Note on Macro environment And its Variables

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The Company’s Macro Environment

 

The company and other actors operate in the larger macro environment which shapes opportunities as well as threats to the company.There are six major factors that play as actors in macro environment.

Macroenvironment Variables
Macroenvironment Variables
Source:marketingenvironment-090420054440-phpapp02/95/marketing-environment-17-728.jpg?cb=1240206344

 

Demographic Environment

The study of the human population on the basis of size, density, location, age, gender, race, occupation, and other statics. As demography includes people and people make up the markets so it is a major interest to the marketers. The population growth rate is increasing day by day and it will now exceed from 6.1 billion to 8.1 billion by 2030. This increment in population is both opportunities and challenges in the world.

If the world demographic environment is changed then they have major implications for business. For example, A quarter century ago due to skyrocketing population, the Chinese government made the policy of limiting families to one child each. Also in Pakistan 14 years or younger has reached to 40 percent of total population, out of which almost 14 percent are older and younger.

The marketers keep close look towards the demographic trends and developments in their market, both at home and abroad. They track all demographic components like changing age and family structures, geographic population shifts, educational characteristics, and population diversity.

  • Increasing Population:One of the major characteristics in Asian is its rapid population growth in its urban population. Some around 1.1 billion people will move to cities in next twenty years. The population in cities area will rise from 29 percent to 37 percent in 2025.
  • A Growing Middle Class: The population consists of various groups according to their income. These groups are classified into a various class such as deprived, aspirers, seekers, strivers and global Indians according to their disposable income.
  • Growth in Rural Population: The demand of the rural population has increased a lot but in rural area, there is not only the problem of purchasing power other problems like lack of proper infrastructures such as road and telecommunication connectivity and supply of electricity also exist.
  • A Changing Family System: The traditional system of a family includes parents, grandparents, and children. Head of the family will earn the money for others. Now the joint family system has been eradicated and now the nuclear family system has come into play. In this system, both husband and wife work and their children are looked by babysitters.
  • The Changing Role of Women: As we know about three decades ago the role of women is to take care of the house but now the woman has entered into the corporate world has changed in many economic ways.
  • Increasing Diversity: Countries vary according to the ethnic and racial group. With increasingly diverse markets, most large companies, now target specially designed products to various ethnic groups.

 

Economic Environment

The factors that affect the consumer's  purchasing power and spending patterns are economic environment. Marketers have to pay close attention to various trends and consumer spending patterns both across and within their world markets. 

  • The Global World: The seeds of the global economic crisis of 2007-2009 were shown in the USA when the overambitious bankers provided thousands of subprime housing loans to consumers who had limited capacity to service that loans. When the real states price has collapsed many of these customers defaulted on their loans. Due to these many of the stock markets around the world crashed and also billions of rupees in capitalization. However, the financial collapse led to the developed world going into a major recession.
  • Changing Income Distribution and Consumer Spending Patterns: Various components like food, housing, and transportation use up the maximum household income. Consumers having different income has different spending patterns. According to Ernst Engel, as family income rise percent of spent on food declines, percent of housing remains constant which devoted to increment in savings.

 

Natural Environment

Natural environment is related to the natural resources that are needed as inputs by the marketers or that are affected by the marketing activities. Some parts of the world are rich in natural resources such as minerals, crude oil, or vegetation. For example, Arabian gulf has huge reservoirs of crude oil and some parts are rich in minerals in India. In various cities, the pollution levels have increased into dangerous levels. Renewable sources such as forest and food, water, soil etc should be used wisely whereas nonrenewable resources pose a serious problem

Environment sustainability has been practiced that create the world economy that planet can support indefinitely. For Example: In 2005, technologies ,GE launched its evolution series which cuts the consumption of the fuel by 5 percent and emission by 40 percent compared to locomotives built just a year earlier.

 

Technological Environment

The technology creates great impacts in this changing world. The technology that is available in the world has changed the way people are communicating and doing business. Everyone gets affected due to the change in technological environment. The technological components like self – scanners, and video displays at stores, ATMs , Internet, and mobile phones are few examples that affect the business and consumers. Many consumers get information by reading news, using text messaging and shopping online. As a result, marketers have begun allocating more of their promotional budgets to online ads , mobile marketing.

 

The Political and Legal Environment

The government regulations and political-legal environment must be understood by the organizations in which they do business. Different government policies and regulation have been established in order to protect both consumers and business. For example : The U.S. Food and Drug Administration (FDA) regulates the labeling of the products consumed such as food and medicine. As we have explained, when organizations conduct business in multiple markets, they must understand that regulations and policies differ across countries and across states.

 

The Social and Cultural Environment

Social and Cultural environment includes various social trends such as people's attitudes towards fitness and nutrition and demographic components like age , marital status , education, and occupation, and culture which relates to people's beliefs and values changing in the whole market. The trends of fitness, nutrition and health trends are affecting the offerings of the product by many firms. For example, PepsiCo produces water and vitamin drinks.

 

 

Both microenvironments and macro environment have great impacts on the success of marketing campaigns and therefore the factors of these environments. Considering these factors obviously improve the success of your organization’s marketing campaign and the reputation of the brand in the long term.

 

Reference:

Kotler, P., & Armstrong, G. (2013). Principles of Marketing. Chennai: Pearson India Education Services Pvt Ltd.

http://www.saylor.org/site/textbooks/Principles of Marketing.pdf

 

  • The company's  Macroenvironment.
  • Variables Of Macroenvironment
  • How macroenvironment affects the success of business?
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