Factors influencing industrial markets
The potential Indian population is a target that industrial marketers cannot overlook. Their population expansion provides a range of opportunities and threats.
Opportunities in terms of cheap labour for the industries and threats in terms of poverty, illiteracy which is to be given attention in addition to brain drain and stigma of “developing nation” to India.
The Industrial marketers must cash in on potential opportunities for example; the IT industry has been competitive due to a large number of techno savvy people. They are sent to offshore assignments thus satisfying their hunger for foreign jaunts and avoiding brain drain.
No individual firm should be caught unrepresented by the changing demographic conditions. Trends develop slowly and are easy to monitor and reliable data are available for short and intermediate range planning.
1. Economic Factors:
The economic conditions of the market determine how much an industry can buy and sell. Thus, emerging changes in the economic environment which shall affect industrial marketing both in India and internationally must be closely monitored.
As noted earlier, the industrial demand is a delivered demand and depends on the consumers’ purchasing power, income, taxes, fashion etc. When the country was passing through a recession in the late 1990s the consumers had tightened their belts and had limited their purchases.
The consumer durable industry, for example, television, fridge, microwave oven, washing machine etc. was badly hit which in turn had hit the component suppliers of these goods. Hence the demand for raw materials, components parts and associated services also tightened.
2. Natural Factors:
India is a country of extremes. When one part of the country is having heavy rainfall some other parts endures drought. The drought like situation in Northern India has affected many a industry. The earth quakes and floods in the northern states of India like Orissa and Gujarat have had direct impact on the industries. The industrial marketers must have an alternate strategy or a contingency plan during calamities that are forecast-able or those that could be predicted.
3. Technological Factors:
Technological developments and changes affect the profitability and market acceptance of a company. The electric car “Reva” by Maini group of companies is a technological innovation. It is yet to catch up in India due to reasons like there are no stations on either highways or in the city for recharging and it is a very small car. But Mr. Chetan Maini, the man behind the electric car is leaving no stones unturned.
They have already ventured into some North Indian cities and have exported to Europe. This technology is successful and would revolutionise the automobile industry. This industry is also being revolutionised by some car makers who are still working on a prototype which has buttons to change gears and increase acceleration instead of clutch and gear box. No industry today whatever is printing and packaging industry or an. It firm can ignore technological changes. As a marketer, he must be aware of the changes and make flexible strategies to adapt to these changes.
4. Social /Cultural Factors:
Cultural customs, habits, norms and traditions greatly influence the structure and function of an organisation as well as interpersonal relationships of organisational members. In India it is “Durability” that is important whereas in USA it is “style” that is appealing. Say product whether industrial or targeted to the consumer must be careful when appealing to customers with respect to the cultural values and representations.
5. Political/Legal Factors:
Government influence on the Industrial marketing environment. From the time of Jawaharlal Nehru to the time of Mr. Atal Behari Vajapayee there has been major influence of the Government in the industry to protect the Indian industries’ foreign investment or for that matter, foreign participation of any kind has not been allowed in the areas of defence, steel, drugs, fertilisers, machine tools etc.
More encouragement was given to small scale and cottage industry. Even the banks were nationalised, the multinationals which were present in India till about 1980s were engaged in commerce, trade and finance or export of tea. Indian Government felt that in areas where adequate Indian skills and capital are available, there was no need for foreign collaboration.
In fact, in 1977 Coca-Cola was asked to wind up operations in India, and IBM was to dilute equity to stay. Some companies like Alkali Chemicals, Dunlop, Goodyear and Asbestos Cement were allowed to remain as they were operating in non-priority areas. Today the Government having realised the importance has liberalised in many areas.
Still controls the industries do not contribute to an extent the effective and fair functioning of the economy. The Government acts as a regulatory agency in import and export matters. It controls the tax and interest rates. It provides economic stabilisation through control of inflation. It is environmentally and socially conscious. It passes rules, regulations and laws from time to time to ensure that general public interest is not compromised.
The Government has placed a large number of drugs with dubious justification under the scanner. Doubts persist about safety of a host of drugs including CISAPRIDE, the drug for night heart burn, and PPA, an ingredient in certain paediatric preparations. The review of iron preparations containing zinc, amino acids and vitamins decision could be of grave concern to many leading MNCs as these drugs are high margin products.
The Government can also change the marketing environment by making changes to its procedures for example Mr. Chandra Babu Naidu, Ex-Chief Minister of Andhra Pradesh, has decided to experiment with online procurement in four of its government departments.
|Andhra Pradesh Technology Services (APTS)||All IT related procurement for the State Government|
|Andhra Pradesh State Road Transport Corporations||Spares, Oil, Lubricants, bus body building services and office products|
|Commissionerate of Tenders||All tenders of value more than Rs 1 crore, projects relating to irrigation, roads and building|
|Andhra Pradesh Housing Infrastructure||Drugs, All civil and medicare related products and services|
The impact of this decision is that the industries supplying to the Government are hoping to supply must gear up for IT invasion and must be able to bid and make tenders through a computer. The marketing strategies will have to be adjusted to accommodate these changes.
Since Government transcends all levels of the industrial environment, it is capable of influencing and being influenced by environmental elements at all levels. Thus industrial marketers must keep careful watch pending regulations to ensure that their respective business plans will meet the government’s approval. Industrial marketers must be constantly in touch with the laws, regulations and sanctions of the Government.