Module 1. Overview of marketing

Lesson 5

MARKETING ENVIRONMENT: MICRO AND MACRO ENVIRONMENTS

5.1 Introduction

The organization is an open system. It obtains raw materials from the outside system, converts them into products and provides it in the system to be sold. The organization is impacted by many environment factors. Some factors exist in the immediate environment which is referred as micro environmental factors over which organizations have some control. At the same time organization are also impacted by external macro environmental factors over which they have no control.

Marketing environment is made up of all the factors and forces that influence marketing. Marketing environment is generally understood as external factors which will affect the organizations. This is further classified as macro or micro factors. Macro factors affect the economy and industry as a whole. Micro factors are within an industry. Micro environmental factors are also called task environment which is closest environment of the organization. The micro environmental factors have a direct influence on the organization. It includes factors like consumers, competitors, suppliers, labour market, industry and financial resources. The macro environment is also referred to as remote environment and its elements have indirect influence on the organization. It includes factors such as demographic, economic, socio-cultural, technological, natural, political, legal factors.

5.2 Micro Environmental Factors

The microenvironment consists of individuals and organizations that are close to the company and directly impact the customer experience. It includes the company itself, its suppliers, other marketing input from agencies, the markets and segments in which the firm trades, firm’s  competition and also those around the firm (which public relations would call publics) who are not paying customers but still have an interest in firms business. The Micro environment is relatively controllable since the actions of the business may influence such stakeholders.

For example Gujarat Cooperative milk marketing federation’s (GCMMF) micro environment would be very much focused on immediate local issues. It would consider how to recruit, retain and extend products and services to customers. It would pay close attention to the actions and reactions of direct competitors. GCMMF would build and nurture close relationships with key suppliers. The business would need to communicate and liaise with its publics such as neighbors which are close to its stores, or other road users. There will be other intermediaries as well including advertising agencies and trade unions amongst others.

5.3 Macro Environmental Factors

5.3.1 The demographic environment

This is the study of population and its characteristics such as size and growth rate in different geographic locations across the world, age distribution and ethnic mix, educational level, household patterns, regional characteristics and movements. Growth in population provides an opportunity for selling more products. Population age mix decides the purchasing pattern. Each population segment has its own needs. Young children need toys, youngsters may need bikes and old age persons have their own needs e.g.  related with health. Education level of population also decides purchasing patterns. A drastic difference is visible between purchasing pattern of educated elite urban consumer and uneducated rural consumer. The probiotics dairy foods are specifically meant for health conscious population. Examples: Seeing the large market for gearless scooters Hero Honda launched ‘PLEASURE ‘the gearless scooter made exclusive for women with the tagline ‘Why should Boys Have all the fun’ Yoga, & dances like Salsa, Samba & western are increasingly gaining popularity in metros as a means of fitness & stress busters.

5.3.2 Economic environment

Economic factors like income distribution, level of saving, debt, credit facility for consumers and stage in business cycle etc. may act as opportunity or threat for an organization. The available purchasing power of consumers is dependent upon economic factors. Economy of a country also passes through cycle of recession, depression, recovery and prosperity. Each phase of this cycle has associated impact on purchasing power on citizens of that country. Each business organization has to relate their business strategies in accordance with these phases of business cycles. After adopting liberalization policies in 1991, the economic conditions of India has drastically changed and has consequently affected the marketing decisions. On an average economy has shown progress, per capita income and purchasing power has increased. Examples: The Indian Railways Launched ‘Garib Rath’ (Vehicle for the poor), A.C trains with fare almost half the normal train fare. The Tata launched its low price car ‘Nano’ to give the economically weaker sections the privilege of owning a car.

5.3.3 Cultural environment

Culture is a complex set of knowledge, belief, art, morals, laws, custom and other capabilities and habits learned by individuals as a member of society. Culture is reflected by habits and habits influences the consumption patterns. Culture varies from country to country. Within the country also culture exhibits cultural variations. Organizations have to provide products/services in the market according to cultural shifts.

In present times, the Indian culture seems to be influenced to a great extent by western culture. A change in life style is visible especially in urban younger generations. Supermalls have taken a strong foothold in all the major towns of the country. Food habits, clothing patterns and other consumption patterns are seen influenced totally by western culture. It can be seen that different types of traditional dairy products are liked by consumers based upon cultural influences. Examples: Shrikhand in Gujarat and Rasgulla in West Bengal. Similarly, people in southern states like cooked flavor of ghee.

India is increasingly influenced by western culture hence organizations have changed their strategies accordingly. Shopping is done in ‘malls’ like ‘Big Bazars’, ‘D-Marts’. The concept of ‘Multiplexes’ is gaining popularity and this has lead to the rise of many brands of Multiplxes like ‘Fame’, ‘PVR cinemas’ & ‘ INOX’.

5.3.4 The social environment

Man is a social animal. Social forces and society has profound impact on purchasing pattern of individuals. Social customs determines the acceptance or rejection of a particular good. The food, dress and life style are influenced by social norms. India exhibits a heterogeneous social environment due to large geographic and social variance. Gender discrimination is also one of the social phenomena. In a traditional society strict role differentiation exists between man and women, specific dress codes are dictated for each gender such differences may generate different marketing opportunities. The organization should have idea about how the consumer reacts to various marketing offers in a social setting. Example: The food retail chains like KFC, Subway, Dominos, MacDonald’s are on high demand due to changing consumer preferences.

5.3.5 Politico-legal environment

Different types of political systems exist in different countries of the world. Business organizations are controlled to lesser or greater extent by each of this system. Business organizations aim is to earn profit. Government’s main aim is to seek welfare of the mass/ society. Thus in order to achieve this objective, large number of laws is enacted by government and business organizations are to abide by this rules. Each business organization has to have complete knowledge about all the legal rules. In India since 1991 liberalization polices are adopted and many rigid rules governing the business organizations has been dismantled. Example: The government of India  recently proposed foreign direct investment in retail sector but it was opposed by many stakeholders including opposition parties.

5.3.6 Technological environment

This is one of the most important driving forces affecting the lives of people today. The technological changes are occurring very fast. In all the fields due to fast technological up gradation we see that new products are continuously coming in the market. Internet has dramatically changed the lives of people today. All the knowledge is available at the click of a mouse. This distribution of e-course is also a relevant example highlighting the use of internet. Examples: The social networking sites like ‘twitter’, ‘Orkut’ & ‘ Face book’ have gained widespread popularity among all age groups. The ‘e-store’ like ‘e-bay’ is stores where goods can be purchased online.

5.3.7 Natural environment

The people all over the world have become more conscious about environment. Business organizations are required to adopt good business practices which do not spoil the environment. World is also facing the energy crisis. The non renewable energy sources like crude oil products are limited and their unscrupulous use put heavy pressure and leads to price rise. People are now concerned with all types of pollution (air, water, noise etc). The business organizations are to adopt pollution practices in the larger interest of the society. Reduced use of plastics, less use of fossil fuels, increased use of renewable energy sources like solar and wind energy etc are to be adopted by present day organizations. Examples: The concept of ‘green Building’ is being promoted where energy efficient buildings are constructed. The ‘NDTV Greenathon’ concept supported by TOYOTA.

Fig. 5.1 illustrates environment of business.

Fig. 5.1 Environment of business

The key questions to be asked by each marketing organization with respect to each type of marketing organization are described in Table- 5.1

Table 5.1 Key questions for each marketing organization

Type of environment	Key questions
Demographic	What are likely major demographic changes in near future? Whether these demographic changes will act as opportunity or threat to the organization?
Culture	What are the cultural features/ characteristics of the region? What cultural changes are evident in near future?
Social	What are predominant social values of the society? What visible changes are evident in society?
Politico legal	What types of political system does the region hold? What are important laws relating to operation of business houses?
Technology	What is the pace of technological development in major industries? What type of technological developments is affecting one’s own business industry?
Natural	What are the specific laws to protect the natural environment of the region?
Economic	In which phase of economy the country is passing? How is the economy of region? (developed, developing, under developed etc)

References

http://marketingteacher.com/lesson-store/lesson-marketing-environment.html