Topic 3

Macro environment
@2007, Huong
& Internal environment
 Topics

Examining the macroenvironment and its influences on

companies.

Trend in relation to the economic, social & technology

environment

Understand the microenvironment factors that affect the

company’s ability to serve its customers.
 Marketing environment

The marketing environment includes the actors and forces

outside marketing that affect marketing management’s ability
to build and maintain successful relationships with target
customers.

Macro-Environment Micro-environment

1. Demographic 1. Marketing organisation

2. Economic, 2. Marketing intermediaries
3. Natural 3. Customers
4. Technological 4. Competitors
5. Political 5. Publics
6. Cultural forces
3-3
 The Macroenvironment

– Larger societal forces that affect the whole micro-

environment:
• Demographic, Economic, Natural, Technological,
• Political &Cultural forces
3-4
How Will Marketing Strategies Evolve in Times of
Coronavirus (COVID-19)?
Consumer attitudes and behaviors are changing.

Life before COVID-19 revolved around going to work, grocery

stores, malls, gyms, restaurants, movies, and schools.

During COVID-19, we'll adapt to working, shopping, exercising,

entertainment, and learning at home. Digital experiences will
replace in-person experiences. Some of the new habits will
become the new normal – even after the crisis passes.

Looking ahead, the best companies in the world will prepare now
for how to meet the needs of consumers (where they're at) when
the recovery period begins. Don't expect consumers will return to
the same place.
During a time of economic crisis, the role of the marketer may now
seem obsolete. However, it is quite the opposite, as this is an
opportunity to pick up on consumer behavior changes and virtually
engage with consumers in new ways. These changing times make it
crucial for marketers to see consumers as individuals and not group
customers into segments.

Listen for changes in customer sentiment & behavior

Gartner

Use social listening to monitor customer discussions about health

concerns or information needs. Monitor customer care emails, phone
calls and service chats for changes in concerns or sentiment.

Balance your response. Marketers must support customers and protect

customer relationships while staying honest about what the firm can
and cannot deliver at this time. Be careful about taking actions that
provide short-term stability (or gain) for the firm at the expense of
customer trust.
 The Macroenvironment
Demographic Environment
• Demography is the study of human populations-- size,
density, location, age, gender, race, occupation, and other
statistics.

• Demographic environment involves people, and people

make up markets.

• Demographic trends include changing age and family

structures, geographic population shifts, educational
characteristics, and population diversity.

3-8
 Demographic Environment

Age structures sub-groups

• Baby Boomers - born 1946 to 1964

• Generation X - born between 1965 and 1976
• Millennials- born between 1977 and 2000
• Generation Z – born after 2000
Emerging Trends from the Covid-19 Pandemic
Globalisasian

In the aftermath of Covid-19, the idea of holiday travel will also

change as airport security becomes more stringent, surveillance in
public places will become more intensive, and working from home
may become the norm for most of the workforce.

Socialbakers Q1 Trends Report Highlights the COVID-19

Impact on Social Media Users

Increased amount of time people spent online, created

opportunities for brands to increase reach or
engagement.

brands that promoted their posts, taking advantage of the

lower ad costs, saw a 28.6% increase in page reach
from March 13-April 13
 Economic Environment
The economic environment consists of factors that affect
consumer purchasing power and spending patterns.

• Industrial economies are richer markets. U.S., Uk, Germany, Japan

• Subsistence economies consume most of their own

agriculture and industrial output. Indo-China, Africa

• Developing economies also offer outstanding marketing

opportunities. China, India, Brazil, Mexico

Changes in Consumer Spending

Value marketing involves offering financially cautious buyers
greater value—the right combination of quality and service at a
fair price.
Economic growth slowed
3-12
Source: IMF, 2020
Compared to economic forecast just 3 months ago in
January 2020
 Natural environment
• Increased cost of energy: One non-renewable resource, oil,
has created the most serious problem for future economic
growth.

• Major industrial economies depend heavily on oil and, until

economical energy substitutes can be developed, oil will
continue to dominate the world political and economic picture.

• Increased pollution: Industry will almost always damage the

natural environment. However, this can create opportunities for
products to help save the environment: smoke-stack scrubbers,
recycling centres, high-temperature incinerators, and landfill
systems.

• Government intervention in natural resource management:

Governments of different countries vary in their concern and
efforts to promote a clean environment.
 The technological environment

Fast pace of
• Technological technological
advances are the most change
dramatic forces
affecting today’s
marketing strategies High R&D
budgets

Increased
regulation

1
6
 Technological environment (1)
• Technological environment is perhaps the most dramatic
force now shaping our destiny. Technology has released
medical wonders and advanced communication; however, it
has also created the means of mass destruction.

• New technologies replace older technologies, creating new

markets and new opportunities.

• Fast pace of technological change: Many of the world’s

greatest inventions and innovations have occurred in the
last century: cars, planes, computers, light globes, radio
and television, for example.

• Even now, many computers are considered obsolete a little

more than two years after being made.
ZARA: TECHNOLOGY AND USER EXPERIENCE AS
DRIVERS OF BUSINESS

Technology allows Zara’s executives to monitor each store’s ambient

temperature, energy consumption, and much more. Indeed, this is one
of the keys to Zara’s success: big data. Thanks to data analysis, the
company even knows the average weight of residents in each store’s
neighborhood. The company uses these figures to determine what
sizes of each garment to ship to each establishment. In short, Zara has
the predictive capacity to determine what sorts of products will be
easiest to sell.
Companies like vegan cosmetics brand Lime Crime recently launching
app that uses Augmented Reality (AR) to create experience for users &
customers. When a user scans a product within the mobile app, the AR
technology allows the brand’s signature character “Venus” to virtually
speak to customers about the features of the item, as well as to offer
educational resources, like product demos and tutorials involving the
scanned item. Target market of Millennial and Gen Z consumers spend
more time interacting digitally than they do interacting with others in the
real world.
 Technological Environment
Impacts:

 New products, innovations & improvements new

opportunities. Wireless payment

 Shorten existing Product Lifecycle mass market launch

 Production methods capital-intensive, more productive,

lower operation cost. Mainframe, Servers/ computers.

 Recover high initial R & D cost marketing program (price)

 Internet, incorporate in their marketing programs

- consumers have also greater information
- mobile workforce (salesforce)
 Political environment

• Marketing decisions are strongly affected the political

environment; -laws, government agencies and pressure
groups that influence, limit organisations and individuals in
a given society.’

• Consumer protection laws: Unfair practices, Product

safety, Warranties & Actions against manufacturers.

• There is increased emphasis on ethics and socially

responsible actions to reduce marketing abuse.

Australian Competition and Consumer Commission (ACCC),

the Foreign Investment Review Board
 Cultural environment
• Cultural environment is made up of institutions and other
forces that affect society’s basic values, perceptions,
preferences, and behaviours.

• People grow up in a particular society that shapes their

basic beliefs and values. They absorb a world view that
defines their relationships to themselves and others.

• Cultural characteristics can affect marketing decisions:

- Persistence of cultural values – pass from generation to

Generation. Subcultures (religious groups, teens, working
women)

- Secondary beliefs and values are more open to change

and include people’s views of themselves, others,
organizations, society, nature, and the universe.
 Responding to the Marketing Environment
Views on Responding

Uncontrollable Proactive Reactive

• React and • Take aggressive • Watch and

adapt to actions to affect react to forces
forces in the forces in the in the
environment environment environment

Passively accept the Develop strategies to

environment, analyze change the
environmental forces environment and
& design strategies to overcome seemingly
deal with threats and uncontrollable
take advantage of the environmental events
opportunities
3-45
Microenvironment
 Microenvironment

Actors in the Microenvironment

Actors close to the organisation that affect its ability to

serve its customers:
• The Company, Suppliers, Marketing Intermediaries,
• Competitors, Customer markets & Publics
3-24
 The marketing organisation

• Senior management sets the organisation’s mission,

objectives, broad strategies and policies.

• Marketing managers must make decisions (marketing)

within the plans made by senior management.

• Senior management must approve marketing plans before

they can be implemented.

• In designing marketing plans, marketing management takes

other organisation groups into account such as: top
management, finance, research and development (R&D),
purchasing, manufacturing and accounting.
 Marketing Resources

Figure Marketing resources (Hooley et al. 2012)

1. Marketing Assets
Market/ Customer based assets
- Relationship with Customers – deep level of trust
- Company name & reputation – performance consistency
- Brands, country of origin – good image for quality & precision
- Market domination – market leader/ high mkt coverage
- Superior products & services – better than others

Supply Chain assets

- Distribution network, control and Strength – many outets/ dealers

- Distribution uniqueness – different & reach target market
- Suppliers network and Relationship – continue support,
downtime
Internal Support assets
- Cost advantage – higher capcity utilisation, economies of scale
- Information systems – company inform of buyers/ rivals
- Technological skills – enables lower cost or higher quality
- Production expertise – skilled assets/ flexible manufacturing
- Copyrights/ patents – legal protection, exclusive right
- Partnership – forming alliance for support or product develoipment

Alliance based assets

- Access to markets – greater market reach
- Access to Management skills – provides leadership, integrate
- Exclusivity - “lock-in” distribution
 Marketing intermediaries

Marketing intermediaries help an organisation to promote,

sell and distribute its goods to final buyers. They include:

• Resellers
– Distribution channel firms that help the organisation find
customers or make sales to them such as Wholesalers
and Retailers.

• Physical distribution firms

– Help the organisation stock and move goods from
their points of origin to their destinations such as
transportation firms.
 Marketing intermediaries

• Marketing services agencies

Facilitating agencies - Marketing Research companies,
Advertising agencies, Media firms,
Export and Marketing consulting firms helps organisations
target and promote its products to the right markets.

• Financial intermediaries
Include Banks,
Credit organisations,
Insurance
organisations and other businesses that help to
finance transactions or insure against the risks
associated with the buying and selling of goods.
 Customers

The marketing organisation must study its customer

markets closely. The organisation can operate in five
types of customer markets:
1. Consumer markets
2. Business markets
3. Reseller markets
4. Government markets
5. International markets
 Customers
• Consumer markets - individuals & households that buy
goods & services for personal or household consumption.

• Business markets - firms that buy goods and services for

further processing or for use in their production.

• Reseller markets - organisations that buy goods and

services in order to resell them at a profit.

• Government markets - government agencies buy goods &

services to produce public services or transfer these goods
and services to others who need them.

• International markets are overseas buyers including

consumers, producers, resellers and governments.
 Competitors
• Every organisation faces a wide range of competitors.
The marketing concept states that, to be successful,
an organisation must provide greater customer
value and satisfaction than its competitors.

• No single competitive marketing strategy is best for all

organisations. Each marketer should consider its own
size and industry position compared with those of its
competitors.

• Organisations are facing competition from international

competitors as well as opportunities in international
markets.
 Publics
A public is any group that has an actual or potential
interest in, or impact on, an organisation’s ability to
achieve its objectives. Every organisation is involved with
seven types of publics:
1. Financial publics
2. Media publics
3. Government publics
4. Citizen-action publics
5. Local publics
6. General publics
7. Internal publics