Macro & Micro-environment and Their Influence to Marketing

(Lesson 4)

The two types of marketing environment:

• Micro – environment

o Consists of factors close to the company that affect its ability to serve its customers.

The company itself, marketing channel firms, customers markets and a broad range

of publics.

• Macro – environment

o Consists of the larger societal forces that affect the entire microenvironment.

o Broad forces which shape the character of opportunities and threats.

o Demographic, economic, natural, technological, political, and cultural forces

Importance of Macro- and Microenvironment

1. An understanding of macro and micro marketing environment forces is essential for

planning.
2. Helps a business to compete more effectively against its rivals.

3. Assists in the identification of opportunities and threats.

4. Enables an organization to take advantage of emerging strategic opportunities.

Company’s Microenvironment

• Marketing management’s job is to build relationships by creating customer value and

satisfaction.

• The success of marketing plans requires working closely with the company’s

microenvironment.

• Company

o Marketing managers must work closely with top management and the various

company departments.

o The finance department is concerned with finding and using funds required to

carry out the marketing plan.

o Top management sets the company mission, broad strategies, objectives, and

policies.

o Under the marketing concept, all managers, supervisors, and employees

• Suppliers

o These are firms/business houses and individuals who provides resources needed

by the company to produce goods and services.

o The developments in the supply’s environment have a substantial impact on the

marketing operations of the company.

o Companies can lower their supply costs and increase product quality to gain

competitive advantage in the market.

o Supply shortages have to be fully monitored and plans in order to avoid it.

Examples:

▪ Some hotels have contracted with restaurant companies to supply their

food and beverages.

▪ Retail stores have contracted distributor of products or wholesalers.

▪ Some bakeries contracted suppliers of the raw materials for their bread.

• Marketing Intermediaries

o It helps promote, sell, and distribute its goods to the final buyers/customers.

o They act as middlemen, distributing agencies, market service agencies and

financial institution.

o The Internet as a booking engine has created many opportunities, but it has

also made interactions with intermediaries more complex.

o Marketing services agencies are suppliers that help formulate and implement

marketing strategy and tactics.

• Customers

o The target market of the company is usually of the five types:

▪ Consumer market like individual and householders.

▪ Individual market like organizations buying or producing other and

▪ Reseller market like organizations buying goods and services with a

view to sell them to other (retail stores)

▪ Government and other non-profit markets like those buying goods and

services to produce public services.

▪ International market like individuals and organizations of nations other

than homeland who buy for either consumption or industrialization.

• Competitors

o The marketing concept holds a successful company must satisfy the needs and

wants of consumers better than its competitors.

o No company stands alone in serving and satisfying the needs of a customer. It

will always face competition.

o The company to come out successfully must adopt means which may help it to

outmaneuver.

o The competitive environment consists of certain basic things which every

marketing manager has to take note of.

o Both large and small firm must find marketing strategies that give them specific

advantages over competitors operating in their markets.

• Public

o It is defined as ‘any group that has an actual or potential interest in or impact on

a company’s ability to achieve its objective.

o The actions of the company do affect the interest of other groups i.e., those who

form general public for the company who much be satisfied along with

consumers of the company.

Company’s Macro-Environment

• It comprises general forces that affect all business activities in market.

• The company and all of the other actors operate in a larger macro-environment of
forces
that shape opportunities and pose threats to the company.

• It refers to those factors which are external to company’s activities and do not
concern

the immediate environment.

• Demographic forces

o Demography is the study of human populations in terms of size, location, age,

gender, race, occupation, and other statistics.

o The demographic environment is of major interest to marketers because it

involves people, and people make up markets

o Demographic data helps in preparing geographical marketing plans, household

marketing plans, age, and sex wise plans.

o It influences behavior of consumers which in turn will have direct impact on

marketplace.

o A marketer must communicate with consumers anticipate problems, respond to

complaints and make sure that the firm operates properly.

• Economic forces
o Factors influencing consumer buying power and strategies (stage of the business

cycle, inflation, unemployment, resources, income etc.)

o Affecting consumer purchasing power and spending patterns.

o Marketers must pay close attention to major trends and consumer spending

patterns both across and within their world markets.

Under economic environment manager generally studies

1. Trends of gross national product.

2. Patterns of real growth in income.

3. Variations in geographical income distribution.

4. Borrowing pattern, trends and governmental and legal restrictions.

5. Major economic variables.

Inflation and Deflation

➢ Inflation: The devaluation of money by reducing what it can buy

through continued price increases.

➢ Deflation: Falling prices

Unemployment

The proportion of people in the economy who do not have jobs and are

actively looking for work.

Income

-Discretionary Income: the amount of money people have

spend after paying bills and necessities.

Resource Availability

-Demarketing: reducing consumer demand for a good or service to a

level that the firm can supply

• Natural Forces

o The natural environment consists of many amenities that attract tourists, such

as conserve natural habitats, resources, endangered species, minimize

environmental impact, recycling, energy efficient products and clean air.

marketers or that are affected by marketing activities.

Natural Environment Trends

➢ Shortage of raw materials

-Limited quantities of non-renewable resources.

➢ Increased pollution.

-Waste disposal, air/water pollutants.

➢ Increased government intervention.

-When Boracay Island were ordered to stop accepting tourists.

➢ Environmentally sustainable strategies.

- G. R. E. E. N. movement.

• Technological Forces

o It is the application of science, inventions, and innovations to solve problems

o Technology has shaped our destiny which has given us wireless internet, can let

us communicate people all over the globe, can send documents anywhere and

anytime and inexpensive worldwide transportation.

o Technology changes rapidly.

o It creates new markets and opportunities the boom of online selling.

o The challenge is how to convince buyers for the quality of your product and

how to make practical, affordable products.

o Safety regulations result in higher research costs and longer time between

conceptualization and introduction of product.

o New technology has a long – term competitive advantage because it creates

more and better products, but it can make existing product obsolete.

• Political / Legal Forces

o Marketing decisions are strongly affected by developments in the political

o The laws, government agencies, and pressure groups that influence, and

restricted the activities of various organizations and individuals in the society.

o Legislation and regulation affecting business have been enacted for three

reasons.

▪ Protects companies from each other

▪ Customer from unfair business practices

▪ Society’s interest against unrestrained business behavior.

• Cultural / Social Forces

o Core beliefs and values are passed on from generation to generation and are

reinforced by schools, churches, business, and government.

o The cultural environment includes institution and other forces that affect

society’s basic values, perceptions, preferences, and behaviors.

o Social responsibility has crept into the marketing literature as an alternative to

the market concept.

o Socially responsible marketing is that business firms should take the lead in

eliminating socially harmful products.

Elements of Culture

a. Language

b. Manners and Customs

c. Technology and Material Culture

d. Social Institutions – business, family

e. Education – transmitting values, skills, attitudes etc.

f. Aesthetics – attitude toward beauty, art, music etc.

g. Religion
There are lots of elements in the macro environment but to help break down this
complexity

into more digestible parts, mnemonics is created. One of the most popular mnemonics
is PEST,

which stands for:

• Political. According to A.B. Ilano of Principles of Marketing, “What are the different

pieces of legislation, including tax rates, that affect the business? How likely is it for

the government to intervene in the industry? How stable is the working environment in

terms of political stability and overall predictability?”

• Economic. According to A.B. Ilano of Principles of Marketing, “Is the market growing

or shrinking? What is the savings rate of the population, and how is the employment

situation? Is the consumer spending increasing or decreasing? Do people feel that their

quality of life is improving? How volatile is the exchange rate, the interest rate, and

other essential indicators?”

• Social. According to A. B. Ilano of Principles of Marketing, “Is the population growing

or shrinking? Is it aging or the broad demographic is getting younger? What are their

interests? What are the lifestyles that they lead? How do the markets behave, especially

in terms of assessing and consuming your industry products?”

• Technological. According to A. B. Ilano of Principles of Marketing, “What are the new

technologies that are changing the business landscape? What new ideas are gaining

momentum? What new products and practices could threaten to make your current

business obsolete?”