Marketing Environment: Micro and Macro

The Marketing Environment

• Divided into two components: microenvironment and macroenvironment.
• Marketers monitor the environment and adapt to it.

Microenvironment

• Forces and actors close to a company that affect its ability to serve its customers.
• Includes the company itself, suppliers, distributors, customers, and competitors.

Macroenvironment

• Larger societal forces beyond the control of the organization.
• Consists of political/legal, economic, ecological/physical, socio/cultural, and technological factors.

Political/Legal Factors

• Determine the rules by which business can be conducted.
• Marketing decisions are affected by legislation at EU and national levels.
• EU laws prevent collusion, abuse of market dominance, and control mergers and acquisitions.
• National laws affect marketing decisions by regulating advertising.

Economic Factors

• Can affect supply and demand.
• Include economic growth and unemployment rates.
• Include interest and exchange rates.
• Include taxation and inflation.
• Important to identify and monitor the economic influences relevant to the business.

Ecological/Physical Factors

• Environmentalists are concerned with the social costs of consumption.
• Environmental concerns go beyond just personal costs to consumers.
• Companies should be aware of the environmental consequences of their actions.
• Opportunities and threats are associated with ecological issues.

Ecological Factors Impacting Marketing Decisions

• Climate change
• Pollution control
• Conservation of scarce resources
• Animal testing of new products
• Environmentally friendly ingredients and components
• Use of recyclable and non-wasteful packaging

Socio/Cultural Factors

• Changes in the demographic profile of the population.
• Cultural differences exist between nations.
• Includes the influence of consumerism.

Consumerism

• Organized action against business practices that are not in the interests of consumers.
• Consumerism resulted in many firms adopting Corporate Social Responsibility (CSR) to guide business practices.

Demographics

• The study of human populations in terms of size, density, location, age, gender, race, occupation, and other statistics.
• Marketers track changing demographic factors.
• Key issues include world population growth, age distribution, and household structure
• The United Nations Population Division published "World Population Prospects: The 2006 Revision."

Age Distribution Trends

• Decline in younger age groups in developed countries, except for BRICS countries.
• Growing senior market, also known as the grey market.
• Changes in age distribution affect demand for certain products and services.
• Marketers may need to change their focus to adapt to age distribution.
• Focus shifts to pensions, personal savings, and medical insurance.

Trends in Household Size and Composition

• Relatively large household size in Ireland.
• Rise in one-person households.
• Many dual-earner families.
• Results in increased demand for childcare and convenience.

Technology

• Technological change can provide opportunities.
• Opportunities such as new product development.
• Opportunities such as creating new markets.
• Opportunities to change marketing practices and communication.
• Opportunities to revolutionize society.
• Technology poses a threat if firms cannot compete with more advanced rivals.

Trends in Technology

• Accelerating pace of technological change and more new product ideas.
• Shorter time lag between introduction and peak production.
• More functionality in smaller devices.
• Copying of competitors’ products.
• Investigation and banning of potentially unsafe products.
• Digital music
• 3D printing.

Key Questions for Marketing Macroenvironment

• What is the political situation and how does it affect the industry?
• What are the prevalent economic factors?
• How important is culture in the market, and what are its determinants?
• What technological innovations are likely to pop up and affect the market structure?
• Are there any current laws regulating the industry, and could the laws change?
• What are the environmental concerns for the industry?

The Customer

• Focus must be on the customer.
• Customers determine the success or failure of a business.
• Need to be sensitive to changing customer needs in the marketplace.
• Willingness to adapt as opportunities arise is paramount.

Distributors

• Deliver directly to customers or use independent wholesalers and retailers.
• Help companies promote, sell, and distribute goods to final buyers.
• Examples of final buyers include resellers/middlemen, physical distribution firms, marketing services agencies, and financial intermediaries.
• The growing power of online retailers like Amazon and Apple has affected sales and profitability.
• Growing power affects both manufacturers and offline retailers.

Suppliers

• Provide resources needed to produce goods and services.
• Most marketers treat suppliers like partners.
• Suppliers seriously affect marketing through supply shortages or delays, labour strikes, and price trends.

Competitors

• Competitors serve a target market with similar products and services.
• Products and services are viewed by consumers as reasonable substitutes.
• Researching competitors and their brands is necessary.
• Understanding customers is insufficient, need to know about competitors and their brands.
• Need to understand their strengths, weaknesses, strategies, and response patterns.
• Examples of issues are competitor myopia and comparative advertising.
• Also direct and indirect comparative advertising.

Environmental Scanning

• The process of monitoring and analyzing the marketing environment.
• Need to decide what to scan and how to organize the activity.
• Monitoring trends is important.
• Developing forecasts is important.
• Interpret and analyze internally produced information
• Establish a database
• Distribute information
• Environmental Scanning is the practice of monitoring and analyzing a company's marketing environment.
• As described by Jobber & Fahy (2022).

Responses to the Marketing Environment

• Ignorance means to continue as normal, ignoring environmental issues.
• Delay involves delaying action even after a change in the environment has been recognized.
• Retrenchment refers to cutting costs to survive but failing to deal with the issues causing sales and profit decline.
• Gradual Strategic Repositioning constitutes gradual, planned, and continuous adaptation to the changing marketing environment.
• Radical Strategic Repositioning means changing the direction of the entire business.