Principles of

Marketing Importance of Macro- and Microenvironment

Quarter 3 – Module 4 An understanding of macro and micro marketing environment forces is essential for
Macro and Micro-environment & planning.
Their Influence to Marketing Helps a business to compete more effectively against its rivals.
Planning Assists in the identification of opportunities and threats.
The Marketing Environment Enables an organization to take advantage of emerging strategic opportunities.
You cannot just launch a product without knowing the world at large. Moreover, even in Company’s Microenvironment
rolling out, you need to know quite a bit of information such as information about Marketing management9s job is to build relationships by creating customer value and
competitors9 products and strategies, the market and its behaviors, government regulations satisfaction.
regarding your proposed product, alternative options, economic trends, distributors and The success of marketing plans requires working closely with the company9s
their behaviors, and a lot more. The problem is the world is very large and complex. It microenvironment.
takes time for us to analyze each and every element in it. What element should you scan
and monitor first? Is this element worthy of your attention?

We first begin with a breakdown of the primary elements that make up your business
environment.

Figure 2. The Marketing Environment: Company9s Micro Environment.

Company

 Marketing managers must work closely with top management and

the various company departments.
 The finance department is concerned with finding and using funds
Figure 1. Six Interesting Difference between Micro and Macro Environment (Business required to carry out the marketing plan.
Environment) - Core Differences  Top management sets the company mission, broad strategies,
objectives, and policies.
The two types of marketing environment:  Under the marketing concept, all managers, supervisors, and
• Micro – environment employees should work in harmony to provide superior customer
Consists of factors close to the company that affect its ability to serve its customers. The value and satisfaction.
company itself, marketing channel firms, customers markets and a broad range of publics. Suppliers
• Macro – environment  These are firms/business houses and individuals who provides resources needed
Consists of the larger societal forces that affect the entire microenvironment. by the company to produce goods and services.
Broad forces which shape the character of opportunities and threats.  The developments in the supply9s environment have a substantial impact on the
Demographic, economic, natural, technological, political, and cultural forces marketing operations of the company.
  Companies can lower their supply costs and increase product quality to gain o The company to come out successfully must adopt means which may
competitive advantage in the market. o Supply shortages have to be fully help it to outmaneuver.
monitored and plans in order to avoid it. o The competitive environment consists of certain basic things which every
Examples: marketing manager has to take note of.
▪ Some hotels have contracted with restaurant companies to o Both large and small firm must find marketing strategies that give them
supply their food and beverages. specific advantages over competitors operating in their markets.
▪ Retail stores have contracted distributor of products or
wholesalers. • Public
▪ Some bakeries contracted suppliers of the raw materials for their o It is defined as 8any group that has an actual or potential interest in or
bread. impact on a company9s ability to achieve its objective.
Marketing Intermediaries o The actions of the company do affect the interest of other groups i.e.,
o It helps promote, sell, and distribute its goods to the final those who form general public for the company who much be satisfied
buyers/customers. along with consumers of the company.
o They act as middlemen, distributing agencies, market service agencies
and financial institution. Company’s Macro-Environment
o The Internet as a booking engine has created many opportunities, but it
has also made interactions with intermediaries more complex.
• It comprises general forces that affect all business activities in market.
o Marketing services agencies are suppliers that help formulate and • The company and all of the other actors operate in a larger macro-environment of
forces that shape opportunities and pose threats to the company.
implement marketing strategy and tactics.
Customers • It refers to those factors which are external to company9s activities and do not
o The target market of the company is usually of the five types: concern the immediate environment.
▪ Consumer market like individual and householders.
▪ Individual market like organizations buying or producing other
and services.
▪ Reseller market like organizations buying goods and services
with a view to sell them to other (retail stores)
▪ Government and other non-profit markets like those buying
goods and services to produce public services.
▪ International market like individuals and organizations of
nations other than homeland who buy for either consumption or
industrialization.
Competitors Figure 3. Macro-Environmental Factors | Marketing Portfolio.
o The marketing concept holds a successful company must satisfy the
needs and wants of consumers better than Demographic forces
its competitors. o Demography is the study of human populations in terms of size,
o No company stands alone in serving and satisfying the needs of a location, age, gender, race, occupation, and other statistics.
customer. It will always face competition. o The demographic environment is of major interest to marketers because
it involves people, and people make up markets
 o Demographic data helps in preparing geographical marketing plans,  The natural environment consists of many amenities that attract tourists, such as
household marketing plans, age, and sex wise plans. conserve natural habitats, resources, endangered species, minimize environmental
o It influences behavior of consumers which in turn will have direct impact impact, recycling, energy efficient products and clean air.
 The natural environment involves natural resources needed as inputs by marketers
on marketplace.
or that are affected by marketing activities.
o A marketer must communicate with consumers anticipate problems,
respond to complaints and make sure that the firm operates properly. Natural Environment Trends
 Shortage of raw materials -Limited quantities of non-renewable resources.
• Economic forces o Factors influencing consumer buying power and strategies (stage
 Increased pollution. -Waste disposal, air/water pollutants.
of the business cycle, inflation, unemployment, resources, income etc.)
 Increased government intervention. -When Boracay Island were ordered to stop
o Affecting consumer purchasing power and spending patterns.
accepting tourists.
o Marketers must pay close attention to major trends and consumer  Environmentally sustainable strategies. - G. R. E. E. N. movement.
spending patterns both across and within their world markets.
Technological Forces
Under economic environment manager generally studies
 It is the application of science, inventions, and innovations to solve problems
 Technology has shaped our destiny which has given us wireless internet, can let us
1. Trends of gross national product. communicate people all over the globe, can send documents anywhere and
2. Patterns of real growth in income. anytime and inexpensive worldwide transportation.
o Technology changes rapidly.
3. Variations in geographical income distribution.
o It creates new markets and opportunities the boom of online selling.
4. Borrowing pattern, trends and governmental and legal
o The challenge is how to convince buyers for the quality of your product
restrictions.
and how to make practical, affordable products.
5. Major economic variables. o Safety regulations result in higher research costs and longer time between
conceptualization and introduction of product.
Inflation and Deflation
o New technology has a long – term competitive advantage because it
➢ Inflation: The devaluation of money by reducing what it can buy through
creates more and better products, but it can make existing product
continued price increases.
obsolete.
➢ Deflation: Falling prices Political / Legal Forces o Marketing decisions are strongly affected by developments in
Unemployment the political environment.
The proportion of people in the economy who do not have jobs and are actively looking for o The laws, government agencies, and pressure groups that influence, and
work. restricted the activities of various organizations and individuals in the
society.
Income
o Legislation and regulation affecting business have been enacted for three
-Discretionary Income: the amount of money people has spent after
paying bills and necessities. reasons.
▪ Protects companies from each other ▪
Resource Availability Customer from unfair business practices
-Demarketing: reducing consumer demand for a good or service to a level that ▪ Society9s interest against unrestrained
the firm can supply business behavior.
Cultural / Social Forces
• Natural Forces
  Core beliefs and values are passed on from generation to generation and are are gaining momentum? What new products and practices could threaten to make
reinforced by schools, churches, business, and government. your current business obsolete? =
o The cultural environment includes institution and other forces that affect
society9s basic values, perceptions, preferences, and behaviors.
o Social responsibility has crept into the marketing literature as an
alternative to the market concept. Going through the different elements above is what is called PEST analysis. The
o Socially responsible marketing is that business firms should take the lead acronym PEST can sometimes be rearranged as <STEP=.
in eliminating socially harmful products. But in the end, it is all about identifying important trends in the environment. But why
trends? It is because trends become the reality of the near future. Since it also takes time to
mobilize a new product concept, you would want your product concept to be viable in the
Elements of Culture near future where it belongs. Trends according to A.B. Ilano of Principles of Marketing,
a. Language <Trends are all about momentum: it is where the market is going toward for the long haul.
That is what is worth investing in.=
b. Manners and Customs
c. Technology and Material Culture Sample trends according to A. B. Ilano of Principles of Marketing:
d. Social Institutions – business, family • The continuing growth of smartphone penetration
e. Education – transmitting values, skills, attitudes etc. • The continuing growth in credit card usage.
f. Aesthetics – attitude toward beauty, art, music etc. • The movement toward a higher value information-oriented job.
g. Religion • The growing presence of multinational franchises even in non-food industries.

There are lots of elements in the macro environment but to help break down this Knowledge of relevant trends can lead to insights into possible opportunities and
complexity into more digestible parts, mnemonics is created. One of the most popular threats to a firm9s operations. What are the trends that your business can take advantage
mnemonics is PEST, which stands for: of? What are the trends that can eventually threaten its operations?
• Political. According to A.B. Ilano of Principles of Marketing, <What are the
Directions: Identify what is asked in each item. Write the letter of the correct answer in
different pieces of legislation, including tax rates, that affect the business? How
your notebook.
likely is it for the government to intervene in the industry? How stable is the
working environment in terms of political stability and overall predictability? =
1. Reducing consumer demand for a good or service to a level that the firm can supply.
• Economic. According to A.B. Ilano of Principles of Marketing, <Is the market A. Demarketing
growing or shrinking? What is the savings rate of the population, and how is the B. Remarketing
employment situation? Is the consumer spending increasing or decreasing? Do C. Post-marketing
people feel that their quality of life is improving? How volatile is the exchange
D. Pre-marketing
rate, the interest rate, and other essential indicators? =
• Social. According to A. B. Ilano of Principles of Marketing, <Is the population 2. These consists of many amenities that attract tourists, such as Conserve natural
growing or shrinking? Is it aging or the broad demographic is getting younger? habitats, resources, endangered species, minimize environmental impact, recycling,
What are their interests? What are the lifestyles that they lead? How do the energy efficient products and clean air.
markets behave, especially in terms of assessing and consuming your industry A. Cultural Forces
products? = B. Demographic Forces
• Technological. According to A. B. Ilano of Principles of Marketing, <What are C. Economic Forces
the new technologies that are changing the business landscape? What new ideas
D. Natural Forces
3. It is a booking engine where you can find lots of opportunities and has also made D. Anthropology
interactions with intermediaries more complex even, they are of different part of the 9. This includes the laws, government agencies, and pressure groups that influence and
world. limit the activities of various organizations and individuals in society.
A. Internet A. Economic Forces
B. Magazine B. Demographic Forces
C. Ticketing office C. Political Forces
D. Brochure D. Cultural Forces
4. It consists of factors close to the company that affect its ability to serve its customers. 10. The core beliefs and values are passed on from parents to children and are reinforced
A. Macro-environment by schools, churches, business, and government.
B. Company A. Cultural Forces B. Political Forces
C. Micro-environment C. Technological Forces
D. Competitors D. Natural Forces
5. They provide resources needed by the company to produce goods and services. 11. These includes the application of knowledge in science, inventions, and innovations to
A. Suppliers solve problems.
B. Company A. Natural Forces

C. Competitors B. Technological Forces

D. Marketing intermediaries C. Economic Forces

6. Companies engaged in commercial competition with others. D. Political Forces

A. Suppliers 12. It consists of the larger societal forces that affect the entire microenvironment.
B. Companies A. Macro-environment
C. Competitors B. Company
D. Marketing intermediaries C. Micro-environment
7. They help the company promote, sell and distribute its goods to the final buyers. D. Competitors
A. Suppliers 13. These may include hotels, banks, parlors, construction, lending, supermarkets and
others. A. Suppliers
B. Companies
B. Companies
C. Competitors
C. Competitors
D. Marketing intermediaries
D. Marketing intermediaries
8. It is the study of human populations in terms of size, location, age, gender, race,
occupation, and other statistics.
14. Below are the factors influencing consumer buying power and strategies except for:
A. Topography A. Business cycle
B. Sociology B. Inflation
C. Demography C. Unemployment
D. None of the above
15. Below are the elements of Culture except for:
A. Language
B. Manners and Customs
C. Unemployment
D. Education