TOPIC 1: Marketing Environments: Macro Environment

Background to the module

• This is an extension to Principles of Marketing 1

• The main of the module is to make learners understand the different environments which
have an impact on the operations of any organization and then come up with proper
strategies.

The Marketing Environment

• Is divided into:

• Macro environment

• Micro / market/ task environment

• Internal environment

Macro Environment

• This environment is made up of the following:-

• PESTLE/PESTELI/PEST/SLEPT, where,

• P – Political environment

• E – Economic environment

• S - Socio-cultural environment

• T – Technological environment

• L – Legal environment

• E – Ecological/Natural environment

• Organizations have no control over the macro environmental factors.

• These factors have a great impact on the operations of the entire organization.
 • Organizations have to comply to the demands from the macro environment

Analysis of the Political environment and its impact on business

• Marketers are expected to analyse the following:

• Nature of government e.g One party state, Government of national unity/ Multi – party
government

• Identify the ruling party and its ideology towards business

• Identify the major opposition party and its ideology towards business

• Analyse the degree of polarization among political parties

• Analyse the relationship between the host country and the international political
institutions

• Analyse political stability or instability of a country

• A country with a favourable political environment is favourable for investors

Analysis of the Economic environment and its influence on business operations

• In this environment the marketer is expected to analyse the following:

• Level of inflation e.g 1 digit, two digit, 3 digit or galloping inflation

• Interest rates for example, an economy with high interest rates affects capitalisation by
firms as borrowing is very expensive

• Rate of unemployment whether it is high or low. Normally a country with high

unemployment levels is characterised by low demand for products and services where
luxury products may not sell fast

• Industry stage of development e.g introduction, growth or maturity stage

• Level of GDP/PNP/ GNP per capita

 • Exchange rate whether its fixed or floating exchange rate system

• Any other economic aspects which affect business whether directly or indirectly

Socio-cultural environment and its influence on business operations

• The marketer is expected to analyse the following:

• Migration e.g rural – urban migration/ urban –rural migration

• Population size of countries, cities or towns e.g. China with a population of over 1.3
billion represents a large market size, Mexico city is over 11 million people

• Population demography

• Religion

• Education level

• Language

• Color

• The working women and the role that women play for example, companies may feature
ladies when making adverts and in some countries women are not allowed to be in
business like in Afghanistan, Iraq and other Arab states where women are believed to
play subordinate roles

• Marketers should analyse the social environment and observe the social values that are
dominant. Failure to observe the social values will make the firm unpopular

Technological Environment

• Refers to the new methods, systems, processes and procedures for doing business

• Companies are expected to use modern marketing methods such as e-commerce, mobile
money transfer systems, online advertising, online buying, e-wholesailing, e-retailing
e.t.c
• Companies should use modern communication methods such as social media, digital
marketing systems, electronic procurement systems and other internet based
communications

• Process technology (automated processes as opposed to manual methods of executing

business operation

• Production technology such as the Computer Aided Design (CAD) and the Computer
Aided manufacture (CAM)

• Modern transport systems across all modes

Legal Environment

• This environment is made up of laws, rules, regulations, statutory provisions, bills,

government gazettes, by-laws and other pieces of legislation which are promulgated from
time to time by the law making bodies such as the legislature, regulatory authorities like
the industry associations and local authorities

• It deals with company registration requirements, licensing and procedures expected of

companies in their operations

• Environmental regulations also fall in this category e.g in Zimbabwe EMA provides
guidelines on how companies should conduct their operations without harming the
environment

Ecological Environment

• This is also known as the natural environment

• This is the environment from which the companies obtain their raw materials

• In this environment companies are expected to use cleaner methods of production

• Companies should do whatever is good and avoid that which is detrimental to

environmental degradation
 • Companies especial manufacturing and mining companies should use efficient methods
of extracting raw materials from the natural environment,

• Companies to practice green marketing i.e reducing environmental pollution, employ

good modern waste disposal methods, use of dust abatement systems to reduce fugitive
smokes, smoke emission pipes to be over 50 metres from the ground so that gases emitted
will be less harmful to both human, animal and plant life

• Practice afforestation and reduce on deforestation activities, reduce artisanal mining, sand
poaching, veld fires and other practices with the potential to cause environmental
degradation

• Analysis of the larger external environment enables organization to identify opportunities

that they can exploit and threats that they can avoid

Discussion Questions

1. Using an organization you are familiar with, explain how the macro environmental
factors are impacting on the performance of the organization.
2. Explain how the organization is managing the impact of the macro environmental factors

Conclusion

The macro environmental factors have a great impact on the operations of any organization
hence the organization must always scan the environment in order to identify opportunities
and threats from the environment