ANALYZING THE

ENVIRONMENT
Analyzing the
Macroenvironment
• Needs and Trends

• Fad

• Trend

• Megatrend
Analyzing the
Macroenvironment
• A fad is “unpredictable, short-lived, and without social,
economic, and political significance.”
• A direction or sequence of events with momentum and
durability, a trend is more predictable and durable than a fad;
trends reveal the shape of the future and can provide strategic
direction.
• A megatrend is a “large social, economic, political, and
technological change [that] is slow to form, and once in place,
influences us for some time—between seven and ten years, or
longer.”
Identifying the
Major Forces

• Six major forces in the broad environment

Demographic Natural

Economic Technological

Socio-cultural Political-legal
The Demographic Environment
• Worldwide population growth

• Population age mix

• Ethnic and other markets

• Educational groups

• Household patterns
The Demographic Environment
• World population growth is explosive: The
world’s population on July 1, 2012, was
estimated at 7,027,349,193, forecasted to rise
to 8.82 billion by 2040 and exceed 9 billion by
2045.

• There is a global trend toward an aging

population. In 1950, there were only 131 million
people 65 and older; in 1995, their number had
almost tripled to 371 million. By 2050, one of 10
people worldwide will be 65 or older.
The Demographic Environment
• Marketers generally divide the population into
six age groups: preschool children, school-age
children, teens, young adults age 20 to 40,
middle-aged adults 40 to 65, and older adults
65 and older.
• Some marketers focus on cohorts, groups of
individuals born during the same time period
who travel through life together.
• The population in any society falls into five
educational groups: illiterates, high school
dropouts, high school diplomas, college
degrees, and professional degrees.
The Demographic Environment:
India
• Population: 1,428,627,663 (Global Share 17.76%)
• Median Age: The median age in India is 28.2
years (2023).
• Fertility in India: A Total Fertility Rate (TFR) of 2.1
represents the Replacement-Level Fertility: the
average number of children per woman needed for each
generation to exactly replace itself without needing
international immigration. A value below 2.1 will cause
the native population to decline
• Life Expectancy in India: 72.0 years(life expectancy at
birth, both sexes combined)
• FEMALES: 73.6 years
• MALES: 70.5 years
• India Urban Population: Currently, 36.3 % of the
population of India is urban (518,239,122 people in
2023)
The Economic
Environment
CONSUMER PSYCHOLOGY

INCOME DISTRIBUTION

INCOME, SAVINGS, DEBT, CREDIT

The Economic Environment
• Purchasing power depends on consumers’ income, savings,
debt, and credit availability as well as the price level.
• As the recent economic downturn vividly demonstrated,
fluctuating purchasing power strongly affects business,
especially for products geared to high-income and price-
sensitive consumers.
• Marketers must understand consumer psychology and levels
and distribution of income, savings, debt, and credit.
Income distribution
• Subsistence • Very low incomes
economies • Mostly low incomes
• Raw-material- • Very low, very high
exporting economies incomes
• Industrializing • Low, medium, high
economies incomes
• Industrial economies • Mostly medium
incomes
INDIA: ECONOMIC TRENDS

• India is on track to become the world’s third largest

economy by 2027, surpassing Japan and Germany,
and have the third largest stock market by 2030,
thanks to global trends and key investments the
country has made in technology and energy.
(Morgan Stanley)
• Summary of the economic survey 2022-23
• India to witness gdp growth of 6.0 per cent to 6.8
per cent in 2023-24, depending on the trajectory
of economic and political developments globally
• Rbi projects headline inflation at 6.8 per cent in
fy23, which is outside its target range
Income Distribution in India

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The Sociocultural Environment

Views of Views of
ourselves society

Views of Views of
others nature

Views of Views of the

organizations universe
SOCIO-CULTURAL
ENVIRONMENT
• Views of ourselves.
• Indian consumers have arrived.
• Fatalism, self-pity, and dependence on the government or charity
of the rich in the past has given way to a new self-confidence,
with even the poor and the deprived seeking greater participation
and aspiring for better lifestyles.
• Views of others.
• Concerns for the poor and underprivileged, women, and children
— particularly their nutrition status and education—and inclusive
and equitable growth dominates the discussions among the better-
off in the Indian society.
• The rapid decline in the joint family has also moved people
toward seeking stronger bonds outside the family, among friends,
neighbours, and professional associations.

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SOCIO-CULTURAL
ENVIRONMENT
• Views of organizations.
• After a period of relative calm in the labour–management
relationship, organized labour has started demonstrating its
impatience with perceived unfair management practices.
• In an employment market dominated by the unorganized sector,
employees aspire for a secure job in the government, public sector
and organized, private sector.
• Views of society.
• Some people defend society (preservers), some run it (makers),
some take what they can from it (takers), some want to change it
(changers), some are looking for something deeper (seekers), and
still others want to leave it (escapers).
• Consumption patterns often reflect these social attitudes.
• Makers are high achievers who eat, dress, and live well.
• Changers usually live more frugally, drive smaller cars, and
wear simpler clothes.
• Escapers and seekers are a major market for movies, music,
surfing, travel, and spiritualism.
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SOCIO-CULTURAL
ENVIRONMENT
• Views of nature.
• Asians have been closer to nature for generations.
• Environment protection, nature worship, and living in harmony
with nature are now at conflict with development.
• Construction of large dams, destructive and unauthorized mining,
and the felling of trees by the timber mafia is threatening the old
relationship between human beings and nature.
• However, several citizen groups and political parties are
providing active resistance trying to push for a more balanced
approach.
• Views of the universe.
• Most Asians are religious and look at the universe for
harmonious, peaceful co-existence.

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The Sociocultural Environment
• Core cultural values
• Values are passed from parents to children and reinforced by social institutions

• Subcultures
• Groups with shared values, beliefs, preferences, and behaviors emerging from their
special life experiences or circumstances

• Although core values are fairly persistent, cultural swings do take place.

• Marketers have always loved teenagers because they are trendsetters in fashion, music,
entertainment, ideas, and attitudes. Attract someone as a teen, and you will likely keep the
person as a customer later in life.
OTHER CULTURAL
FACTORS IN MARKETING
• In India, the generation of the 1950s and the 1960s was influenced by
freedom fighters, socialism, and—to some extent— communism. The
current “kool generation” is consumption-oriented, living for today,
and is influenced by the film industry and cricket stars.
• Each society contains subcultures, groups with shared values, beliefs,
preferences, and behaviors emerging from their special life
experiences or circumstances.
• Marketers have always loved teenagers because they are trendsetters
in fashion, music, entertainment, ideas, and attitudes.
• Attract someone as a teen, and you will likely keep the person as
a customer later in life.

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The natural environment
• Corporate environmentalism
• Opportunities await those who can reconcile prosperity with
environmental protection
The natural environment
• Corporate environmentalism recognizes the need to integrate
environmental issues into the firm’s strategic plans.
• Trends for marketers to be aware of include the shortage of raw
materials, especially water; the increased cost of energy;
increased pollution levels; and the changing role of
governments.
The Technological Environment

Accelerating pace of change

Unlimited opportunities
for innovation

Varying R&D budgets

Increased regulation of technological

change
TECHNOLOGICAL
ENVIRONMENT
• Accelerating pace of change:
• More ideas than ever are in the works, and the time between idea
and implementation is shrinking.
• So is the time between introduction and peak production.
Example: Apple introducing products at a rapid pace.
• Opportunities for innovation:
• Some of the most exciting work today is taking place in
biotechnology, computers, microelectronics, telecommunications,
robotics, and designer materials. Researchers are working on
AIDS vaccines, safer contraceptives, and nonfattening foods.
• They are developing new classes of antibiotics to fight ultra-
resistant infections, superheating furnaces to reduce trash to raw
materials, and building miniature water-treatment plants for
remote locations.

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TECHNOLOGICAL
ENVIRONMENT
• Spending on research by companies:
• In India, historically, most of the R&D budget has been spent on
development rather than research.
• However, in the last decade, many pharmaceutical and
biotechnology companies have focused on contract research,
while companies such as Tata and Mahindra and Mahindra have
focused on appropriate and affordable technology with frugal
innovations.
• Increased regulation of technological change:
• Governments has expanded its agencies’ powers to investigate
and ban potentially unsafe products.

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The Technological Environment
• In many markets, the next technological breakthrough seems
right around the corner.
• Medical researchers hope to use stem cells for organ
generation and hybrid positron emission tomography (PET) and
magnetic resonance imaging (MRI) to dramatically improve
diagnosis. Environmental researchers are exploring plasma arc
waste disposal to harness lightning and turn garbage into glass
or a gaseous energy source.
• Too many companies seem to be putting their money into
copying competitors’ products with minor improvements.
The Political-Legal Environment

LAWS

GOVERNMENT AGENCIES

PRESSURE GROUPS
The Political-Legal Environment
• Two major trends are increased business legislation and the
growth of special-interest groups.
• The consumerist movement organized citizens and government
to strengthen the rights and powers of buyers in relationship to
sellers. Consumerists have won the right to know the real cost
of a loan, the true cost per
• Standard unit of competing brands (unit pricing), the basic
ingredients and true benefits of a product, and the nutritional
quality and freshness of food.
• Privacy issues and identity theft will remain public policy hot
buttons as long as consumers are willing to swap personal
information for customized products—from marketers they trust