.2 6.7 17.4 18.6 19.8 17.8 18.4 6.3 6.3 9.7 8.2 7.2 12.4 10.4 3.1 10.5 1.3 16.4 10.7 16.4 6.8 18.3

Economic environment- Asia is the future market


GDPs of south asia is only 2.3%, housing 24% of world Growth is fast- about 7%. Important future market 2006 growth rates are india- 9.2%, pakistan-6.2%, nepal 7.2%, sri lanka-7.4%, bangladesh-6.7%

Nations and regions in a country could be divided in four types of economies Subsistence Raw material based Industrializing & Industrial economies

World Energy Consumption- oil gas basedindustrialisation and appliance markets Insert Exhibit 3.3

Economic environment (contd.)


Based on income we could divide regions and countries in five categories Huge middle and upper middle class is of India is growing fast Very low income people Low medium income medium income Medium high income High income

Income distribution in India


class Destitute Aspirants Climbers Rich Income/yr Up to 16k 16k-22000 95-96 19 25.40 18.60 0.70 06-07 9.5 11.70 47.20 43.20 3.00 Pop. Crore Pop. Crore

22k- 45000 31.20 Abv 215k

Consuming 45k- 215k

Social-Cultural Environmentpeople differ in


Views of themselves Views of themselves Views of others Views of others Views of organizations Views of organizations Views of society Views of society Views of nature Views of nature Views of the universe Views of the universe

Social-Cultural Environment- topography, language, culture, religion, values, food habits


Society shapes the beliefs, values, and norms that largely define consumer tastes and preferences. People inherit & absorb a worldview that defines their relationships to themselves, others, organizations, society, nature, and to the universe Views of themselves- people vary in emphasis on selfgratification. View of others, people vary in concern about homeless, rich, crime, victims, and other social problems. Views of organizations, people vary in their attitudes toward corporations, government agencies, trade unions, etc Views of society, people vary in attitudes toward society. View of nature, people vary in their attitudes toward nature. View of the universe, people vary in beliefs about origin of universe

Social-Cultural Environment- topography, language, culture, religion, values, food habits High Persistence of Core Cultural Values The people living in a particular society hold many core beliefs and values that tend to persist.
Core beliefs and values are passed on from parents to children and are reinforced by major social institutions. Secondary beliefs and values are more open to change. Marketers have some chance of changing secondary values but little chance of changing core values.

Social-Cultural Environment
Existence of Subcultures
Each society contains subcultures, groups with shared values emerging from their special life experiences or circumstances. Members of subcultures share common beliefs, preferences, and behaviors. To the extent that sub cultural groups exhibit different wants and consumption behavior, marketers can choose particular subcultures as target markets. Marketers sometimes reap unexpected rewards in targeting subcultures.

Islamic Banking: Reflecting Religious and Cultural Sensitivities


Consistent with principles of Islamic Laws (Shariah). Based on social justice Prohibits investing in business that are considered unlawfulimmoral, alcohol, drugs, anything that harms society, nudity, porn, speculations, interest, bids Sharing in profits out of borrowed capital ok. Different treatment to shareholders and depositors Popular in Pakistan and Bangladesh, National and international banks want to start Islamic banking in India

Cartoon Networks New Generation Survey of children aged 7-14 & their moms
Achieving good grades at school all respondents Looking good 90% of respondents Being religious/traditional 84% of respondents Having boyfriend/girlfriend 40% of respondents Career aspirations One-third wanted to be doctor, 21% of wanted to be engineer Children influence purchase of appliances All children play a decisive role in purchase of their own items

Technological Environment- new technology cut on two fronts


One of the most dramatic forces shaping peoples lives is technology- fuel efficient bikes, TB drugs, cell phones, jet aircrafts, hydrogen bombs, submarines, Every new technology is expensive but it is a force for creative destruction.- CFL destroyed bulbs The economys growth rate is affected by how many major new technologies are discovered
technologies need investments of time and money Prolonged use commit heavy investment but then a new technology deplete all valuable investments technology need change in other areas too

New technologies also creates major long-run consequences that are not always foreseeable- New

Technological Environment- marketer should


monitor the following trends in technology: Pace of change Opportunities for innovation Varying R&D budgets Increased regulation of change
New products, adoption of new technologies, R&D- spending by Govt, industry and academia Patent protection Communication and internet Portable devices and electronic networking Alternate energy sources Precision farming & Genetic organisms Smart, mobile robots

Natural Environment
The deterioration of the environment is a major global concern. In many world cities, air and water pollution have reached dangerous levels. There is great concern about greenhouse gases. New regulations have hit certain industries very hard. Consumers often appear conflicted about the natural environment. Corporate environmentalism is the recognition of the importance of environmental issues facing the firm and integration of those issues into the firms strategic plans specially related to 4 major trends

Natural Environment
Shortage of raw materials Increased energy costs Anti-pollution pressures Governmental protections

Natural Environment
Shortage of Raw Materials The earths raw materials consist of the infinite, the finite renewable, and the finite nonrenewable.
Infinite resources, such as air and water. Finite renewable resources, such as forests and foods. Finite nonrenewable resources, such as oil and minerals- iron, zinc. Coal- pose real problem. Many reaching stage of depletion. R&D must search alternatives

Toyota Experienced Success with Green Cars

Consumer Environmental Segments


True Blue Greens (30%)hard core activists

Greenback Greens (10%)buy green not activists

Sprouts (26%)- will buy green


if suit their needs

Grousers (15%)They feel they wont make any difference

Apathetic (18%)
indifferent

Political-Legal Environment- law, government, political parties, pressure groups- limit and also provide opportunities
Increase in business legislationcompetition, consumer, society,

Growth of special interest groups


consumer protection act 1986 ensure- safety, Information, choice, representation, redressal, education