Social, economic, technological & competitive Forces

8/22/2019 Social, economic, technological & competitive Forces

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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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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



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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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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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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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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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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.

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Social, economic, technological & competitive Forces