F O RC E S

S OC I A L, E C O N O M IC , T E C H N O LOG I C A L , AND C O M P E TI TI V E F O R C E S

SOCIAL FORCES
In recent years, the concept of social responsibility has entered into

the marketing literature as an alternative to the marketing concept.

The implication of socially responsible marketing is that retail firms

should take the lead in eliminating socially harmful products such as cigarettes and other harmful drugs etc.
There are innumerable pressure groups such as consumer activists,

social workers, mass media, professional groups and others who impose restrictions on marketing process and its impact may be felt by retailers in doing their business.

SOCIAL FORCES
Purchase decision of individual consumers are

influenced by beliefs, values and attitude, which in turn 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 an object 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.

SOCIAL FORCES
Religion , Customs And Culture Of Consumers:

People live in different parts of the country may have different cultural values which has to be analysed by retail business people/firm. This will help them to reorient their strategy to fulfill the demands of their consumers.

Education Level:

People with different education level have different type of needs and demands. Over 30 different languages, 200 different mother tongues and 2000 dialects.

Language:

SOCIAL FORCES
Increase in Life Expectancy:

Life expectancy increased to an average age of 66 years in 2006-07 from 58 years in 1991-92.

Age Factor:

India is a very young nations, with more than 70% of its population below the age of 40 and more than 47% below the age of 20. The increase in youth population which has also started earning early also increase 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.

SOCIAL FORCES

ECONOMIC FORCES
The economic environment determines the purchasing power of

people.
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 of consumers, existing in that area. Major income groups are middle class & upper middle class whose growing incomes fuels the growth for consumption.

Purchasing Power:

Total purchasing power is a function of current income, prices, savings and credit availability Consumer purchasing power measures the value in money for which consumers may purchase goods or services.

ECONOMIC FORCES
Market Conditions:

Market condition means whether it is boom or recession, 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.

ECONOMIC FORCES

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

TECHNOLOGICAL FORCES

COMPETITIVE FORCES
Forces in the marketing environment that are

based on competition among customers and competition with other firms

Who is buying goods and services and who is

providing them to those customers?

Are there many competitors or are there just a

few? Maybe none.

Knowing what competitive forces exist helps an

organization develop strategic planning to attract customers

PORTERS FIVE COMPETITIVE FORCES

Michael Porters Five Forces analysis is a tool for the structural

analysis 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 especially

made cheaper.
BARGAINING POWER OF BUYERS If there is more no of sellers the bargaining power of buyers

increase because they have alternatives to switch over.

PORTERS FIVE COMPETITIVE FORCES

BARGAINING POWER OF SUPPLIERS Same is in case of suppliers. The bargaining

power 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 are equal in sixe and strength.

Potential Entrants Bargaining power of Suppliers

Industry Competitors Rivalry Among Existing Firm

Threat of new entrants

Suppliers

Buyers

Threats of substitute products or services. Substitutes

Bargaining power of Buyers

PORTERS FIVE COMPETITIVE FORCES

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 to entry and on the other side it may not be easy for a small player.

PORTERS FIVE COMPETITIVE FORCES

Threat of Substitutes

This threat arises when the demand for a product decline 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 from moderate to low.

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 finished products to make various retail products or those who actually provide the finished products that can be sold in a retail store. In India the bargaining power of suppliers is low because there are a large number of potential suppliers in the market.

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 when it comes down to the pricing of the products.

In India, the bargaining power of the buyers is fast increasing and can be termed as moderate to high.

PORTERS FIVE COMPETITIVE FORCES

Intensity of Rivalry

The 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 are few players in the market. The level of product differentiation is fast changing with large number of new players entering into the market.

We can conclude that the intensity of rivalry is moderate but increasing.