1.

THE DEMOGRAPHIC AND ECONOMIC ENVIRONMENT:

1.1. The Demographic Environment:
Whether marketing to domestic or international markets, demographic information can provide
important insights about a target market and how to address consumer needs. Demographics
refer to statistical information about the characteristics of a population. The word demography
itself is defined as the study of human population in terms of size, density, diversity, location,
age, gender, race, family systems, changing role of women, education, occupation and other
statistics. Since markets involve people, demographic environment is of major concern for the
marketers. The world’s large and highly diverse population poses both opportunities and
challenges. Various traits are used to determine product preferences or buying behaviors of
consumers that have major implications on the business and marketing macro environment are as
follows:

1.1.1. Increasing Population:

Population size will affect future market demand through prices and supply elasticity. A rapidly
increasing population indicates a growing demand for many products. High population growth
rate also indicates an enormous increase in labor supply. Moreover, it gives rise to differing
demand patterns and calls for different marketing strategies.

1.1.2. Changing Age Structure of Population:

Since the birthrates and longer life expectancy, the population is rapidly getting older. This aging
of the population will have a significant impact on markets and those who service them. If we
take the U.S. population contains several generational groups divided pretty much in four largest
groups – the baby boomers, Generation X, the Millennials, and Generation Z and their
impact on today’s marketing strategies.
 The Baby Boomers have been one of the most powerful forces in the marketing
environment born between 1946 and 1964.
 Born between 1965 and 1976, Gen Xrers are less materialistic than the other groups;
have cautious economic outlook and for them parents, family comes first rather than
career. They tend to research products before they consider a purchase, prefer quality to
quantity, and tend to be less receptive to overt marketing pitches
 The Millennials or Generarion Y are born between 1977 and 2000, they make up a
huge and attractive market. They have comfort with digital technology. They engage with
brands in an entirely new way, such as with mobile or social media. More than sales
pitches from marketers, they seek opportunities to shape their own brand experience and
share them with others.
 Generation Z are young people born after 2000. Make up important kids, tweens, and
teens markets. They influence a large portion of their own and parents spending.
Age groups, such as 18–24, 25–34, etc., are great predictors of penchant in some types of
products. For example, few teenagers wish to purchase face whitening cream.

1.1.3. Growing Middle Class:

Social-class groups or several income groups such as wealthy, middle, and lower classes. The
rich, for instance, may want different products than middle and lower classes, and may be willing
to pay more. It is an important factor to indicate level of wealth and quality of life.

1.1.4. Rural Population:

In Pakistan, India and other Asian countries, the rapidly increasing rural population is of major
concern for marketers. Since demand and consumption growth is increasing due to growing
number of rural population, organizations are interested to increase the production and improve
marketing efforts to meet their demands. But lack of proper infrastructure, telecommunication
connectivity, reliable supply of electricity etc. affects distribution infrastructure. The government
of these nations are working to bridge the gap between urban and rural population by improving
infrastructure conditions.  Due to availability of basic infrastructural facilities, business units can
easily reach the target rural buyers for example; in 2017 markets in the urban regions started
shifting from analog to digital phones, sales of analog technology based telephones
increased in rural areas.

1.1.5. Generational Marketing:

Lifestyle, life stage or the common values the consumers seek in the products they buy instead of
age is more effective way of population segmentation to increase the marketing efficiency.
Consider an example of Nishat Linen (a manufacturing company of women clothing). They
experience rapid growth in their sales by introducing separate clothing range for different
events such as party wear, wedding wear, casual wear and office wear. They targeted women
according to the lifestyle they possess to increase their profits.

1.1.6. The Changing Family System:

Today, both male and female strata of society works to manage financial needs. Also, there is a
rapid shift from joint family system to nuclear families globally. This factor combined with the
increase in family income have resulted in growth of real estate market. For example, there has
been a huge demand of residential flats among all segments in Pakistan. Hence varying family
structures plays an important role in ensuring effective marketing efforts.
1.1.7. The Changing Role of Women:
Women have been playing their part in growth of corporate world. This have surely increased the
attention of different organizations towards this segment of society. Many products are
especially developed for the women of new era.

1.1.8. A More Educated and Professional Population:

The rising number of educated population have immensely increase the demand for quality
products and better service as well as educational material such as books, learning services etc.
Moreover, it has also increase the demand for personal computers, digital learning mediums and
internet services. The rising number of educated professionals will affect not just what people
buy but also how they buy. The projected fastest employment growth is also varying the
consumer buying behaviors. There is also a change in working patterns such as work from home
or telecommuting. This has led to increase in competitive markets which are striving to provide
quality products and services to consumers.
For example, in recent times of Corona Virus, tele-commution organizatons are making
efforts to provide efficient and effective digital and networking services for better work
from home results.

1.1.9. Increasing Diversity:

Countries vary in their ethnicity and race. Marketers have find many markets in one country due
to combination of different religions, languages, dialects, cultures and lifestyles. This is an
opportunity as well as challenge for organizations as it has made large companies, target
specially designed products, ads, and promotions to one or more of these groups. Consider an
example of Christmas festival in Pakistan named Easter. Due to growing demand of chocolates
in the Easter season, different chocolate manufacturing companies offer deals and discounts to
customers to increase their sales.
Both nationally and internationally, markets are experiencing diversity in needs and wants of the
consumers. Separate marketing efforts are required to adapt to these changes.
Marketers are also immensely trying to meet the demands of disabled and LGBT community.
The Barbie brand has taken plenty of heat over the years for the body imagery it sells to
kids. The company is, for the first time, offering versions of Barbie in a wheelchair and
with a prosthetic leg.
Recently a well-known tea manufacturing brand “Tapal Family Mixture” have released an
advertisement in which a candidate experiencing a speech disorder called “stammering”
gives a job interview with courage and confidence.
Thus the variables of diversity are of great importance for marketers.
1.1.10. Geographical Shifts:
Geographic Shifts in population, this is a means a period of great migratory movements between
and within countries. Such population shifts interest marketers because people in different
regions buy differently. Examples, people in the Midwest buy more winter clothing than
people in the Southeast.

1.2. Economic Environment:

The term economic environment refers to all the external economic factors that influence buying
habits of consumers and businesses and therefore affect the performance of a company. These
factors are often beyond a company’s control, and may be either large-scale (macro) or small-
scale (micro).
Macro factors includes employment/unemployment, income, inflation, interest and tax rates,
currency exchange rates, saving rates, borrowing patterns, cost of living, consumer confidence
levels and recessions.
Micro factors includes size of the available market, demand for the company’s products or
services, competition among companies, availability and quality of suppliers and the reliability
of the company’s distribution chain (i.e. how it gets products to customers).
Companies often cannot control their economic environment but they can evaluate economic
conditions before choosing to enter a particular market or industry or pursue other strategies.
Since in recent era, consumers have adopted a sensible spending pattern, marketers are now
working to offer more value to consumers. It means the right combination of product quality and
good services at a fair price. This concept is known as Value Marketing.
The changes in the micro and macro-economic factors have a large impact on market place.
Companies often predict the economic turns to take advantage from them.
Consider an example of Daraz 11.11 sale where the online market place offers products at
discounted prices.
In addition to this, income distribution have also resulted in manufacturing specific products for
specific segment. For example, Aurora pens are manufactured especially for elite class
whereas parker pen are mostly used by middle income earners.

REFERENCES:
1. https://open.lib.umn.edu/exploringbusiness/chapter/9-8-the-marketing-environment/
2. https://www.linkedin.com/pulse/how-changes-demographic-economic-environments-affect-
marketing-andre
3. https://courses.lumenlearning.com/marketing-spring2016/chapter/reading-demographic-
factors-shaping-the-global-marketing-environment/#:~:text=Based%20on%20demographic
%20data%2C%20marketers,how%20to%20achieve%20maximum%20results.
4. https://smallbusiness.chron.com/economic-factors-affecting-marketing-1699.html
5. https://marketbusinessnews.com/financial-glossary/economic-environment/