The Demographic Environment in Marketing
Demography is the study of populations in terms of their size and characteristics. Among the topics of interest to demographers are the age structure of a country, the geographic distribution of its population, the balance between males and females, and the likely future size of the population and its characteristics. Changes in the size and age structure of the population are critical to many firms’ marketing. Although the total population of most western countries is stable, their composition is changing. Most countries are experiencing an increase in the proportion of elderly people, and companies who have monitored this trend have responded with the development of residential homes, cruise holidays, and financial portfolio management services aimed at meeting this group’s needs. At the other end of the age spectrum, the birth rate of most countries is cyclical, resulting in a cyclical pattern of demand for age-related products such as baby products, fashion clothing, and family cars
Consider the following changes in the structure of the Indian population and their effects on marketers.
- There has been a trend for women to have fewer children. There has also been a tendency for women to have children later in life. In addition, there has been an increase in the number of women having no children. Fewer children has resulted in parents spending more per child (more designer clothes for children rather than budget clothes) and has allowed women to stay at work longer (increasing household incomes and encouraging the purchase of labor-saving products).
- Alongside a declining number of children has been a decline in the average house- hold size . There has been a particular fall in the number of large households with five or more people and a significant in- crease in the number of one-person households .
The growth in small or one-person households has had numerous marketing implications, ranging from an increased demand for smaller units of housing to the types and size of groceries purchased. A single person buying for him or herself is likely to use different types of retail outlets compared with the household buying as a unit.
Marketers also need to monitor the changing geographical distribution of the population (between different regions of the country and between urban and rural areas). The current drift towards rural and suburban areas has resulted in higher car ownership levels and a preference for using out-of-town shopping centers.
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 behavioral 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 behavioral. 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 behavioral data to achieve the most accurate outlook of consumers. Segmenting the customers by relevant demographic data is essential for establishing a successful marketing strategy.
The Technological Environment in Marketing
The pace of technological change is becoming increasingly rapid, and marketers need to understand how technological developments might affect them in four related business areas:
- New technologies can allow new goods and services to be offered to consumers- internet banking, mobile telecommunications, and new anti-cancer drugs for example.
- New technology can allow existing products to be made more cheaply, thereby widening the market for such goods by enabling prices to be lowered. In this way, more efficient aircraft have allowed new markets for air travel to develop.
- Technological developments have allowed new methods of distributing goods and services. (For example, amazon. com used the internet to offer book buyers a new way of browsing and buying books.)
- New opportunities for companies to communicate with their target customers have emerged, with many financial services companies using computer databases to target potential customers and to maintain a dialogue with established customers. The internet has opened up new distribution opportunities for many services-based companies. The development of mobile internet services offers new possibilities for targeting buyers at times and places of high readiness to buy.
Some concede the significance of the technological environment but also propose that keeping pace with technological changes is becoming more challenging for companies today. For one thing, the technological life cycle is getting shorter. Take mobile phones as an example: 15 years ago, mobile phones were basically used to communicate, nowadays the functions of mobiles include Multimedia playback device, high-speed web browser, camera, Bluetooth and so on. The update pace of the technological environment is too fast to always track. For another thing, technology and innovations require heavy investment in research and development. For instance, the development of a drug is an enormously expensive process. The increasing cost of research and development makes it more difficult to master a wide range of technologies, even for big companies.
However, it is a trend that technology develops faster and faster which means the development of society. Obviously, new technology would replace old technology which means that when old industries overlooked new technologies, their business declined. Hence, the companies must track technological trends and aware whether or not these changes will affect their products’ continued ability to satisfy customer needs. Also, there are some solutions for the high research and development budgets including collaborating with other companies to develop new products and technologies, acquiring smaller, innovative companies which cannot afford to develop and commercialize new products and technologies. Furthermore, the corporations may recover their expenses through charging a high price for the new products and innovation after monopolizing the market.
Consequently, it is essential for a company to stay ahead of others and update their own technology before it becomes outdated. Marketers need to understand the changing technological environment and how new technologies can satisfy customer needs. Example can be found in the case of Toyota Prius which are introduced in 2000 as their first hybrid car. As for the technologies used in Prius, the electric motor starts the car and operates at low speeds, using a nickel metal-hydride battery. At higher speeds, the Prius automatically switches to the internal combustion engine. Under normal motorway driving conditions, it should get 28 km per liter. The Prius would get twice as many kilometer’s per liter of petrol, it costs about £4,000 more than the Toyota Echo, although they are almost the same car. In spite of its high price, it has achieved great success after it was introduced. Between July and October 2000, Toyota sold 2,610 Priuses and had difficulty keeping up with demand. By the end of October 2000, the cars were waitlisted until January. Toyota spend £200 million on the whole marketing budget of the Prius in 2002, the reason why Toyota spend so much on it is competition and the new opportunities of new technology. All car manufacturers have plans to move to hybrids to raise petrol mileage and lower emissions, including Ford, DaimlerChrysler and General Motors. It is clear that there are many reasons why people may want a revolutionary car. Some enthusiasts are crazy about scientific and technological advances and want the newest products. Others rebel against fuel price increase and prefer less-fuel consuming cars with hi-tech. Toyota acquired what their customers want and how new technologies can serve customer needs, as a result, it obtained significant success in the campaign of hybrid cars.
To summarize, the technological environment is perhaps the most dramatic element to decide our consumption which creates both threats and new opportunities, therefore, to anticipate the customer requirements, marketers should watch the following trends in technology and try to adapt to these changes. They must stay ahead of trends so that they can make new marketing strategies, rather than becoming outdated and suffering the business decline.