Micro and Macro Marketing Environments

“The forces outside marketing that affect the marketing management’s ability to develop and maintain successful transactions with its target customers” (“Principle of Marketing”, Philip Kotler, 2007)

When it comes to marketing strategies, unfortunately, not everything depends on the company’s decision making. There are several factors that are not dependant on the firm’s actions. These factors are consistent in their micro and macro environment.  A company’s marketing environment should not be neglected at any point of its development. The micro and macro environments are changing constantly, so should the organisation’s strategy. Any organisation should know how to react to every change in the marketing environment. Often analysis of the surrounding marketing environment could make a huge difference in any organisation’s future.

Microenvironment

The microenvironment consists of anything that is within reach of an organisation. This could be, business partners/shareholders, employees, customers, suppliers and competitors. All of them are factors close to the company that can have a direct impact.

  • Customers:

A company should be able to meet any of their customers wants and needs. Unfortunately, customers are not always consistent and can be easily persuaded in a different direction. It is the organisation’s responsibility to be aware at all times of what their customers want and needs are. Failing to do so, the business will be failed too.

  • Employees:

Every organisation is represented by its employees. They are the face of the company. A company is only as good as its workers. Having the correct staff is an essential part of any organisation’s strategy. More and more companies are realising the importance of their employees’ well-being as well. Examples are almost every new start-up or Silicon Valley company that exists. Constant training and improvement of the staff are needed to ensure forward movement to the whole organisation.

  • Suppliers:

This is one of the factors that are most crucial for a company’s price policy. If a supplier brings a drastic increase in its products, the company will react the same way. One way that this might be avoided is having a good relationship with the suppliers. A good relationship will guarantee a fair trade, from which the end-users will benefit.

IKEA, for example, has a unique strategy concerning their suppliers. The Swedish retailer is working with suppliers from all over the world. They pick the best quality for the right price. They might not be the best example of building relationships with their partners who supply them. The reason is they often change them. This way the Swedes are making sure they will have the best-priced quality products for their customers.

  • Business Partners and Shareholders:

These are the people that own the company. The people that are making the decisions on what direction the firm will take. A good relationship and open negotiations on a regular basis between the shareholders must be set. Doing this will ensure a clear future of the company’s business and marketing plans. Establishing a good relationship will allow a better understanding of the organisation’s distribution of income.

  • Competitors:

One’s product should differentiate from its competitors to earn market share. Regular research on a company’s competitors will help to achieve that. If a competitor’s product is better, a firm needs to know how and why it is better. What are the competitor’s flaws, that can be used as an advantage? What does your product or service do better than the competition? What are the competitors’ prices? Can you beat them? If not, why does your product should be priced higher? The answers to all these questions are crucial for an organisation to maintain its position within the market.

  • Media:

In a world where social media is King, every company should be active and maintain a positive media presence. Even if an organisation decides to stay away from the media, does not guarantee that their name would not be a subject in someone else’s blog page for example. These mentions may benefit or they may limit the firm’s image. To avoid and limit bad reviews from unfair competitors and customers, an organisation should be active and responsive to what is happening on the internet.

Macro-environment

The macro-environment is the environment in which an organisation has no control over. Like there are events that a farmer cannot control to prevent his crops from being destroyed, like a flood. These events in the marketing world are PESTLE factors. Political, economical, sociocultural, technological, legal and environmental. These analyses are widely used in the marketing and business world.

pestle

  • Political (PESTEL)

Any company or organisation is existing in a political environment. Every economy is affected by the government of the domestic country or international governmental bodies (such as the European Union). Depending on a political situation in a country, where the organisation is registered, is decided the way a company operates its business. These factors include, for example:

  • Taxation
  • Safety regulations
  • Consumer protection laws
  • Contract laws
  • Foreign trade policies
  • Trade restrictions

A recent example of a political situation that affected the market worldwide, was the UK referendum, where the majority voted to leave the EU. That affected their market instantly, even though it will not take place for at least two more years. The British pound collapsed, many international companies started to look for other locations in Europe to move their headquarters, a perfect example of how an external factor affects a marketing strategy.

  • Economical (PESTEL)

Political and economic forces are strongly related to each other. The example given above shows how a political decision affected the economy with an immediate impact, by lowering the local currency value. In the short run, this might help the economy in the UK as more businesses around the world will be willing to buy products and services from the Kingdom. In the long run, if trade and movement restrictions are applied, the market will be badly affected. The reason for that is because there will be too much legislation involved in international trade.

  • SOCIOCULTURAL (PESTEL)

This part of the analysis is probably the most difficult to follow or predict. Here a marketer should be able to foresee the purchasing behaviour, tastes and changing priorities in a consumer’s mind. The cultural values are easily changed in the era of the internet. Information is all around and consumers are being influenced with a 4G speed.

Examples are most easily seen in the technology, fashion and food industry. Fast-food chains are being pressured by health food bloggers and critics. Fitness Instagram icons are brainwashing the easily influenced mind on how to live their lives in an exchange of supposed longevity. YouTube gurus are giving weekly reviews of the new best technology money can buy. It is almost impossible for a company to predict what will be next in the good books of the internet and what will be in the bad ones.

  • TECHNOLOGICAL (PESTEL)

Technology is changing the market environment with a pace that is almost impossible to catch up with. This like anything else has it positive and negative values. In the marketing world, technology can help mainly in market research. Data can be collected and analysed like never before. Predictions can be more accurate. A negative could be the investment needed. Technology does not come cheap, unfortunately. For a start-up, with a small budget, would be almost impossible to compete with an established big-budgeted company, because their technology would not be as advanced. This puts the start-up at a huge disadvantage, which is unfair.

  • ENVIRONMENTAL (PESTEL)

These are forces that affect not only the marketing world but the world in general. These are forces that, unfortunately for us and the future of this planet, have been neglected until the recent past. Due to the over-consuming, we have managed to dry out our home of its resources. There is a scarcity of resources that are unprecedented and the carbon footprint that we leave is more visible now than it ever was. Thankfully the consumers and governments are starting to realise that and there has been a change in the market. Customers are looking for environmentally friendly products. One of the biggest market influencers is Elon Musk, who’s recent single tweet shifted hundreds of millions of dollars in the stock market. He’s companies are trying to change that carbon footprint with his Tesla Motors (both vehicles and home batteries). Governments had their say as well:

“At the Paris climate conference (COP21) in December 2015, 195 countries adopted the first-ever universal, legally binding global deal. The agreement sets out a global action plan to put the world on track to avoid dangerous climate change by limiting global warming to well below 2°C”

This is affecting the markets in a way consumers are making their purchase decisions

  • LEGAL (PESTEL)

Legal factors are often closely related to political factors. Legislations issued by governments are strongly affecting any company business and marketing strategies. In order for a successful business, an organisation should trade within the laws. This, for example, might affect a company’s hiring, labelling, safety and advertising policies. Trademarks and copyrights are also legal factors every business should be aware of.

The micro and macro environments may not be the most important thing in any organisations daily agenda, but they should not be neglected. As we found out these are the environments that an organisation thrives or dies in. They should be carefully and regularly analysed in order for one business to succeed and be up to date with the current market situation. The cost of this analysis may not be big, but the return a marketer could receive could be of great importance.

Comments (2)

Hi, great article. I’m going to share thenovicemarketeer.com on facebook. BTW what dou you think about euro 2016 semifinal? Who will win?

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