Japanese auto major Honda, like most major car makers,
experienced one of its worst performance slumps in 2008. Shrinking demand
worldwide for new vehicles and a strengthening yen have had disastrous effects
on the company’s bottom line. With the new CEO Takanobu Ito, the company
started to focus on R&D and this became company’s new goal.
Except for the Honda Civic diesel (majorly sold in UK),
the company was only making petrol cars. With the increase in the price of
petrol, many price sensitive markets like India, preferred diesel cars. In
India, they were facing strong competition from local automobile companies like
Maruti Suzuki, Tata Motors and Mahindra & Mahindra and also with the
Japanese and Korean automobile giants. These companies were not only selling diesel
cars but also small cars (B-segment) to fit the pockets of Indian consumers.
Seeing the demand, Honda’s research and development team in Japan started
developing diesel engines. They also brought B-segment care “Brio” in India in
2009 and finally came with diesel car “Amaze” in 2013. In 2014, they also
launched “Mobilio, a compact MUV in competition to Toyota’s Innnova” and
Maruti’s “Ertiga’.
As the result, year 2014 was recorded as Honda’s the best
ever year in India, with record sales of crossing 1.79 lakh units.
Like Honda, even the most successful companies need to
keep a watchful eye on happenings of the marketing environment. Marketing
environment is consists of the forces outside the functional areas of business
that affects company’s performance. These are the forces that may not be
directly affecting the business (apparently), but may cause a major concern if
ignored. This calls for continuous gathering, filtering & analysis of the
information. The information may be regarding the changes in competition,
economic and demographic conditions, customer’s tastes and preferences or any
other changes that may affect the company in future. These major forces outside
the company forms Macro-Environment. On the other hand, Micro-Environment
consists of forces close to the company that affect its ability to serve its
customers. In this session, we shall discuss macro factors affecting marketing
function.
The Macro Environment
The macro environment consists of Demographic, Economic,
Natural, Technological, Political and Cultural forces.
Demographic Environment
The marketers need to study the changes in
Demographic environment, i.e. majorly related to changes in population
including its size and growth in cities, towns and villages, age distribution,
educational levels, ethnic and regional characteristics and
household patterns. Demographic environment consist of geographic
distribution, density, mobility trends, age distribution, birth, marriage &
death rates, racial, ethnic & religious structure, occupation, location and
other statistics.
Key trends in demographic environment that affects
marketing in India are:
Increasing Population:
India is world’s second largest in terms of population.
The population growth in India has resulted in increasing demand of commodities
and items of mass consumption. Many companies target the low income population
that is also very large in numbers by providing less costly utility
products.
Age Distribution:
According to the Census of India, India is one of the most the
youngest country in the world. (Demographic Dividend). Hence it is the best
market for innovative and futuristic products.
Rural India:
More than 70% of Indian population lives in rural India.
(Rural Population in India). The Marketers are
targeting them with new range of products as they feel that this market has
lots of opportunities and gaps. With increase in exposure through television,
radio and now mobile and internet, the rural population has increased
aspirations that is no different from urban population. A study conducted by
IMRB confirms the same - Rural India
Household Pattern:
People in India are moving from a joint family system to
nuclear family system. This trend has increased the number of households. Women
in India now are more educated and empowered. This led to demand of new product
line in almost all categories of products.
Increased education:
According to recent research, Indians are spending more and more in
the education of their children. Also, in India, primary education is free in
public schools. This resulted in increased college attendance and hence
increased white collar workers in offices.
Kids Fashion
Fashion clothing is increasing becoming
popular amongst kids in India. Seeing the demand, Flipkart has announced the
launch of a high focus, store Li'l Stars' dedicated to kids on its platform.
Due to growing exposure of working class in India, there is an in increase in
demand of global brands like Pepe Jeans, US Polo and Disney. More and more
parents are demanding global brands for their children not only in toys segment
but also in apparels. This is a very good opportunity for other global players
as kids apparel market in India stands as 20% of the total apparel market in
the country.
Economic Environment
Economic environment consists of the factors that affects
consumers buying ability and patterns. The analysis of key economic concerns
for markets like economic development or slowdown, changes in income and
savings, changes in consumer spending patterns and inflation.
Young Indian Buyers
Demographics in India is fast moving
and the good news is it is growing young! Indian buyers of luxury cars are only
in their 30s a decade less than the global average. Many of these are
millionaire at a very young age thanks to the success with startups or they are
high paid professional. The average age of Indian millionaire has come down to
35-40 rom 50. That means younger people have disposable income to buy multiple
entry level models like Mercedes A Class, Audi Q3 and BMW X1. Also, overall
growth in Indian economy has helped in the emergence of these new age
entrepreneurs who are highly aspirational, are global travelers and are
conscious about their personality.
Natural Environment
Businesses need to understand the importance
of conserving the natural resources as they are used as an input
for most of the production. There is worldwide concern over issues like
industrial pollution, ecological deterioration, indiscriminately
mining, use of harmful pesticides and fertilizers, deforestation,
introduction of genetically modified food and pollution of rivers and
underground water.
Rough Ride Ahead!
Mahindra & Mahindra a leading SUV
manufacturer in India has suffered a huge blow as due to environmental concerns
in the nation's capital Delhi, Supreme Court has decided to enforce a ban on
more than 2 litre engine diesel vehicles. This ban is imposed till 31st March
2016. M&M, however, has decided to face the testing times with resilience.
According to the Chairman, Anand Mahindra, "the company will honour the SC
and develop vehicle that comply with their stipulations."
Many countries including India, are dealing with these
issues by government interventions with corporate support.
Use of CNG-powered vehicles, solar power and other forms of green energy, recycling activities are some initiatives to name a few.
Use of CNG-powered vehicles, solar power and other forms of green energy, recycling activities are some initiatives to name a few.
ITC - The Green Company
ITC's YC Deveshwar recently has
won the Smart Green Leader award for Lifetime Achievement. In his leadership
ITC has become the only company in the world with carbon positive (10 years),
water positive (13 years) and solid waste recycling positive (8 years). Apart
from it's numerous initiatives for sustainable development and empowerment of
rural India, ITC has pioneered in using renewable energy resources. Many ITC
hotels, factories and buildings have LEED (Leadership in Energy and
Environmental Design) certificate.
In India, Central Pollution Control Board is working towards prevention and
control of water and air pollution and improvement of the quality of air.
Eco-mark is a scheme on labeling of environment - friendly products.
An earthen pot has been chosen as the logo for the Ecomark
scheme in India. The familiar earthen pot uses a renewable resource
like earth, does not produce hazardous waste and consumes little energy in
making. Its solid and graceful form represents both strength and fragility,
which also characterizes the eco-system.
Electric Cars in China
While many countries are testing and
launching their version of electronic cars, the real happening in the sector is
taking place in China. The deteriorating climatic conditions and government
subsidies have encouraged many car companies to launch e-vehicles. The biggest
factor in fuelling this surge is the cost factor which is becoming lesser due
to heavy government subsidy. Apart from this, Chinese government is also
planning to subsidize the installation of charging centers and free parking and
registration of electric cars.
Technological Environment
Every company needs to be updated about the happenings in
technological environment. These are the forces that create new product and
market opportunities. Apple Inc. has all its success attributed to its
R&D and technological updation. Samsung, IBM and many other
companies keeps their employees on toes to continuously update and
upgrade the technology.
Marketers need to follow the trends like, accelerating
pace of change, unlimited opportunities for innovation, R&D
budgets of competitors and increased regulation.
Political-Legal Environment
Political-legal environment consists of laws,
governmental agencies and groups that influence or limit marketing actions. It
includes policies regarding liberalization, globalization, decontrol, de-licensing, FDI Policy and similar matters. Marketers needs to keep an eye on
the following:
Government may impose legislation with an aim to protect
companies and consumers from unfair trade practices. Key regulations are
related to environmental concerns, export and import issues, occupational
health and safety concerns, manpower issues and protection from competition.
Changes in legal environment like new taxes, restrictions
in age limits for consumption, bans and other mandatory measures requires close
monitoring as they affect the marketing activities immensely.
Looney Tales
Google's
project Loon may see the light of the day in India. Indian government with all
their privacy concerns over spectrum, is now ready to approve the pilot run of
the project. Google's Indian chief Sunder Pichai has managed some support for
the project Loon, Google has proposed to provide internet connectivity in hard
to access areas of the country from balloons floating at a height of 20 km
using LTE (Long Term Evolution Technology) or 4G technology .Meanwhile, RailTel
Google's project to connect 400 Indian railway station is on track and around
100 stations will be connected by the end of next year. Google's Internet
Saathi, a tie up with Tata is also announced. This project will help women get
online by providing 1,000 bicycles equipped with internet devices.
Many companies are converting their processes into green
and environment friendly. Some other companies, are taking up causes like, safe
driving, save water and electricity and save wildlife, say no plastic and so
on.
The paper-work, documentation and other mandatory
obligations are to be fulfilled as per the Company Law.
To Be or Not To Be
Net neutrality is one of the most
trending topic in India. Telecom Regulatory Authority of India (TRAI) is once
again attempting to address the question of net neutrality and exploring
whether zero-rating plans and schemes such as Facebook’s ‘Internet.org’ are in
violation of the principle of net neutrality. Like last time they are inviting
comments on differential pricing for data services. The concerns are that these
zero-rating plans may result in discriminatory, anti-competitive, predatory or
misleading in favour of some telecom service providers.In a zero-rating plan, the cost of browsing will be borne by the content providers of a website and the subscriber browse the website free of charge. Bharti Airtel had faced criticism when they launched such program and later put off.
Talking
about Facebook's strategic tie-up with Reliance Communications, Internet.org,
it aims at allowing access to certain websites along with Facebook without
mobile data charges. Latest news is facebook has pulled out free basics in India.
Socio-Cultural Environment
Socio-cultural forces affect a society’s basic values,
perceptions, preferences, and behaviours that reflects in their purchasing and
preferences. Culture reflects individual consumer’s relative emphasis they
place on self-gratification. Their motivations and behavioural patterns are
influenced by their own specified needs and wants. Different cultures have
different concerns about others. Currently these is lot of commonality in most
cultures as people are moving from being social to being social on social
networking sites. People vary in their attitudes toward corporations,
government agencies, trade unions, and other organizations. Joining some
organizations like army, Navy or Airforce is a dream of every young boy or girl
in India. Some universities like Delhi University, NMIMS University are very
prestigious in India and worldwide. These attitudes comes from general learning
from the society. Their celebrations and customs are driven by the norms of
society and very closely observed.
Cultural belief also determine consumer’s attitudes
toward nature. Growing demand of organic food shows that people prefer natural
products. Also there is an increasingly favourable
attitude towards green products and green marketing. Overall people
are also deeply involve in their beliefs about the origin of the universe and
their place in it. Movies like PK, OMG and similar are popular because of their
content on view of universe.
Smart Toys - Rama Rama
Gamaya, a Sunnyvale based gaming company is
launching a virtual game based on Ramayana. The centrepiece of the game is a
book that serves as the gaming console, a portal into the great Indian epic. A
toy character from the Ramayana has to be placed on this Bluetooth-enabled book
for the game to come alive on Android and iOS devices, allowing children to
transport the character into a virtual world.
