Macro Environmental Trend and Forces - Bikram Adhikari

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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