Understanding The Demographic Trends Marketing Essay

India, officially the Republic of India, is a country that comes under the South Asia part of the world. It is the seventh largest country by area, the second most populous country with over 1.21 billion people, and the most populous democracy in the world.

India is a federal constitutional republic administered under a parliamentary system with 28 states and 7 union territories. It is a multilingual, democratic and multi ethnic society.

The Indian economy has ranked at the tenth largest by nominal Gross Domestic Product (GDP) and is the third largest Purchasing Power Parity (PPP) in the world. India is currently one of the world’s fastest growing economies and it is believed to be a newly industrialized country. As per by the list provided by the International Monetary Fund (2013); India is now positioned on the 3rd with a GDP of 4,710.807 $ Billion.

A Macro Environment consist of all the aspects which are external to the firm and cannot be managed by an organization. They are not precise to any industry but persuade all the firms but the level of influence may be at different for different industries. In a marketing research, one must have the knowledge of various factors which influences the marketing decisions of a companies. Since they are not controllable, one must alter decisions as per the changing environment. The key factors involving Macro Environment of marketing are the economic, natural, socio cultural, technological, and Political in legal term.

DEMOGRAPHIC ENVIRONMENT

Demographic as the name suggests is associated to the study of population and population mix in terms of age, gender, size, density, occupation, race, location and other statistics. Demography involves people and people are the ones who make markets. They contribute to demand and to manpower which facilitates production and supply. Thus, as a marketer, one should recognize the demographics of the nation and of global population as globalization is on a rise.

Population Growth:

India is ranked second after China in terms of population. The population as per Census estimated in 2011 was approximately 1.2 Billion with a growth rate of 17.64%. This factor offers an exceptional opportunity for business. Due to high population growth many fast-moving customer goods(FMCG) companies and traders get attracted to countries like India whose markets are not yet explored.

Population Mix:

It is not only the growth that is important but the composition of a population is equally important.

For instance; in a country like India, where major proportion of population comprise youths whic has made the firms to place themselves in the favor youths.

Household pattern:

In household patterns, like large, small or nuclear families influence the marketing decisions. For instance; in the rural parts of India where the trend of large joint families is still pertinent, the purchasing decisions are influenced by almost all the family members. On the other hand, in case of urban India where mostly nuclear families exists, the decisions is made by a individual members.

Geographical Shift:

India is a country with a plethora of languages. Here language changes every 100 miles and culture changes every 10 miles. Thus, a Indian marketer must have detailed information of the cultures and languages of various regions in order to place its production in a better way.

India’s Demographic Environment (a per India: Census 2011 provisional figures)

1. Size of population: 1.21 billion. Males 623.7 million (51.54%) and females 586.46 million (48.46%)

2. Population growth rate: 17.64%.

3. Age structure: India has more than 50% of the population below 25 years and more than 65% below 35 years. It is being expected that, by 2020, the average age of an Indian will be 29 years.

4. Gender: Number of females per 1000 males. (Average is 944)

5. Religions: Hindus (80.5%), Muslims (13.4%), Christians (2.3%), Sikhs (1.9%), Buddhist (0.8%), Jains (0.4%), and other (0.6%).

6. Education: India’s effective literacy rate has recorded a 9.2% rise to reach 74.04% at 77,84, 54, 120.

7. Income: India’s per capita income, recorded an increase of 11.7% to Rs 5,729 per month in 2012-13 compared with Rs 5,130 in the previous year.

Apparel is a perfect industry for examining the dynamics of customer-driven chains. The Indian apparel industry is as varied and multifarious as the country itself. It ranks second largest manufacturer of textiles and garments in the world and the third largest producer of cotton and the second largest consumer of cotton. The basic strength of India’s apparel industry comes from its sturdy production of large range of natural fibers like cotton, jute, silk and wool along with synthetic and man-made fibers like polyester, viscose, and nylon.

As per The Economic Times of India (July 2012),” India’s textile and apparel industry size was calculated approximately to be $89 billion in 2011 and the forecast shows that it will increase at a compound annual growth rate (CAGR) of 9.5% to reach $223 billion by 2021. India’s domestic textile and apparel market is valued $58 billion and it has the prospective to develop at a CAGR of 9% to reach $141 billion by 2021″. This industry directly employs to over 35 million people and contributes four per cent to the Gross Domestic Product (GDP) thereby making it the latest industrial sector and the largest source of foreign exchange earnings in India

The Indian apparel sector observed a growth in the consumer spending on apparels among other sectors of Indian market and is expected to sustain its growth in the coming years. Today, people have become more conscious considering their outerwear and therefore, are willing to spend money on apparels. One of the main reason behind the increase in the level of expenditure is the rise in population along with the rise in the disposable income of the consumers along with the invention of malls in India.

The Indian apparel retail industry categorizes in three segments men’s wear, women’s wear and kid’s wear. It is then divided into age groups, occupation, education and income. The table below shows the percentage and the frequency of Indian customer spending on apparel demographic trends in 2007.

Source: Sample-data found in an article “Store choice in emerging Indian apparel retail market: An empirical analysis” by Amit and Ruchi Mittal (2008).

Note: The respondents were from Delhi (India) and its satellites Gurgaon and Faridabad. The data was collected in 2007 from 333 people. The majority apparel customers in this research were women (30-39 years), graduates, employed and had monthly household incomes between Rs.10,001 to 20,000 ( 1 US$=Indian Rs 47).

India’s Market Profile:

India is now the world’s fourth-largest economy, it’s the third largest in Asia, and second largest among emerging markets. The Indian market imitates significant diversity in income and lifestyle. As per The Economics Times f India (2012), “India’s share of the world’s textile and apparel exports stands at 4.5 per cent. It is estimated that due to the increasing shift of textile and apparel production to Asian nations and the deteriorating export-competitiveness of China, this figure will grow to 8 per cent by 2020, with a total exports value of $82 billion.”

The purchasing power in India has become an existing trend and the seasonal demands has gradually disappeared from the Indian market in these past five years.

Activities in an apparel industry involves designing, advertising and selling of clothes which are currently in demand. Each product produced has a definite theme, a purpose and a target market. of its own. To classify the future trends, apparel industry connects with marketers and outfit designers who not only maintains records of all the essential requirements of consumers but also broadens to designing of fashion accessories like shoes, bags, jewelry and many more. As the apparel industry is on an endless rise, accordingly there has been great increase in opportunities and competition along with increasing need for specialized and educated staff in this industry.

The apparel industry is directly proportional to the consumer buying capacity.The purchases of apparel are likely to be linked with modification in the disposable income of consumers. However, consumer spending depends on a various factors like actual and apparent economic conditions which affects disposable income of the consumer (i.e. unemployment, salaries and wages), interest rates, tax rates, availability of credit, international markets, and regional-local markets where the products are sold.

India for long have sighted the growing population as a curse for future developments, sustaining their social and political establishment. But with several years of strong economy, strong military, and a greater respect of India as an emerging market recognition has changed the view about India’s demographic trends.

Age

Another demographic component that impacts business-marketers is age factor. The products and services of a company are sold to attract a to certain kind of age groups. People under 35 years of age are often the first choice consumers for purchasing fashionable clothes as they are younger. Also, some buying groups have more spending power than others.

Income

A demographic element that directly affects businesses is income. The products of a company usually attract to certain groups of income. For instance, premium products like high-fashion women clothing usually attract women with higher incomes. On the contrary, people with lower incomes are more responsive to price and, therefore, prefer purchasing cheap or discounted products. Price is the chief criteria considered while purchasing a product. For this reason, a company should reach lower-income consumers through discounted and wholesale prices and attract higher-income consumers in specialty retail shops such as high-end shops in malls.

As per Datt, R. and Sundharam, K., “Indian Economy”, S. Chand and Company, New Delhi, 2005, India’s per capita income is calculated approximately to be at an average growth rate of 13% during 2011 and to achieve $ 4,200 by 2020.

Geographic Region

Many purchasing trends depends upon the geographical area also. Marketers who track and attain the knowledge of buyers demands and requirements in a specific geographic region can definitely earn higher volume of sales and profits. For example, the apparel demand in Kashmir will be quite different from the demand in Mumbai.

Understanding the Demographic Trends

A demographic trend discloses expansions and changes in a population. Demographic trends more precisely, relates to amendments in a population’s size, age, gender, educational-level, employment-status, income-level, geographic location, marital status, race, religion, and health.

Business leaders, advertisers and marketers can collect valuable information from demographical trends. As an example, a geographic location may notice a change in migration outlines and without the knowledge of demographic trends for the particular area, business decisions made on a consumer-segment could be based on an opinion formed on the basis of incomplete information. Assessing demographic trends for a area though may show that there is a change in the population’s standard-age, employment-level, household-income, or acquired wealth and which in turn would help businesses in targeting its accurate customers and prospects.

The more the information about a population a business-marketer has, the more helpful the data will be. This can capitulate additional insight like the trends in a population’s socio-economic position, life- stage, and lifestyle. Income, education, occupation, and wealth of an individual or a family form the socio-economic position; on the other hand Life-stage is a mix of an individual’s age, family-status, and relationships and lifestyle can be related to education, location, activities, interests, opinions, and life-stage. All the above attributes are necessary and helpful to marketers as they are valuable interpreters of consumers spending trends.

The Value of Demographic Trends

An up-to-date demographic trends enables firms to classify existing and emerging markets for selling their products and services. Evaluating customers and new prospects through demographic trends, marketers can categorize changing needs of the market and adjust to them. The demographic trends can also help organizations identify consumers future spending trends.

Combining attitudinal and behavioural data, the demographic trends can be applied to develop marketing strategies effectively by helping marketers target new and existing customers with the right message at the right time. In this way a business-marketer can increase consumer awareness, improve customer acquisition management, and sustain customers retention level. 

Demographic Trends and Customer Data

Customer data are of three kinds: demographic, attitudinal, and behavioural. The demographic data and trends play an important role in a marketer’s customer-acquisition and retention attempts. Normally, demographic data must be merged with attitudinal and behavioural data to achieve the most accurate outlook of consumers. Segmenting the customers by relevant demographic data is essential for establishing a successful marketing strategy.

Conclusion:

It is very important that every marketer keeps a close vigil on demography of the country a business is running and if they wish to expand with success as a co-passenger. As it has been learnt and understood that demography spells population and its subsets (male/female/age group/education status etc); keeping a constant watch on the changing and emerging trends on these parameters will not only enable a marketer to help maintain their apparels up to date but will also avoid competition from stealing their limelight.

Also, a regular study on the change in the demography for the times to come is of essence as being the first to cater to the changing fashion will only help keep the firm ahead always. India is becoming a favorite for many genres of companies; and as a country it is climbing up the fashion ladder; an apparel firm with variety is here to stay as there a people from all walks of life with the spending capacity on a rise and if the current trends and a future watch is effectively maintained; the apparel will only grow from strength to strength.