The macro environment includes all the factors that can influences the organization and its marketing mix but that are out of their direct control. A company does not generally influence any laws, population or economy. It is continuously changing and the company needs to be flexible to adapt.Macro environment provides opportunities and threats to the marketing while micro environment provides strengths and weaknesses to marketing.
The major components of the macro environment of marketing are as follows:
Economic Environment
Markets require buying power as well as people. The economic environment consists of factors that affect consumers’ purchasing power and spending patterns. Nations vary greatly in their levels and distribution of income. Some countries have subsistence economies. They consume most of their own agricultural and industrial output. These countries offer few market opportunities. At the other extreme are industrial economies, which constitute rich markets for many different kinds of goods. Changes in major economic variables such as income, cost of living, interest rates and savings and borrowing patterns have a large impact on the marketplace. Companies watch these variables by using economic forecasting. Businesses do not have to be wiped out by an economic downturn or caught short in a boom. With adequate warning, they can take advantage of changes in the economic environment.
Marketers must pay close attention to major trends and consumer spending patterns both across and within their world of markets.
Following are major components of economic environment:
Changes of Income
Income Distribution
Social class
Changing consumer spending pattern
Natural Environment
The natural environment involves the natural resources that are needed as inputs by marketers or that affected by marketing activities. Environmental concerns have grown steadily during the past three decades. In many cities around the world, air and water pollution have reached dangerous levels. World concern continues to mount about the possibilities of global warming, and many environmentalists fear that we soon will be buried in our own trash. Marketers should be aware of several trends on the natural environment. The first involves growing shortages of raw materials. Air and water may seem to be infinite resources, but some groups see long-run dangers. Air pollution chokes many of the world’s large cities and water shortages are already a big problem in some parts of the world. Renewable resources, such as forests and food, also have to be used wisely. Non-renewable resources, such as oil, coal and various minerals, pose a serious problem. Firms making products that require these scare resources face large cost increases, even if the materials do remain available.
The second environmental trend is increased population. Industry will almost always damage the quality of the natural environment. E.g., the disposal of chemical and nuclear wastes; the dangerous mercury levels in the ocean, the quantity of chemical pollutants in the soil and food supply and the littering of the environment with non-biodegradable bottles plastics and other packaging materials.
The third trend is increased government intervention in natural resources management. The governments of different countries vary in their concern and efforts to promote a clean environment. Some, like the German government, vigorously pursue environmental quality. Others, especially many poorer nations, do little about pollution, largely because they lack the needed funds or political will. Even the richer nations lack the vast funds and political accord needed to mount a worldwide environmental effort. The general hope is that companies around the world will accept more social responsibility, and that less expensive devices can be found to control and reduce pollution.
Concern for the natural environment has spawned the so-called green movement. Today, enlightened companies go beyond what government regulations dictate. They are developing environmentally sustainable strategies and practices in an effort to create a world economy that the planet can support indefinitely. They are responding to consumer demands with ecologically safer products, recyclable or biodegradable packaging, recycled materials and components, better pollution controls and more energy-efficient operations. Natural calamities like flood, landslide, earthquake, etc. are also related with opportunities and challenges. For example, Pre-Fab materials for home building in Nepal in present context.
Technological Environment
Technological environment includes forces that create new technologies, creating new products and market opportunities. The technological environment is perhaps the most dramatic force now shaping our destiny. Technology has released such wonders as antibiotics, organ transplants, notebook computers and the Internet. It also has released such horrors as nuclear missiles, chemical weapons and assault rifles. It has released such mixed blessings as the automobile, television and credit cards. Our attitude toward technology depends on whether we are more impressed with its wonders or its blunders. The technological environment changes rapidly. Think of all of today’s common products that were not available 100 years ago or even 30 years ago. Prithvi Narayan Shah did not know about automobiles, airplanes, radios or the electric light. Janga Bahadur Rana did not know about television, automatic dishwashers, air conditioners, antibiotics or computers. Chandra Shamsher did not know about xerography, synthetic detergents, tape recorders, birth control pills or earth satellites. King Tribhuvan did not know about personal computers, DVD players or the World Wide Web.
New technologies create new markets and opportunities. However, every new technology replaces an older technology. Cell phone hurt the pager industry, xerography hurt the carbon-paper business and the compact disks hurt phonograph records. When old industries fought or ignored new technologies, their business declined. Thus, marketers should watch the technological environment closely. Companies that do not keep up with technological change soon will find their products outdated. And they will miss new product and market opportunities. Scientists today are researching a wide range of promising new products and services, ranging from practical solar energy, electric cars, and cancer cures to voice-controlled computers and genetically engineered food crops. Today’s research usually is carried out by research teams rather than by lone inventors. Many companies are adding marketing people to R&D teams to try to obtain a stronger marketing orientation. Scientists also speculate about fantasy products such as flying cars, three-dimensional televisions and space colonies. The challenge in each case is not only technical but also commercial - to make practical, affordable versions of these products.
As products and technology become more complex, the public needs to know that these are safe. Thus, in many developed countries, various government agencies investigate and ban potentially unsafe products. These agencies set safety standards for consumer products and penalizes companies that fail to meet them. Such regulations have resulted in much higher research costs and in longer times between new-product ideas and their introduction. Marketers should be aware of these regulations when applying new technologies and developing new products. Marketers should monitor the following technology trends:
The accelerating pace of technological change
Unlimited opportunities for innovation
Varying research and development budgets and
Increased regulation of technological change.
Political-Legal Environment
Marketing decisions are strongly affected by developments in the political environment. The political environment consists of laws, government agencies and pressure groups that influences or limit various organizations and individuals in a given society. Even the most liberal advocates of free-market economies agree that the system works best with at least some regulation. Well-conceived regulation can encourage competition and ensure fair markets for goods and services. Thus government develop public policy to guide commerce – sets of laws and regulations that limit business for the good of society as a whole. Almost every marketing activity is subject to a wide range of laws and regulations.
Legislation affecting business around the world has increased steadily over the years. Most of the developed countries have so many laws covering issues such as competition, fair trade practices, environment protection, product safety, truth in advertising, consumer privacy, packaging and labeling, pricing, and other important areas. The European commission has been active in establishing a new framework of laws covering competitive behaviour, product standards, product liability and commercial transactions for the nations of the European Union.
Several countries have gone further than United States in passing strong consumerism legislation. For example, Norway bans several forms of sales promotion– trading stamps, contests, premiums – as being inappropriate or unfair ways of promoting products. Thailand requires food processors selling national brands to market low price brands also so that low income consumers can find economy brands on the shelves. In India, food companies must obtain special approval to launch brands that duplicate those already existing on the market, such as additional cola drinks or new brands of rice.
Demographic Environment
Demography is the study of human population in terms of size, density, location, age, gender, race, occupation, and other statistics. The demographic environment is of major interest to marketers because it involves people and people make up markets. The world population is growing at an explosive rate. It now totals more than 7.7 billion and will exceed 8.2 billion by the year 2030. The world’s large and highly diverse population poses both opportunities and challenges. Think for a few minutes about the world and your place in it. If we reduce the world to a village of 1000 people representative of the world’s population this world would be our reality:
Our village would have 520 females and 480 males including 330 children and 60 people over age 65, ten college graduates and 335 illiterate adults.
We’d have 52 North Americans, 55 Russians, 84 Latin Americans, 95 Europeans 124 Africans and 584 Asians.
Among us we’d have 329 Christians, 178 Muslims, 32 Hindus, 60 Buddhists, 3 Jews, 167 nonreligious, 45 atheists and 86 others.
The explosive world population growth has major implications for business. A growing population means growing human needs to satisfy. Depending on purchasing power, it may also mean growing market opportunities. Thus marketers keep close track of demographic trends and developments in their markets, both at home and abroad. They track changing age and family structures, geographic population shifts, educational characteristics and population diversity. Following are some demographic factors which affects marketing: Worldwide population growth age mix, ethnical and racial diversity, educational groups, household pattern, etc.
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