Changes in business environment due to demographic changes
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This document discusses how demographic changes impact the business environment in India. It defines demographic environment and lists 15 key elements that companies analyze, such as population size, growth rate, family size, education, and lifestyle. It provides examples of how companies like Dominos, Horlicks, Honda, and Coca-Cola have tailored their strategies and marketing based on these demographic factors in India. The document also outlines advantages like focus, branding, and trend analysis, and disadvantages like needing to constantly update information and potential customer loss.
Changes in business environment due to demographic changes
- 1. Changes in Business Environment due to Demographic changes… Varun Pratap Singh Tomar By-
- 2. Components of Business Environment Internal Environment • Value System • Resources • Company Image • Mission& Objective External Environment • Micro Environment • Customers • Suppliers • Distributors • Society • Macro Environment • Demographic Environment • Technological Environment • Economic Environment • Political Environment
- 3. • Micro environment is defined as the near by environment, under which the firm operates. Micro environment • Macro environment refers to thegeneral environment , that can affect the working of all business Macro environment
- 4. Demographic environment Demographic Environment is the study of population segregation by Business entities to target their respective customers in order to reduce marketing cost and to focus mainly on their audience.
- 6. Demographic environment Elements 1 Population Size 2 Growth Rate of population 3 Family Size 4 Educational Level 5 Language
- 8. Demographic environment Elements Population Size • Since every organization across the globe like to target large amount of profit, so for this, organization do require a healthy amount of customer. For this factor a good population size is an important aspect. • Eg:- Pizza chain like Dominos has India as its largest market after US with covering 70% of Pizza Market.
- 9. Demographic environment Elements Growth Rate of Population • In country like India, which has a high growth rate of population has attracted so many health food drinks for kids. • Ex: Horlicks in India covers almost 50% Market share competing with Complan and Bournvita .
- 10. Demographic environment Elements Family Size • Country like India earlier was known for Joint Families structure but with the changing era, its has started adopting the tradition of Nuclear families. • Ex: In urban areas, there are 88% Nuclear families having 3-4 members in a family. So with this companies dealing in cars started targeting customers with this. • Honda launched a car campaign of its car Mobilio in 2014 with tagline of ‘Apne liye, apno ke liye’
- 11. Demographic environment Elements Educational Level • Huge population of India is young and most of them are graduates, so those who have a family and are married living in urban cities have a different approach towards various aspects like Food habits, suggesting schools, colleges etc. • Ex: Indian Parents are now focusing towards Smart Class concept and with respect to this, more than 12000 schools have adopted the concept of smart classes. Companies like Educomp, NIIT, Samsung Smart Class Solutions are major key players in the market.
- 12. Demographic environment Elements Language • Language is the one of the centers of attraction for companies so that they change their complete strategies to cover markets. • Ex: Coca-Cola in China did so much research just to pronounce its brand name and it was over 40,000 characters to find actual tagline in Chinese language i.e. “Happiness in the Mouth”
- 13. Demographic environment Elements Religion • Religion is basically one of the parameters that every organization likes to take care of during the business, because anything against religion may destroy or may lead to huge loss for the company. • Ex: Mc-Donald’s does not sell beef or pork based dishes in India because it may harm sentiments of Hindus or Muslims.
- 14. Demographic environment Elements Racism • Racism is one of the problems which always creates trouble to companies, in some countries it’s not allowed for them to hire other than natives, then it become a big problem to hire good employees for the company. • Ex: Trump’s controversial decision over H1B visa actually made companies to suffer in completion of their projects. Indian IT Giant Infosys got the problem because their clients in US showed incapability in arranging H1B visa for the Infosys Employees.
- 15. Demographic environment Elements Age • There are multiple organizations which basically likes to deal in different age segments and they have their customers accordingly. • Ex: Firstcry.com is one of the emerging companies which deals in baby products. It will be having around 400 Stores in India by the end of 2017.
- 16. Demographic environment Elements Assets Ownership • Assets ownership helps organization to make new ideas to make profit by business. • Ex: Cab Services like OLA, UBER which basically use individual owner’s car to earn profit on sharing basis.
- 17. Demographic environment Elements Home Ownership • Home Ownership is one of the foci which likely to leads creation business like Home Loan, Rental etc. • Ex: Many Banks like PNB, SBI offers home loans to public while company like OLX allows Home Owners to give their flats, Homes on rent.
- 18. Demographic environment Elements Employment Status • Sometimes due to unemployment, org like to come to our country just because they know that they can hire people at lower cost then other countries. • Employment Status in a country is one of the parameters to judge a country’s growth so for any organization its important to know whether their business will be able to survive in the particular country or not • Ex: In India, too many US staffing companies are working just because here they have to pay less to employees.
- 19. Demographic environment Elements Lifestyle • With the going era lifestyle is one of the concern of the customer. So many companies target their customers and thus help in finding a unique base of customers. • Ex: Royal Enfield is one of the bikes which is purchased by the people who are more likely attracted by powerful engine and heavy sound.
- 20. Demographic environment Elements Birth Rate & Death Rate • Birth Rate and Death Rate in a country talks about creating a business environment which will lead to Medicine market. So, many companies across globe like to cover other countries to cover the expand their market. • Ex: Australian brand Human Mixtard is one of the largest Insulin seller for Diabetes in India.
- 21. ADVANTAGES AND DISADVANTAGES A demographic environment is a set of demographic factors such as gender or ethnicity. Companies use demographic environments to identify target markets for specific products or services. This practice has both advantages and disadvantages. Marketers have to take both sides of the demographic environment coin into account when deciding what strategy to apply.
- 22. ADVANTAGES Focus When a company looks at a demographic environment, it focuses its attention on the people who are most likely to buy a product. This is good from the marketing standpoint because it means the company does not waste money trying to get people to buy who have no interest in the product Branding and Strategy Demography provides very specific information about different populations. Once a company has this data, the company can develop well-defined strategies about how to reach each population -- that is, it tells companies exactly how to market and develop their brands so people in the demographic environment will respond. For instance, if people in the demographic environment tend to be busy, young workers, then a company might promote the quick use and convenience available with the product. Trending and Comparison When companies examine demographic environments, they usually do so under the same lenses, such as age or gender. By collecting demographic data over extended periods of time and comparing information from different points, companies can identify trends within the population. This lets them forecast what might happen with sales in the future and make some decisions about upcoming production or offered services
- 23. DISADVANTAGES Change Populations are never constant. People migrate from place to place, and people pass away and are born. Subsequently, marketers cannot simply collect demographic data one time. They have to collect the information constantly in order to have a realistic picture of what is happening at any given point. This requires a great deal of effort and means a constant expense to a business.
- 24. DISADVANTAGES Customer Loss Focusing marketing based on demographic information means that a company may lose potential customers who do not fit the general demographic mold because the company does not concentrate on attracting those customers. This includes the loss of sales from people who might buy the product or service for someone else, as those people might not be aware the company offers the product or service.
- 25. CONCLUSION Thus, as a marketer, one must understand how important demographic changes effect the Indian business and market and be flexible to these changes leading a competitive edge to the business organization.