pop & Dem fac

8/9/2019 pop & Dem fac

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Population and Other

Demographic factors

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DEMOGRAPHY:

The study of the structure of human

populations using statistics relating

to births, deaths, wealth,

diseasesetc.


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Demographic Environment

The importance of

demographic factors to

business is clear from the

facts that managementis

menand marketispeople.


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Market is people in the sense thatdemand depends on the people

and theircharacteristics---------------------------------

The number,

Income levels,Tastes and preferences,

Beliefs,


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Attitudes and sentiments

And a host of otherdemographic factors.


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Important demographicbasesofmarket

segmentationincludethefollowing.

Age structure

Gender Income distribution


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Family size

Family life cycle (Ex--- Young,

single; Young married, no

children; Young married with

children.)Occupation


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Education

Social classReligion

Race

Nationality


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Demographicfactorssuchas----

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Size of the population,Population growth rates,

Age composition,

Density of population,

Rural-urban distribution,


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Family size,

N

ature of the family,Income levels etc. have very

significant implications for

business.


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Population Size

The sizeofthe population is an

important determinant of demand

for many products.Poorcountries withsmall

population are generally not

attractiveforbusiness..


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However, even such countries

may hold out opportunities for

some companies.

As these markets may not be

ofinterestforlargecompanies.


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Advanced countries, particularly

with large population, are

generally attractive markets.The major part of the international

tradeand foreigninvestments

naturally take place between thesenations.


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Because of the large potential

ofthesemarkets, competition

isgenerallystrong in them.


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Falling Birth Rate and Changing

Age Structure

The universaltrend now, however, is

fallin birthrates,

although the total population(inrelation to age) is still growing at

over one percent annually.


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Developingcountries are

also experiencing

significant decline in the

population growth rates.


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In developed countries the fall

in the birth rate is sosteep that

the population size wouldshrink drastically.


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Thecollapseofpopulationsizehasseriousimplicationsforbusiness.

EX---- Because of the decline in thebirth rates and the consequent fallin the size of the baby population,the market for baby products hasshrunk.( Johnsonand Johnson).


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THE Declining birthratehas,

however, beena boonto

certainindustries.Ex- hotels, airlines and

restaurants .Small families

preferred for outing when

compared with large families.


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Increasingly diverse ---------------

communities make recruitment,retention

and motivationmorecomplex.

Inadditiontorecruitment,thiscomplexity ------------

poses practical challenges in relation to

reward policy, benefit packages, work patterns,hoursetc.


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Ageing populations, with longer workinglives make the problem ofoutdated

qualificationsand skills particularlyacute

foremployersinsectorsheavily

dependent on skills, such as retail.


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Customers needs are diverging

--------- Retailers are developing

strategies reflecting thischange.


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Accordingto Drucker,Collapsing birthrate in the

developed world, which hedescribes as nationalsuicide.

High population growth rate also

implies an enormous increase inthe labour supply.


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Cheap labourand agrowing

market--------- haveencouraged many multinationals toinvest in developing countries.


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Many companies in the developed

countrieshaverelocated their

productionfacilities, wholly orpartially, in the developing

countries toreducethelabour

costs.


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The falling birth rate and rising longevity

will significantly alter the age distribution

within the population.

Ex----- After some time very small number

will be under fifteen, and a very large

number at least one-third of the

population -------will be above sixty.


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The changesintheage

distribution have a lot of

implications for business.Several pharmaceutical companies,

for instance, are paying a lot

attention to the potentialrequirements of the aged

population.


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THE increasing proportion of

the aged would have

implications for the Govt. It may increase the welfare

burden of the governments.

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pop & Dem fac