Macro Environment in Marketing Definition Factors Examples

This includes all developments from antibiotics and surgery to nuclear missiles and chemical weapons to automobiles and credit cards. As these markets develop it the macro environment consists of can create new markets and new uses for products. It also requires a company to stay ahead of others and update their own technology as it becomes outdated.

Same-gender couples are more likely to be young, less likely to have kids, and much more likely to be politically liberal and have disposable income. If you’re marketing a product that only appeals to traditional nuclear families, or if your marketing strategy only features traditional families, you may be leaving out a large portion of the consumer base. It’s becoming increasingly rare to feature a white, traditional, two-parent two-child family in marketing materials anymore. The micro environment is specific to a business or the immediate location or sector in which it operates. In contrast, the macro environment refers to broader factors that can affect a business. Examples of these factors include demographic, ecological, political, economic, socio-cultural, and technological factors.

The Macro Environment – Six Forces To Consider (DEPEST/ DESTEP)

This involves laws, government agencies, as well as the pressure groups that can influence or give constrains to various individuals or organizations in a given society. Fiscal policy refers to government policy around taxation, borrowing, and spending. High tax rates can reduce individual and business incentives to work, invest, and save. The size of a government’s annual deficits and total debt can influence market expectations regarding future tax rates, inflation, and overall macroeconomic stability.

Cultural factors in heritage, living styles, religion, etc., also affect a company’s marketing strategy. Social responsibility also became part of marketing and slowly emerged in marketing literature. Technological forces are perhaps the most dramatic forces which are changing rapidly.

Ecological Factors

Some companies will employ analysts trained to evaluate macro-environmental factors and provide recommendations based on their research. These analysts will review broad macro-environmental forces related to such factors as politics, the economy, demographics, and technology. The Federal Reserve’s monetary policy initiatives are a key factor influencing the macro environment in the United States. Monetary policy measures are typically centered around interest rates and access to credit.

Rather than paying the tariff, the company can look for a domestic source for these goods that is cheaper than the imported good. If they can't find a domestic source, they will have to purchase the more expensive imported goods. In many cases, the company will need to pass the additional cost on to the consumer in the form of increased product prices. This could reduce the company's revenue if sales decrease because of the company's higher prices.

Threats and Opportunities

An organization ought to study the populace, its conveyance, age structure, and so forth before choosing its strategy of marketing. Each faction of the populace acts differently, relying on a range of factors, for example, age, status, and so on. If these variables are measured, a company can manufacture only those products which suit the necessity of the buyers. In this respect, it is said that ‘to comprehend the business sector you must comprehend its demography’. The macro-environment consisting of wider societal authorities, and the micro-environment which incorporates the influences related to a company, together form the general marketing environment of a company.

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• And this will also include the taxation laws and the budget for the given year.
• Macro-environment on the whole deals with the demographic, economic, technological, natural, socio-cultural and politico-legal environment aspects of the markets.
• While the internal environment can be controlled, the business has less or no control over the external environment.
• It includes concepts such as demography, economy, natural forces, technology, politics, and culture.
• But diligent decision-making and strategies can reduce the impact on the economy.

In other words, the development of a marketing strategy must be based on both customer satisfaction competitive differentiation. The political and legal environment is a broad term covering the firms and institutions by which the nation is governed. It consists of an interacting set of laws, government agencies, and pressure groups that influence and constrain the conduct of various organizations and individuals in society.

Demographic Environment

Marketers should be able to study and analyze the following major trends of the economy. It refers to the natural resources or physical environment that are required as inputs by marketers or which is affected by the marketing activities. The ecological conditions have become a crucial factor to consider as the environmental concerns have grown strongly in the recent years. Demography can be defined as the study of human population in context of size, density, age, location, gender, race, occupation and other statistics. The marketers have special interest in the demographic environment because it consists of people and people are the driving force for development of markets. The large and diverse demographics offer both opportunities as well as challenges for businesses.

This understanding will minimize business risk and give a competitive advantage over competitors. If the economy is down, selling goods and services obviously may become much more difficult as consumer spending decreases. Political forces shape every nation, and it’s a big consideration for all marketers. Political forces are often a consideration that is ignored by larger companies, only for them to be forced to spend millions of dollars later on legal fees when local governments litigate[6]. Uber is a prime example of a large company that moved into municipalities and ran its business its own way, uncaring about local laws.

• Now take McDonald’s, which wanted to use Twitter and a high-tech website to advertise their ‘Create Your Taste’ campaign.
• They relate to factors that create new technologies and thereby create new product and market opportunities.
• Afterwards, any developments in the macro environment should be closely watched to readjust the marketing strategy when needed.
• Luckily for them, the public was so mad at traditional taxi drivers at the time that they supported Uber’s strategy, which stopped a lot of governments from taking them to court, but not all.
• The tightening of monetary policy indicates rates are rising, making borrowing more costly and less affordable.
• The lifestyle, qualities, convictions, and so on is dead set besides everything else by the society in which we live.

We briefly mentioned age structure earlier, but the issue goes deeper than just its connection to population growth; this issue affects the viability of entire categories of the market. While the population is growing older, the number of babies being born is shrinking. In the US, the annual rate of childbirth has declined 20% in the last five years, and Singapore has become desperate enough to offer couples a ‘baby bonus’ of up to $10,000 for having a baby[3].

Ecology and Physical Environment

Cyclical industries are heavily influenced by the macro environment, while basic staple industries are less influenced. Industries that are highly dependent on credit to finance purchases and business investments are strongly influenced by changes in interest rates and global financial markets. An understanding of the external and internal environment is essential for planning for the future. A marketer needs to be fully aware of the current scenario, dynamism, and future predictions of the marketing environment if he wants his plans to succeed. These components incorporate the climate, atmosphere, environmental change, accessibility of water, accessibility of raw materials and so on.

Culture is the means used in adjusting to the biological, environmental, psychological, and historical components of human existence. These socio-cultural characteristics differ from people to people and society to society. The political environment of a country is the combination of three branches of the government – legislature, executive and the judiciary.

An assortment of environmental forces affects a company’s marketing arrangement. It is the task of the marketing manager to modify the company’s policies together with the shifting environment. Macro and micro environment comprise the structure of the marketing environment. The macro environment refers to the key external and uncontrolled elements that impact an organization’s decision making and effect its performance and strategy. This includes economic variables, demography, legal, political, and social influences, technological developments, and environmental factors.

The marketing environment is the combination of external and internal factors and forces that affect the company’s ability to establish a relationship and serve its customers. An issue that concerns many people, especially those on the conservative side of politics, is changing family structure. An enormous factor in the macro environment is the change in family structures all over the world.

Our philosophy is to research, curate, and provide the best startup feeds and resources to help you succeed in your venture. We are currently ranked as the 13th best startup website in the world and are paving our way to the top. Aashish has worked with over 20 startups and successfully helped them ideate, raise money, and succeed. Organizations are very susceptible to change in laws and interpretations done by courts. Another, slightly different analysis of the Macro Environment is the PESTLE-analysis (replaces the Demographic factor by a Legal one). Take your learning and productivity to the next level with our Premium Templates.