Macro environment The major external and uncontrollable factors that influence an organizations decision making, and affect its performance and strategies. These factors include the economic factors, demographics, legal, political, social conditions, technological changes, and natural forces. Specific examples of macro environment influences include competitors, changes in interest rates, changes in cultural tastes, disastrous weather, or government regulations.
The Macro Environment includes the factors which are external to the firm. Cannot be controlled by the organisation. Not specific to any industry but influences all the firms but the influence may be at different levels. As a Marketing manager, one must have knowledge of different factors which influences the marketing decision of a firm. One must adjust to the decisions as per the changes in the environment. The Important factors comprising the Macro Environment of Marketing are Demographic, Economic, Socio- Cultural, Natural, Technological and Political-Legal.
Demographic Environment It is related to population and population mix. It is people who contribute to demand. It is manpower which helps in production and supply. Thus as a marketer, on must understand the demographics of the nation.Population Growth:• India is ranked second in terms of population after China.• Provides an exceptional opportunity for business.• The high population growth has attracted many FMCG firms and retailers in countries like China and India whose markets are yet unexplored.
Population Mix:• The composition of population is important.• In a country like Japan, where major population is aged has attracted Pharmacy firms.• In India where population is composed of youths has made the firms to position themselves as pro-Youth, like MTV, Adidas, Coke etc.Household pattern:• The household pattern, like large Families, small families or nuclear families, also influence the marketing decision.• In rural areas of India, the trend of large and joint families is pertinent, the purchasing decision is influenced by most of the family members• In case of urban India where nuclear families are in trend, the decision is taken by a single user.
Geographical Shift:• In India, a language changes every 100 miles and culture changes every 10 miles• The marketer must have knowledge of the culture and language of the region to position its production in a better way.
Economic Environment The ability to buy a product is vital for a marketer. It can be measured in terms of income distribution, economic conditions of the nation, credit availability. India being an emerging economy has lots of potential for the markets. The availability of infrastructure, the business development, the policies, the distribution of income are also important parameters. A high inequality in distribution will lead to limited potential as the market is widely controlled by few riches which have the purchasing capability.
Socio Cultural Environment The market should adjust the decisions with respect to the cultural and social beliefs. McDonald’s had to stop its products containing beef, as cow is regarded as goddess in India. But in many cases, firms are able to dilute the cultural beliefs by exposing them to a new culture. Archies has made its market in India by promoting different occasions like Valentines Day, Fathers Day and Friendship day. The companies who are consistent with the cultural beliefs and are able to attract the loyal customers more easily and can retain them more effectively.
Natural Environment Nature is the source of raw materials for the production of a product. The raw materials may be renewable, infinite or depleting. The raw materials should be preserved and wastage must be minimized. Pollution should be minimized to preserve the ecology. Marketers in the current scenario try to Go Green and promote the Eco friendly Concept. Idea promoted Save Paper. Many companies are promoting Go Green campaign.
Technological Environment A marketer must be aware of recent technological updates. Being technologically upgraded and using the latest technology provides competitive advantage over the competitors. There are unlimited opportunities for innovation and every competitor tries to exploit the new usage of the product. The innovation can be in terms of new usage, new package, new material, and new method of production or even new kind of promotion. The recent era has seen many indescribable Innovations like Tata Nano, Apple I phone, Kindle E-reader, M- Commerce, Micro Credit, etc..
Political & Legal Environment It consists of Government Regulations, policies, social groups, etc. Any kind of business must be abided by the legal policies of the nation. Protects customers from exploitation by the businessmen. Protect interests of society. Protect companies from unfair competition. There are various kinds of laws in India like Consumer Protection Act, Environment protection Act, Indian Contract Act, Competition Law etc. Every citizen is required to be abided by the Indian Constitution. Policies like Displaying the Expiry date, MRP, and Green Circle on a Vegetarian Food product also influence the marketing decision.
There are Special Interest Groups like NGOs who oppose any unethical acts by the business. Recently, we saw opposition by large customer group against Cadbury as worms were found in one of its products. Coca-Cola suffered lots of opposition as pesticides were found in its cold drink. The Growth of Consumerism movement has made the business Pro-Consumer and made the market a Consumer-Driven Market.
Conclusion As a marketer, one must understand each and every parameter of the Macro Environment and be flexible to the changes in the environment. As these factors are external to the business and cannot be controlled, ability of being flexible to the changes in these factors will provide competitive advantage to the firm.