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Gathering Information and
Scanning the Environment
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Needs and Trends
3-2
Fadsshort-lived and without social, economic,and political significance.
Trendsdirection or sequence of events that hassome momentum and durability.
Megatrendslarge social, economic, political,and technological changes
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Trends Shaping the
Business Landscape
3-3
Profound shifts in centers ofeconomic activity(Asia(excluding Japan)13% ofWorld GDP; Western Europe >30%)
Increases in public-sectoractivity(aging of populationnew levels of efficiency andcreativity from public sector)
Change in consumerlandscape(billion newconsumers to enter globalmarketplace in next decade andU.S. Latinos 2015 spendingpower equivalent to 60% ofChinese consumers.
Technological connectivity
(change way people live) Scarcity of well-trained talent
(33 mm university-educatedyoung professionals indeveloping countries is morethan double the number indeveloped ones
Increase in demand fornatural resources(Oil demandprojected to grow by 50% innext two decades and watershortages may constraint growthin many countries)
Emergence of new globalindustry structures(barbell-like structurefew large, narrowmiddle, lot of smallercompanies)
Ubiquitous access toinformation(open sourceapproach)
Management shifts from art toscience(algorithmic decision-making techniques and
sophisticated software) Increase in scrutiny of big
business practices(be able toargue and demonstrateintellectual, social, andeconomic case for business)
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Environmental Forces
3-4
Demographic
Economic
Socio-cultural
Natural Technological
Political-legal
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What is Demographic environment?
The demographic environment includes thestudy of human populations in terms of:
size,
density,
location, age,
sex,
race,
occupation,
other statistical information.
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Population and Demographics
3-6
Population growth
Population age mix
Ethnic markets
Educational groups
Household patterns
Geographical shifts
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World Population Growth World population shows explosive growth, in
2000 it was 6.1 billon and it is projected toexceed 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 majorimplication for business.
For Example--GOLDMAN SCAHS report has
projected that India in next 30 year might growup to 3rdlargest economy in world
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Population Age Mix
In population age mix marketers are increasinglyrecognizing 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 callEye Gear under the brand Fast Track
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LOWEST AVERAGE AGE
aVERAGE AGE 25 YEARS IS THE LOWEST ASCOMPARED TO OTHER COUNTRIES.
IT WILL BE 28 YEARS IN 2020 AND 53 WOULDBE UNDER THE AGE OF 30 BY 2020
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Copyright 2009 Pearson Education,
Inc. Publishing as Prentice Hall3-10
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Copyright 2009 Pearson Education,
Inc. Publishing as Prentice Hall3-11
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Household Patterns
3-13
http://www.fmf.uni-lj.si/~mohar/Pict/Gore97BB.jpghttp://www.gay.com/8/13/2019 Scanning Environment
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Copyright 2009 Pearson Education,
Inc. Publishing as Prentice Hall3-14
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Copyright 2009 Pearson Education,
Inc. Publishing as Prentice Hall3-15
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Copyright 2009 Pearson Education,
Inc. Publishing as Prentice Hall3-16
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ECONOMIC ENVIRONMENT
Market requires purchasing power as well aspeople.
Purchasing power depends upon current income,
prices, debt, credit, saving etc.
Marketers must pay careful attention to trends
affecting purchasing power.
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OF ECONOMIC SLOWDOWN
20 JAN 2008 (Economic times)
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INCOME DISTRIBUTION
Macroeconomic indicators provides overallhealth of economy as well as direction of
economic growth.
Marketers needs to understand the distribution of
income to make more meaningful conclusions.
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Copyright 2009 Pearson Education,
Inc. Publishing as Prentice Hall3-20
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Driven from Consumption Throughout the 1.1 Billion
Population
5-7 million
Super Rich
7080 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 productse.g. bicycles , radios , textiles
Poverty Line = income less than $ 1/day
Source: McKinsey,
60 % of Indias population are under 24 years
http://images.google.com/imgres?imgurl=http://upload.wikimedia.org/wikipedia/en/thumb/2/23/Indian_Couple_on_Bicycle.jpg/180px-Indian_Couple_on_Bicycle.jpg&imgrefurl=http://en.wikipedia.org/wiki/Bicycle&h=250&w=180&sz=15&hl=en&start=1&tbnid=Vj2HXGk35I5f2M:&tbnh=111&tbnw=80&prev=/images?q=lower+class+indians&ndsp=20&svnum=10&hl=en&lr=&sa=N8/13/2019 Scanning Environment
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With High Private ConsumptionGDP
US$ 935 billion
Private Consumption
US$580 Billion(62%)
Public Spending and CapitalFormation
US$ 355Billion (38%)
RetailUS$ 342 Billion
(59%)
Non RetailUS$ 238 Billion
(41%)
Urban (5,100 towns)
US$ 154 Billion(45%)
Rural (6,27,000 villages)US$ 188 Billion
(55%)
Modern retailUS$ 12 billion8% of urban retail spends
Modern retailNegligible
Food
Apparel
Beverages
Footwear
Consumer
durables
Appliances
Stationery
Kitchen utensils
Furniture
Furnishings
Sports goods
Health & Beauty
Personal Care
Jewellery
Timing
Transport
CommunicationRecreation
CulturalServices
Education
Rent
UtilitiesOther Services
Source: Central Statistical Organization (CS0) and Technopak AnalysisConversion rate: 1 US$ = 40.86 Rs.
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Types of Industrial Structures
3-24
Industrial
economies
Subsistenceeconomies
Raw-material-
exporting
economies
Industrializing
economies
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IndiaAn Industrializing
Economy
3-25
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Saudi Arabia
A Raw-Material Exporting Economy
3-26
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SOCIALCULTURAL
ENVIRONMENT
Purchasing power is directed
towards certain goods &services.
People absorb, unconsciously aworldview that defines relationship
to organization, to themselves, to
society, to nature, and to universe.
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Microsoft steps up on search R&D IN
EUROPE
This is because maximum usage is inEuropean countries.
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Social-Cultural Environment
3-29
Views of themselves(pleasure seeker, self-realization, etc.) Views of others(concern about homeless, crime,
victims, social surrogatestelevision, home videogames, etc.)
Views of organizations(company downsizing andcorporate accounting scandals, etc.) Views of society(defend societypreservers; run
itmakers; can get fromtakers; change itchangers; looking for something deeperseekers;
leave it--escapers Views of nature(natures fragility and finiteness) Views of the universe(religious, etc.)
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Most Popular
Indian Leisure Activities
3-30
Reading TV Watching
Spending time with
family
Going to movies
Going out to Eat
Computer activities Walking
Exercise
Listening to music Shopping
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Natural Environment
3-31
Shortage of
raw materials
Increasedenergy costs
Anti-pollution
pressures
Governmental
protections
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NATURAL ENVIRONMENT
Deterioration of natural environment is majorconcern.
Cities like Mumbai, Bangalore etc. reached
dangerous levels.
Some regulation hit industries very hard--Steel
industry
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Microsofts environmental contribution
Microsoft announces a new green wireless mouse.
This is environment friendly because it uses six
month long battery.
K t A idi
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Keys to Avoiding
Green Marketing Myopia
3-34
Consumer Value Positioning(designenvironmental products to perform as well asalternatives; products that have healthbenefits; fixed price for renewable energy
products) Calibration of Consumer Knowledge
(connect environmental products attributeswith desired consumer valuepesticide-free;
solar powered); use of internet. Credibility of Product Claims
(environmental product and consumer benefitclaims)
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POLITICAL LEGAL
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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
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Political-Legal Environment
Increase in
business legislation
(e.g., unfair competition,
protect society)
Growth of special
interest groups
(e.g., consumerist movement)