Business Environment BBA SEM-IV

Dr.M.K.Singh

Demographic profile of India

Demography is the study of human population in terms size,age,density

sex ,location,gender,race,occupation and other statistics.Demographics is
defined as statistical data about the characteristics of a population, such as
the age, gender and income of the people within the population.

A demographic environment is a set of demographic factors such as gender

or ethnicity. Companies use demographic environments to identify target
markets for specific products or services. This practice has both advantages
and disadvantages. Marketers have to take both sides of the demographic
environment coin into account when deciding what strategy to apply.

There are a number of demographics that can affect a business.

Demographics are various traits that can be used to determine product
preferences or buying behaviors of consumers. Most companies identify
their key customers through these various traits. They then target
consumers with like characteristics in their advertisements and promotions.
Targeting consumers with similar demographic characteristics helps
maximize a company's sales and profits.

With over 1.3 billion people , constituting more than a 6th of the world’s
population, India is the 2nd most populous country in the world. It is
projected to be the world’s most populous country by 2022, surpassing
China with its population touching 1.6 billion by 2050. Greater than 50% of
the Indian population is below the age of 25 years and greater than 65% is
below the age of 35 years. It is expected that by 2020, the average age of
an Indian will be 29 years, compared to 37 of China, and 48 of Japan and by
2030; India’s dependency ratio should be just over 0.4.Despite an ancient
civilization, India has the largest proportion of young people in the world.
The working age population (15–64 years) constitutes 64% of the
population. At the global level, every 5th person less than 25 years of age is
an Indian.

These changing demographic profiles indicate that India has a distinctive

20 to 25 years’ window of opportunity called demographic dividend
created due to decrease in the fertility and mortality rates coupled with
improvement in life expectancy. This resulted in changes in the age
distribution with lesser proportion of population in the dependent ages and
hence, comparative cost advantage besides competitiveness of the
productive work force to the economy.

India is having world’s youngest work force with a median age below of
China and OECD Countries. Alongside this window of opportunity for India,
the global economy is likely to face an acute shortage of skilled man power
to the extent of around 56 million by 2020. Hence, the demographic
dividend in India needs to be exploited not only to develop the production
possibility frontier but also to meet the skilled manpower requirement in
India and/ or in other countries. As per International Monetary Fund,
Demographic change may add 2% points to per capita (GDP) growth per
annum, provided, country have appropriate policies and protocols. In
absence of such Standard operating procedures, a country may find itself
with a large number of unemployed or underemployed working-age
individuals resulting in demographic disaster accompanied with adverse
political, economic and social impact.

There is undoubted an immense demographic dividend potential that India

may reap in the next decades by utilizing its growing youth population
productively. However, the current education/skill pattern and health profile
of the growing population besides the emerging economic structure are
not compatible and it is feared that there will be >10% surplus of
unskilled/semi-skilled workers besides an acute similar shortage of skilled
workers who lack formal training and the level of skill now being demanded
in the labor market. In the globalized scenario, employers are edgy about
maintaining competitiveness and the productivity of their workers. Hence,
simply qualifications are not considered adequate for an appropriate job.
Once of skilled workers who lack formal training and the level of skill
sustainability to the production process besides revenue of the
organizations. Unless this mismatch is corrected on a war footing and
demographic dividend is combined with good policies and skills impart
programs, India would end up with a vast build of unemployed and
unemployable youth and face a demographic disaster rather than a
demographic dividend.

India being very vast geographically, consumers here are naturally scattered
over a vast territory. As the country is also marked by great diversity in
climate, religion, language, literacy level, customs and calendars, lifestyles
and economies status, here consumers present a complex and bizarre
group. The heterogeneity holds many implications for a marketer, especially
to those going in for national marketing.

Demographics:

Size of population: According to the Census 2011 the population of India

stood at 1,237 million.

Literacy and education: According to the Census 2011, the national’s

average literacy rate is 74.04 percent. There is a rise in growth of literacy
rate since 1951 and it has increased substantially in the last decade.

From now onwards there will be a faster progress in checking illiteracy as

the proportion of youngsters enrolled in schools is going up and more and
more neo-literates are also emerging from the adults, as a result of the
National Literacy Program.

A vast educated manpower: It is a paradox; on the one hand, India has

the highest concentration of illiterates in the world; and on the other, it has
the second highest concentration of literates and third largest pool of
educated and technically trained manpower in the world. India has a strong
pool of engineers, scientists and technically educated persons. In modern
fields like information technology, India has been displaying its strength
very clearly in recent years.

Diversity:

Indian consumers are not a homogeneous lot. They are marked by great
diversity. It is this diversity that strikes us first when we look at Indian
consumers that is diversity in religion, language, culture, tradition, social
customs, and dress and food habits.

Religious diversity:

The one billion people of India belong to seven different religious

groups”Hindus, Muslims, Christians, Sikhs, Buddhists, Jains and Zoroastrians.
In addition, there are other persuasions and there are sects, sub-sects,
castes and sub-castes. Each religion has its own hierarchic structure,
concretized through centuries of practices. Each caste has its own customs
established over generations. In birth and death, in marriage and family life,
the individual is entangled in the chores of his religion or caste. What is
welcome for one religion is taboo for the other; and something totally
banned in one religion is an accepted practice in another.

Linguistic diversity:

The same diversity is seen in the matter of language. Sixteen languages

have been specified in the Constitution of India as national languages. In
addition, there are hundreds of dialects. In several places, many amalgams
of languages have been formed as a result of shifting populations. If a
marketing man has to approach the entire national market of India, this
linguistic diversity is a big challenge.

Diversity in dress and food habits:

As far as dress is concerned, India holds out the picture of widely varying
styles. Almost every state, or religious community, has its own traditional
styles of dress. The same is the case with ornaments and Jewellery. As
regard food, rice is the staple food in the South and wheat in the North. Of
course, in several of the southern states people now consume wheat
products as co-food items. Likewise, certain southern dishes have become
popular in the north. Still the basic difference in food habits remains. There
are certain communities, which are strict vegetarians. For meat eaters, there
are several restrictions; for the Hindu, beef is taboo, for the Muslim, pork is
taboo, for the Christian, both are delicious. Some use coconut oil as the
cooking medium, some use groundnut oil, and some others, mustard oil.

If a marketer wants to market his products in India he has to consider all

the above diversified aspects before planning the marketing strategy.
Accordingly the advertisements, sales promotion activities, distribution
channels and retailing plans must be drawn in order to successfully sell the
goods whether for B2B or consumer goods through malls and retailers.

Impacts of Demographic profile on business environment

There are a number of demographics that can affect a business.

Demographics are various traits that can be used to determine product
preferences or buying behaviors of consumers. Most companies identify
their key customers through these various traits. They then target
consumers with like characteristics in their advertisements and promotions.
Targeting consumers with similar demographic characteristics helps
maximize a company's sales and profits.
Income Influence
Income is one demographic variable that can affect businesses. A
company's products usually appeal to certain income groups. For example,
premium products such as high-end woman's clothing usually appeal to
women with higher incomes. Conversely, people with comparatively lower
incomes are more sensitive to price and, therefore, may prefer purchasing
discount products. People with lower incomes have less disposable income.
Value is a major determinant in the products they purchase. Hence, a
company may best reach lower-income people through discount retailers
and wholesalers and attract higher-income buyers in specialty retail shops.
Age Variables
Age is another demographic element that impacts businesses. A company's
products and services are more likely to appeal to certain age groups.
Younger people under 35 are often the first consumers to purchase high-
tech products like cell phones, electronic books and video games. The
millennial generation is increasing buying power and growing market share
while baby boomers remain a large and viable group as well.
Geographic Region
People's buying preferences also vary by geographic region, which is
another type of demographic. Those who meet buyers' needs and
requirements in certain geographic regions can earn higher sales and
profits. For example, people often prefer certain food and drink flavors in
certain markets. Companies that sell the flavors consumers desire in various
areas are more likely to profit. Those who do not offer these flavors may
risk losing customers to other competitors.
Obtaining Demographic Information
One of the best ways to collect consumer demographic data is through
market research surveys. These surveys can be conducted by phone, mail,
Internet or in person. The key is collecting as much demographic
information as possible. Other demographic variables, besides age, income
and geography, include household size, education, occupation, gender,
race and employment status. Most marketing research professionals
include demographic questions at the end of their surveys. Warranty cards
are another way to collect this information from customers.

Advantages & Disadvantages of a Demographic Environment

A demographic environment is a set of demographic factors such as gender

or ethnicity. Companies use demographic environments to identify target
markets for specific products or services. This practice has both advantages
and disadvantages. Marketers have to take both sides of the demographic
environment coin into account when deciding what strategy to apply.

When a company looks at a demographic environment, it focuses its

attention on the people who are most likely to buy a product. This is good
from the marketing standpoint because it means the company does not
waste money trying to get people to buy who have no interest in the
product.
Branding and Strategy
Demography provides very specific information about different populations.
Once a company has this data, the company can develop well-defined
strategies about how to reach each population -- that is, it tells companies
exactly how to market and develop their brands so people in the
demographic environment will respond. For instance, if people in the
demographic environment tend to be busy, young workers, then a
company might promote the quick use and convenience available with the
product.
Trending and Comparison
When companies examine demographic environments, they usually do so
under the same lenses, such as age or gender. By collecting demographic
data over extended periods of time and comparing information from
different points, companies can identify trends within the population. This
lets them forecast what might happen with sales in the future and make
some decisions about upcoming production or offered services.
Assumption and Culture
Perhaps the largest problem with a demographic environment in terms of
marketing is that even though marketers use accurate data to make
predictions about what will happen with consumers, there is no guarantee
that what the company predicts actually will come to pass. In other words,
much of marketing with demographic data is based on assumptions.
Additionally, those assumptions are based largely on the cultural norms
surrounding the company. Demographic information has little meaning
unless marketers examine it with this in mind, as culture has such a large
influence on what those in the demographic environment do.
Change
Populations are never constant. People migrate from place to place, and
people pass away and are born. Subsequently, marketers cannot simply
collect demographic data one time. They have to collect the information
constantly in order to have a realistic picture of what is happening at any
given point. This requires a great deal of effort and means a constant
expense to a business.
Customer Loss
Focusing marketing based on demographic information means that a
company may lose potential customers who do not fit the general
demographic mold because the company does not concentrate on
attracting those customers. This includes the loss of sales from people who
might buy the product or service for someone else, as those people might
not be aware the company offers the product or service.

India being very vast geographically, consumers here are naturally scattered
over a vast territory. As the country is also marked by great diversity in
climate, religion, language, literacy level, customs and calendars, lifestyles
and economies status, here consumers present a complex and bizarre
group. The heterogeneity holds many implications for a marketer, especially
to those going in for national marketing.