The market environment is a marketing term and refers to all of the forces outside of marketing that affect marketing management’s ability to build and maintain successful relationships with target customers. The market environment consists of both the macro environment and the micro environment Demographic factors Study of human population in terms of size, density, location, age gender, race, occupation, other stats India’s demographic report findings * Estimated 1. billion people live in India, that makes India 2ND most populous country in the world * 70% of the population lives in rural areas, that trend is slowly changing due to migration to urban area, which is largely due to rapid urbanization * India’s largest urban agglomerate are Mumbai, Chennai, Kolkata, Delhi, Hyderabad & Bangalore. * One of the largest middle class in the world, with rising income. * Has one of the largest & youngest populations in the world with very high aspiration Example of How have companies responded to the changing environment? Young group attracted competitors in the area of motor bikes, readymade garments, mobile phones ,soft drinks(coke,pepsi,gatorrade,red bull), fast food chains (mc Donald, kfc,dominos) * 50% population is woman and their traditional roles have also changed, most women are self-confident and also educated and empowered. This shift has resulted in a whole range of new products like ready to cook, ready mixes, cooking range, washing machine, vacuum cleaner. * More egalitarian relationship between husband & wife & also a move toward more shared decision making pattern between parents & children.
Despite these changes the fact remains that most people continue to give more priority to the families & families continue to maintain strong kinship, bonds & ties. Examples of ads like washing machine, Mdh masala, kurkure ads giving total picture of family & love Political & legal environment It consists of Government Regulations, policies, social groups etc… Any kind of business must be abided by the legal policies of the nation. The Law is for the purpose of protecting customers from exploitation by the business man, to protect interest of society and also to protect companies from unfair competition.
Examples of laws in India * Consumer Protection Act, Environment protection Act Indian Contract Act, Competition Law etc. Apart from this every citizen is required to be abided by the Indian Constitution. * In food companies need approval to launch brands that already exist in the market such as another cold drink or a brand of rice * It is mandatory that all vegetarian food products carry green dot & all non vegetarian food products carry red dot * All products must have the MRP printed on the pack In India government making the rule that all public transport like the buses & auto rickshaw use CNG as fuel instead of diesel & petrol Natural environment The natural environment involves natural resources that are needed as inputs by marketers or that are affected by marketing activities. During the past two decades environmental concerns have steadily grown. Some trend analysts labeled the specific areas of concern were: Nature is the source of raw material for the production a product. The raw material may be renewable, infinite or depleting. In all the cases the raw material shall be preserved and wastage must be minimized.
Also the pollution should be minimized to preserve the ecology. Marketers in the current scenario try to Go Green and promote the Eco friendly Concept. For Instance Idea promoted Save Paper, and many companies are promoting Go Green campaign. Examples of how natural environment factors influenced marketing decision * campaign against coke in a village in Kerala alleging water shortage & environment deterioration in the vicinity environmentalist actively campaigning against the pollution * steel companies have to spend a huge amount of money on pollution control equipment * soap industry have to increase its biodegradability in India the Delhi state government introducing the rule that all public transport like buses & auto rickshaw must use CNG instead of diesel & petrol * pollution under control certification is a must SOCIO-CULTURAL Culture is set of beliefs and customs pertinent in a society. A marketing campaign must be in tandem with the beliefs. The market should adjust the decisions with respect to the cultural and social; beliefs.
Example of how socio cultural aspects have influenced marketer’s decision making Changing family system in India from large joint family to nuclear family have lead to increasing demands for flats, vehicles and consumer goods * Customs have also influenced marketing strategy, for instance business firms do brisk business during festival like diwali, id, Christmas etc * Pepsi identified the popularity of nimbu pani in rural & urban India so they launched nimbus based on the traditional flavor of nimbu pani * In India marriage is a family affair a huge opportunity for business * Because india has many language advertising campaigns have to be launched in national & local language * Shift from kirayani ka dukkan to swanky malls like Big bazaar, pantaloons, shopper stop * From scooter to car, large number of Indians interested in buying a car lead to tata company launching the TATA NANO CAR * People becoming more health conscious shift from soft drinks like pepsi & coke to Tropicana & Real juice. Also the growing fitness & health care industry * New trend of finding marriage partners online has lead to the growth of companies like Bharat matrimonial, manorama matrimonial, shaadi. com and others * In many cases firms are able to dilute the cultural beliefs by exposing them to a new culture. This can be validated by the fact that Archie’s has made its market in India by promoting different occasions like Valentine’s Day, Fathers Day and friendship day. Technological environment
Marketers should take account of the accelerating pace of technological change, opportunities for innovation, varying R&D budgets, and the increased governmental regulation brought about by technological change. There are unlimited opportunities for Innovation and every competitor tries to exploit the new usage of the product Examples of how technology has influenced the marketing macro environment * Especially in the retail industry like the large mall the technology has helped retailers to measure the products with modern weighing machines. Earlier, they have used balances which could not measure the merchandise correctly. * Every new technology is a force for “creative-destruction”. Transistors wiped out the vacuum tube industry; xerography hurt the carbon-paper business; autos hurt the railroads, television hurt the newspapers. Today a large number of people have started to use the internet so advertising as a means of communication is shifting to the internet, companies like Amazon, eBay and Google exploited this opportunity to make huge money * Data storage is becoming more cheaper, earlier pen drives having even 1 gb capacity were expensive, now 1 gb is become almost non existent. This means that information can be carried along with you and that too lots of them * More and more people have mobile phones & most of them have camera that is also a tool of content production * Travel time & trade time have become more shorter this means that commodities & people can move extremely fast from one place to another * Sites like facebook, twitter, orkut and other blog have tremendously increased human interaction.
Every 5 seconds a consumer is posting information about a particular product on the web * Greater emphasis on R&D – Ranbaxy , Zydus, Cadilla , Dr. Reddy’s , Cipla(7-8%of sales) * Technology has made marketing more innovative & also competitive because information can be passed to the consumers faster than ever before Economic environment Consist of factors that affect consumer buying power & spending patterns As we know demand is defined as Desire for a product backed by willingness and ability to pay. Thus it is not only the people but also their ability to buy a product is vital for a marketer. Ability to pay can be measured in terms of Income distribution, economic condition of the nation, Credit availability.
In the economic arena, marketers need to focus on income distribution and levels of savings, debt, and credit availability Income distribution: NCAER (National Council of Applied Economic Research) has classified Indians as under * Destitute: Household income below Rs. 16000 p. a. (Not active participants in market exchange for a wide variety of goods) * Aspirants: Rs. 16000-22000 p. a. (New entrants into the consumption systems due to Increase in their real income) * Climbers: Rs. 22,000-45,000 p. a. (Have desire and willingness to buy, but have limited Cash in hand). * Consuming Class: Rs. 45,000-Rs. 215,000 (Households forming majority of consumers; have money and are willing to spend) * The Rich : (Those who have money and own a wide variety of products). * The first three income categories show significant growth from 1995-96.
The households classified as rich grew by 95% from 95-96 to 06-07, consuming class grew by 132% and climbers by 51%. * Aspirants and destitute decreased by 54% and 50% respectively By income level, the rich grew by 400% in urban areas, and 200% in rural areas, Climbers by 145% in urban areas and 119% in rural areas. There will be a sharper reduction in the number of Aspirants and Destitutes. The trend suggests that the urban areas are likely to witness a relatively higher growth of “people with money”, who actively participate in market exchange. Indian marketing environment few more examples How some industry leaders lost their competitive advantage? Because they failed to perceive the environmental changes.
The decade of 1980 saw many industrial titans losing their competitive advantage to relatively new entrants * Hindustan Motors and Premier Automobiles lost their pre-eminent position in the Indian market to Maruti Udyog’s Maruti800 * Mahindra and Mahindra were shaken up by Maruti Udyog’s Gypsy * Titan watches heralded a new era of watches and shook the giant HMT * Hindustan Levers Surf was cornered by Nirma. * Television giants like NELCO, Crown, Weston, Salora, Bush etc. lost out to absolutely new firms and brands like Onida and Videocon. * Videocon launched its washing machine in1998 and suddenly thereafter, one saw an explosion in the market with about half-a- dozen brands.