social, economic, technological & competitive forces
TRANSCRIPT
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SOCIAL, ECONOMIC,TECHNOLOGICAL,
AND
COMPETITIVE FORCES
FORCES
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SOCIAL FORCES
In recent years, the concept of social responsibility has entered intothe marketing literature as an alternative to the marketing concept.
The implication of socially responsible marketing is that retail firmsshould take the lead in eliminating socially harmful products such ascigarettes and other harmful drugs etc.
There are innumerable pressure groups such as consumer activists,social workers, mass media, professional groups and others whoimpose restrictions on marketing process and its impact may be feltby retailers in doing their business.
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SOCIAL FORCES
Purchase decision of individual consumers areinfluenced by beliefs, values and attitude, which inturn shaped by the society.
Belief is a descriptive thought about an object.
Values are personalised morals.
Attitude may be defined as a learned predisposition towards anobject leading to positive or negative evaluation.
Social forces like reference groups and Family
influence the retailers a lot. Reference group: Membership group, Aspirational group,
Dissociative groups.
Family: Family of Orientation, Family procreation.
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SOCIAL FORCES
Religion , Customs And Culture Of Consumers:
People live in different parts of the country may have differentcultural values which has to be analysed by retail businesspeople/firm.
This will help them to reorient their strategy to fulfill thedemands of their consumers.
Education Level:
People with different education level have different type of
needs and demands.Language:
Over 30 different languages, 200 different mother tongues and2000 dialects.
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SOCIAL FORCES
Increase in Life Expectancy:
Life expectancy increased to an average age of 66 years in 2006-07 from 58years in 1991-92.
Age Factor:
India is a very young nations, with more than 70% of its population below theage of 40 and more than 47% below the age of 20.
The increase in youth population which has also started earning early alsoincrease the overall purchasing capacity.
Changing role of Women & Evolving Family Structure:
As per Census 2001, working women has increased from 22% in 1991 to 26%in 2001.
Economic independent of women has refined the rules of social behavior.
Average family size have also decreased from 5.57 in 1991 to 5.36 in 2001.
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SOCIAL FORCES
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ECONOMIC FORCES
The economic environment determines the purchasing power ofpeople.
The retailer should keep an eye on the income, prices, debt,credit availability, tax rates.
Income Level: Different income level group has different type of product need. So the
retailer should adopt the retail mix according to the income level ofconsumers, existing in that area.
Major income groups are middle class & upper middle class whose growingincomes fuels the growth for consumption.
Purchasing Power:
Total purchasing power is a function of current income, prices, savings andcredit availability
Consumer purchasing power measures the value in money for whichconsumers may purchase goods or services.
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ECONOMIC FORCES
Market Conditions:
Market condition means whether it is boom orrecession, inflation or deflation.
Our economy is growing steadily near to double digit,whereas the global economy is under turmoil.
Monetary Policy:
Factors such as interest rate, taxation policy etc.
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ECONOMIC FORCES
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TECHNOLOGICAL FORCES
Technological factors such as packaging, billing system,storing system, etc. affect the retail mix very much.
Innovative packing of the products
Modern storage where merchandise can be stored for a long time.
Billing.
Transportation.
Internet penetration
Mobile penetration etc
Technology influences retailers at two levels
Product assortments
Retail operation
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TECHNOLOGICAL FORCES
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COMPETITIVE FORCES
Forces in the marketing environment that arebased on competition among customers andcompetition with other firms
Who is buying goods and services and who isproviding them to those customers?
Are there many competitors or are there just afew? Maybe none.
Knowing what competitive forces exist helps anorganization develop strategic planning toattract customers
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PORTERS FIVE COMPETITIVE FORCES
Michael Porters Five Forces analysis is a tool for the structuralanalysis of retail industry.
ENTRY OF COMPETITORS
How easy or difficult it is foe new competitors to start
competing and the barriers to entry that may exists..THREAT OF SUBSTITUTE
How easily a product or service can be substituted especiallymade cheaper.
BARGAINING POWER OF BUYERSIf there is more no of sellers the bargaining power of buyers
increase because they have alternatives to switch over.
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PORTERS FIVE COMPETITIVE FORCES
BARGAINING POWER OF SUPPLIERS
Same is in case of suppliers. The bargainingpower of suppliers increases with the no of
retailers.RIVARLY AMONG EXISTING PLAYERS
Is there a strong competition among existing
players. Is one player very dominant or all areequal in sixe and strength.
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IndustryCompetitors
Rivalry AmongExisting Firm
Suppliers Buyers
Substitutes
PotentialEntrants
Bargaining power ofSuppliers
Threats of substitute
products or services.
Threat of new entrants
Bargaining power of
Buyers
PORTERS FIVE COMPETITIVE FORCES
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PORTERS FIVE COMPETITIVE FORCES
Threat of New Entrant:
New entrants bring in new capacity, the desire to gain market share& often substantial resources.
Barriers to entry prevent ne competitors from entering the market.
Several major barriers to entry are
Economies of Scale
Capital requirements
Product differentiation
Switching costs Access to distribution channel
Govt. policies
But a retailer who has deep financial base may not face barriers toentry and on the other side it may not be easy for a small player.
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PORTERS FIVE COMPETITIVE FORCES
Threat of Substitutes
This threat arises when the demand for a productdecline due to either
Lower prices of better performing substitute product, Low brand loyalty,
New current trends or
Low switching cost.
Low threat of substitutes is favorable to the industry.
In Indian retail, the threat of substitutes ranges frommoderate to low.
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PORTERS FIVE COMPETITIVE FORCES
Bargaining Power of Suppliers It is the ability of supplier to control the cost & supply the inputs.
Supplier power may be
Differentiation of inputs
Switching costs for transferring to other suppliers
Availability of substitutes
Supplier concentration and
Suppliers dependence on volume
The supplier to the retail sectors are those who provide the finishedproducts to make various retail products or those who actuallyprovide the finished products that can be sold in a retail store.
In India the bargaining power of suppliers is low because there are alarge number of potential suppliers in the market.
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PORTERS FIVE COMPETITIVE FORCES
Bargaining power of Buyers
The ratio of suppliers to the buyers in the market is the
key factor in determining the power of buyers.
The buyers would have generally have the last word whenit comes down to the pricing of the products.
In India, the bargaining power of the buyers is fastincreasing and can be termed as moderate to high.
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PORTERS FIVE COMPETITIVE FORCES
Intensity of RivalryThe intensity of rivalry between competitors in an industry
depends on the structure of competition.
Rivalry is more intense where there are many small or equally
sized competitors. Rivalry is less when an industry has a clear market leader.
In Indian retail
The competition among the existing firms is not very high as there arefew players in the market.
The level of product differentiation is fast changing with large numberof new players entering into the market.
We can conclude that the intensity of rivalry is moderate butincreasing.