Gathering Information and Scanning the Environment

Needs and Trends

Fadsshort-lived and without social, economic,

and political significance. Trendsdirection or sequence of events that has some momentum and durability. Megatrendslarge social, economic, political, and technological changes

3-2

Trends Shaping the Business Landscape

Profound shifts in centers of

economic activity (Asia (excluding Japan)13% of World GDP; Western Europe > 30%) Increases in public-sector activity (aging of population new levels of efficiency and creativity from public sector) Change in consumer landscape (billion new consumers to enter global marketplace in next decade and U.S. Latinos 2015 spending power equivalent to 60% of Chinese consumers. Technological connectivity (change way people live) Scarcity of well-trained talent (33 mm university-educated young professionals in developing countries is more than double the number in developed ones
3-3

Increase in demand for

natural resources (Oil demand projected to grow by 50% in next two decades and water shortages may constraint growth in many countries) Emergence of new global industry structures (barbelllike structurefew large, narrow middle, lot of smaller companies) Ubiquitous access to information (open source approach) Management shifts from art to science (algorithmic decisionmaking techniques and sophisticated software) Increase in scrutiny of big business practices (be able to argue and demonstrate intellectual, social, and economic case for business)

Environmental Forces
Demographic

Economic
Socio-cultural Natural Technological Political-legal

3-4

What is Demographic environment?

The demographic environment includes the

study of human populations in terms of:

size, density, location,

age,
sex, race, occupation, other statistical information.

Population and Demographics

Population growth Educational groups

Population age mix

Ethnic markets

Household patterns
Geographical shifts

3-6

World Population Growth

World population shows explosive growth, in

2000 it was 6.1 billon and it is projected to exceed 7.9 billon by 2025I
India

Close to one billion population Growth rate over 2% per annum Life expectancy from 48 years in 1947 to 70 years in 2001

Explosive population growth has major

implication for business. For Example--GOLDMAN SCAHS report has projected that India in next 30 year might grow up to 3rd largest economy in world

Population Age Mix

In population age mix marketers are increasingly

recognizing the potential of youth segment (marketers are focused on youth ) For example--Titan the well-known watch marketer
Introduced a range of Sunglasses which is call

Eye Gear under the brand Fast Track

LOWEST AVERAGE AGE

aVERAGE AGE 25 YEARS IS THE LOWEST AS

COMPARED TO OTHER COUNTRIES.

IT WILL BE 28 YEARS IN 2020 AND 53% WOULD

BE UNDER THE AGE OF 30 BY 2020

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-10

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-11

Literacy Of Population
Literacy of Population is mainly

divided into: A) Literate B) illiterate C)Educated D)Uneducated

Household Patterns

3-13

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-14

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-15

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-16

ECONOMIC ENVIRONMENT
Market requires purchasing power as well as

people. Purchasing power depends upon current income, prices, debt, credit, saving etc. Marketers must pay careful attention to trends affecting purchasing power.

INDIAN SOFTWARE GIANTS WARY OF ECONOMIC SLOWDOWN 20 JAN 2008 (Economic times)

INCOME DISTRIBUTION
Macroeconomic indicators provides overall

health of economy as well as direction of economic growth. Marketers needs to understand the distribution of income to make more meaningful conclusions.

Copyright 2009 Pearson Education, Inc. Publishing as Prentice Hall 3-20

Driven from Consumption Throughout the 1.1 Billion Population

5-7 million Super Rich 70 80 million Afford Cars, Private Healthcare & Foreign travel 250 - 300 million Afford goods like Refrigerators , Scooters & Colour TVs 600-700 million (Generally Rural) Afford simple industrial products e.g. bicycles , radios , textiles

Poverty Line = income less than $ 1/day

60 % of Indias population are under 24 years

Source: McKinsey,

With High Private Consumption

GDP US$ 935 billion Food Apparel Beverages Footwear Consumer durables Appliances Transport Retail US$ 342 Billion (59%) Non Retail US$ 238 Billion (41%) Communication Recreation Cultural Services Urban (5,100 towns) US$ 154 Billion (45%)
Modern retail US$ 12 billion 8% of urban retail spends

Private Consumption US$ 580 Billion (62%)

Public Spending and Capital Formation US$ 355 Billion (38%)

Stationery
Kitchen utensils Furniture Furnishings Sports goods Health & Beauty Personal Care Jewellery Timing Rural (6,27,000 villages) US$ 188 Billion (55%)
Modern retail Negligible

Education Rent Utilities Other Services

Source: Central Statistical Organization (CS0) and Technopak Analysis Conversion rate: 1 US$ = 40.86 Rs.

Types of Industrial Structures

Industrial economies Industrializing economies

Raw-materialexporting economies

Subsistence economies

3-24

India An Industrializing Economy

3-25

Saudi Arabia A Raw-Material Exporting Economy

3-26

SOCIAL CULTURAL ENVIRONMENT

Purchasing power is directed

towards certain goods &services. People absorb, unconsciously a worldview that defines relationship to organization, to themselves, to society, to nature, and to universe.

Microsoft steps up on search R&D IN EUROPE This is because maximum usage is in European countries.

Social-Cultural Environment
Views of themselves (pleasure seeker, self-

realization, etc.) Views of others (concern about homeless, crime, victims, social surrogatestelevision, home video games, etc.) Views of organizations (company downsizing and corporate accounting scandals, etc.) Views of society (defend societypreservers; run itmakers; can get fromtakers; change it changers; looking for something deeperseekers; leave it--escapers Views of nature (natures fragility and finiteness) Views of the universe (religious, etc.)
3-29

Most Popular Indian Leisure Activities

Reading Computer activities

TV Watching
Spending time with

Walking
Exercise Listening to music Shopping

family Going to movies Going out to Eat

3-30

Natural Environment
Shortage of raw materials

Increased energy costs

Anti-pollution pressures

Governmental protections

3-31

NATURAL ENVIRONMENT
Deterioration of natural environment is major

concern. Cities like Mumbai, Bangalore etc. reached dangerous levels. Some regulation hit industries very hard--Steel industry

Microsofts environmental contribution

Microsoft announces a new green wireless mouse.

This is environment friendly because it uses six

month long battery.

Keys to Avoiding Green Marketing Myopia

Consumer Value Positioning (design

environmental products to perform as well as alternatives; products that have health benefits; fixed price for renewable energy products) Calibration of Consumer Knowledge (connect environmental products attributes with desired consumer valuepesticide-free; solar powered); use of internet. Credibility of Product Claims (environmental product and consumer benefit claims)
3-34

TECHNOLOGICAL ENVIRONMENT
Technology has released like non invasive

surgery, Internet, bullet trains, spacecraft, mobile phones, satellites, DNA testing, ATMs Fibre Optics, Microprocessors, Photovoltaic
Solar Energy, Bar codes and scanners, Birth control pills ,GPS etc
It has also released hazards like hydrogen

bomb, nuclear bomb etc.

Technological Environment
Pace of change

Unlimited Opportunities for innovation

Varying R&D budgets

Increased regulation of change

3-36

POLITICAL- LEGAL ENVIRONMENT

Marketing decisions are strongly affected by

development in political and legal environment. Increase in business legislation Protecting the welfare of consumers Gilvec Patent, Consumer protection act, RTI, weights and measures Food bill , NAREGA

Political-Legal Environment
Increase in business legislation (e.g., unfair competition, protect society)

Growth of special interest groups (e.g., consumerist movement)

3-38