The Indian Marketing Environment 1 The Indian Marketing

The Indian Marketing Environment 1

The Indian Marketing Environment At the end of this module the learning outcomes are 1. What are the various components of the marketing environment? 2. How the Indian marketing environment is changing as times change? 3. How are the new economic policies impacting the marketing environment? 4. What are the marketing challenges in the new environment. The Indian Marketing Environment 2

Suggested Readings 1. Marketing Management by Philip Kotler, 12 th edition Chapter 3 2. Marketing Management by Ramaswamy & Namkumari, Chapter 2 and 3 The Indian Marketing Environment 3

Marketing Mix We have said Marketing is the delivery of a total offer to the consumer in such a manner that. a. The offer fulfils the needs of the consumer. b. Terms and attributes of the offer are acceptable c. All the organisational goals including profits are achieved in the process. The Indian Marketing Environment 4

Marketing Mix 1. How does a firm make such offer to the consumer. 2. 1. A product that would meet the identified needs of the chosen consumer group. 3. 2. Performs distribution / placement functions like transportation, warehousing channel management etc. The Indian Marketing Environment 5

3. Carries out a number of promotion measure like personal selling, advertising, sales promotional programmes with a view to communicating with the consumer. 4. The pricing mechanism to achieve consummation of the marketing process. Four elements – Products, Pricing, Placement and Promotion constitute MARKETING MIX. The Indian Marketing Environment 6

1. Product • Product mix/lines • Quality, models, size • Packaging • Merchandising • Service, presale and aftersale. The Indian Marketing Environment 7

2. Price Policies, level of prices, level of margins, discounts. Terms of delivery, payment terms. 3. Placements Channels of distribution types of intermediaries. Location of outlets, channel remuneration. 4. Promotion • Personal selling, quality of sales force • Advertising: Media mix, budgets allocations and programmes. • Sales promotional efforts, contests • Publicity and Public relations. The Indian Marketing Environment 8

Assembling and managing the marketing mix is the main job in the whole marketing task. 1. Interaction between marketing mix and the environmental variables is the substance of the marketing process. 2. Marketing mix has to be juggled constantly in order to meet the changing requirements. 3. As environmental valuables keep changing alterations in the marketing mix become necessary. 4. Changes in customer preferences necessitate alterations in the mix. 5. Changes taking place within the firm too necessitate changes in the marketing mix. The Indian Marketing Environment 9

Can a Marketing mix be created in vacuum. No, it has to reckon with variables that make up the environment. These are called environment variables. These are 1. Customer 2. Competition 3. Trade 4. Environmental The Indian Marketing Environment 10

1. Customer Variables • Number and location of customers • Purchasing Power, Buying Behaviour • Habits • Lifestyles • Brand awareness and loyalty The Indian Marketing Environment 11

2. Competition Variables • Structure of the Industry • Nature and intensity of competition. Buyer’s market or seller’s market. • Strengths and weakness. • Substitute products . The Indian Marketing Environment 12

3. Trade variables • Types of intermediaries, number, strength • Trade practices • Motives and attitudes of the intermediaries. • Extent of sophistication The Indian Marketing Environment 13

4. Environmental Variables • Govt regulation on products, prices, distribution. • Control on trade practices. • Economic conditions – Impact of Kargil war • Culture and traditions • Law and politics • Level of technology The Indian Marketing Environment 14

Environmental Customer Product Price Promotion Mix Trade Variables Environmental Marketing Place Competition Variables The Indian Marketing Environment 15

Indian Marketing Environment a. Demographic Scene • • • Close to one billion population Growth rate over 2% per annum Life expectancy from 48 years in 1947 to 70 years in 2001 National literacy rate is over 50% (2001 census). Diverse religions and languages Dialects in few hundreds. The Indian Marketing Environment 16

b. Economic Scene Top ten economies of the world. Our GDP is growing at 5. 5% per annum. • Agriculture 16% • Industry 24% • Services 60% Slow growth rates till 70’s. Average 3% p. a. Last two decades have seen massive growth in the industry and services sector. In 90’s spectacular growth after liberalization One of the fastest growing economies of the world 17 The Indian Marketing Environment

c. Agricultural Scene Predominance is there. Dependence has reduced 2/ rd population dependent directly/indirectly on agriculture. 3 Rural markets development at a faster rate. Impressive achievements. Self dependent. Rare foodgrain imports. Main cause of development of other sectors. The Indian Marketing Environment 18

d. Industrial scene Contribution to GDP growth increasing More than this, there are qualitative change Rapid foreign investment and competition from multinational companies. The Indian Marketing Environment 19

e. Social scenario: The middle class explosion Estimate of 25 crores in size Rapid industrial growth seen emergence of professionals in many spheres. Target group for most of the companies. The Indian Marketing Environment 20

Social scenario: The middle class explosion Emerged as the consumption community of the country. Better education, higher aspirations. Consumption of non –food items on the increase Joint families giving in. Concept of nuclear families. Higher disposable incomes. Demand for lifestyle products is on the rise. The Indian Marketing Environment 21

f. Rural marketing scenario Shown impressive growth-television, mobile penetration. Earthenware yielded place to a variety of new kitchenware. Becoming increasingly urbanized. The Indian Marketing Environment 22

Rural marketing scenario • Tapping these markets continues to bewilder most companies. • Future growth lies in this market. Videocon tapping all towns upto 50, 000 population for increasing television sales. • Huge, untapped market. The Indian Marketing Environment 23

g. Legal scenario Has direct impact on the marketing environment. E. g. : The introduction of Consumer Protection Act and Consumer Courts. Pace of legal reforms slow. Organizations exploiting these weaknesses • ITC versus excise department for 800 crores (last ten years) About one lac litigations pending Average time of ten years to resolve litigations. Grim scenario The Indian Marketing Environment 24

h. What do we observe • Indian marketing environment acquiring greater dynamism and robustness • Evolution of Middle class • Growing rural markets • Lifestyles undergoing rapid changes. • Demand for lifestyle products. The Indian Marketing Environment 25

New Economic policies 1. New Industrial Policy • Delicensing of industries. • Fera relaxation • MRTP relaxation • Curtailment of the role of the public sector. 2. New Trade Policy • Freer Trade • Linking of imports to exports The Indian Marketing Environment 26

• Relying more on exchange rates and tariffs. • Lowering of tariffs • Convertibility of rupee and the new exchange rate system. • Encouragement to exports. • Open door to foreign investment. • Integrating the country’s economy with the global economy. The Indian Marketing Environment 27

3. Economic reforms and structural adjustment • Fiscal and monetary reforms • Banking sector reforms • Capital market reforms • Red Carpet to Foreign institutional investors. • Insurance sector reforms • Phasing out of subsidies • Dismantling of price controls and introduction of market driven price environment. • Public sector restructure • Privatization of PSUs (Public Sector Units) • New Policy on PSUs • Exit Policy (closing of business) The Indian Marketing Environment 28

Marketing challenges in the liberalised economy 1. Delicensing implies a degree of destablisation for existing players. Umbrella of protection disppears New entrants can alter economies of scale, put up global size plants and pose a threat to existing players. E. g. . Samsung, Hyundai The Indian Marketing Environment 29

2. The challenge of MNC Dominance Majority equity lends MNCs a new strategic edge. The Indian Marketing Environment 30

3. The fierce competition • Competition from fresh Indian Players • Competition from MNCs • Indian companies are not giving up • BPL leader in televisions • Asian paints in paints. • Import liberalisation adds to the competition. • Access to technology adds to the competition. • Competition is. Thenow global in character. Indian Marketing Environment 31

4. The demands of a buyer’s market • Graduating from shortages to surplus. • The challenge of competitive pricing. • Graduating from shoddy products to products of excellence. • The consumer calls the tune. IT IS A BUYER’S MARKET The Indian Marketing Environment 32

5. Indian companies are now compelled to export and go global. • Indian companies taking initiative • Going global • Ranbaxy, Dr Reddy, Infosys • Strong names in the international market. The Indian Marketing Environment 33