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INTRODUCTION All businesses operate within an environment, which directly or indirectly affects the way in which they function, just as we as consumers live within a cultural and social environment which to a greater or lesser degree determines the way in which we behave as individuals. said Elaine OBrien, University of Strathclyde. Unlike the controllable marketing mix variables, the environmental forces are not controllable by marketers. However, marketers can control how they deal with those uncontrollable forces by identifying and monitoring those forces that are relevant to their firms. They also must forecast changes in these forces if they are to develop effective marketing plans and strategies. All organizations operate within environments.
That is, all profit-making and not-for-profit organizations are surrounded by, and must contend with, external forces. Managers cannot govern the nature of these environmental forces. These uncontrollable influences affect consumers behaviour and organizations development of effective marketing mixes. Conceptually, the forces that comprise the marketing environment are viewed as existing at two levels. They are categorized as micro and macro influences.
The micro environment consists of those forces that directly affect the marketing programs of a particular firm. The activities of marketing intermediaries, company, customers, suppliers, and competitors are all examples of external forces that influence the marketing actions of a specific organization. The macro environment encompasses the broad environmental system within which all organizations must conduct business. In one sense, it defines or creates the structure of the marketplace for all organizations. The particular elements that make up the macro-environment are demographic trends, economic, natural, socio and cultural influences, political and legal issues, and technological advances. In this study, we are going to evaluate the extent to which the macro-environment affects marketing decisions.
Companies and their suppliers, marketing intermediaries, customers, competitors, and publics al operate in a macro environment of forces and trends that shape opportunities and pose threats. These forces represent noncontrollables, which the company must monitor and respond to. (Kotler, Millennium Edition) Although these forces are described separately below, marketers must pay attention to their causal interaction, since these sets the stage for new opportunities as well as threats. For example, population growth (demographic) leads to more resource depletion and pollution (natural environment), which leads consumers to call for more laws (political / legal ) to reduce environmental damage. The imposed restrictions stimulate new technological solutions and products (technology), which if they are affordable (economic forces) may actually change peoples attitudes and behaviour (socio / cultural ). ENVIRONMENTAL FACTORS THAT AFFECT MARKETING DECISIONS Political/Legal Environment Marketing decisions are strongly affected by developments in the political and legal environment. This environment is composed of laws, government agencies and pressure groups that influence and limit various organizations and individuals.
Sometimes these laws also create opportunities for business. "There are a number of reasons why the legal environment is important to managers, particularly those involved with the marketing function. First and most obvious, managers themselves may be convicted for certain legal violations such as price fixing and mail or wire fraud. Second, product design considerations, often in conjunction with promotional and warranty materials, may lead to expensive product liability exposure, leading to high insurance rates and even bankruptcy. Similarly, private antitrust lawsuits by rivals or dealers may lead to treble damage awards that may be equally staggering (Petty, 1993). " Marketing decisions are strongly affected by developments in the political and legal environment. This environment is composed of laws, government agencies and pressure groups that influence and limit various organizations and individuals. However, sometimes these laws also create opportunities for business.
The followings are some ways interpreting how the marketing functions of businesses are impinged: At the most general level, the stability of the political system affects the attractiveness of a particular national market. While radical change rarely results from political upheaval in most Western countries, the instability of many Eastern European governments leads to uncertainty about the economic and legislative framework in which goods and services will be provided. At a national level, government passes legislation that directly affects the relationship between the firm and its customers and between itself and other firms. Sometimes legislation has a direct effect on marketers, for example a law giving consumers rights against the seller of faulty goods. At other times, the effect is less direct, as where legislation requiring local authorities to put out to tender some of their duties has the effect of creating more competitive relationships between firms in a market The government is additionally responsible for protecting the public interest at large, imposing further constraints on the activities of firms, for example where the government lays down design standards for cars to protect the public against pollution or road safety risks The government is additionally responsible for protecting the public interest at large, imposing further constraints on the activities of firms, for example where the government lays down design standards for cars to protect the public against pollution or road safety risks. Even the most liberal advocates of free market economies agree that the system works best with at least some regulation.
Well-conceived regulation can encourage competition and ensure fair markets for goods and services. Thus, governments develop public policy to guide commerce -- sets of laws and regulations that limit business for the good of society as a whole. Almost every marketing activity is subject to a wide range of laws and regulations. Understanding the public policy implications of a particular marketing activity is not a simple matter. First, there are many laws created at the federal, state, and local levels, and these regulations often overlap. Second, the regulations are constantly changing -- what was allowed last year may now be prohibited.
Marketers must work hard to keep up with these changes in the regulations and their interpretations. Legislation affecting business has increased steadily over the years. This legislation has been enacted for a number of reasons. The first is to protect companies from each other (e. g. Sherman Antitrust Act, 1890).
Although business executives may praise competition, they sometimes try to neutralize it when it threatens them. So laws are passed to define and prevent unfair competition. The second purpose of government regulation is to protect consumers from unfair business practices (e. g. Consumer Product Safety Act, 1972). Some firms, if left alone, would make poor products, tell lies in their advertising, and deceive consumers through their packaging and pricing.
Unfair business practices have been defined and are enforced by various agencies. The third purpose of government regulations is to protect the interests of society against unrestrained business behaviour (e. g. National Environmental Policy Act, 1969). Profitable business activity does not always create a better quality of life. Growth of Special-Interest Groups The number and power of special-interest group have increased over the past few decades.
Political-action committees lobby government officials and pressure business executives to pay more attention to consumer rights, womens rights, senior citizen rights, minority rights, gay rights, and so on. Many companies have established public-affairs departments to deal with these groups and issues. An important force affecting business is the consumerist movement-an organized movement of citizens and government to strengthen the rights and powers of buyers in relation to sellers. Consumerists have advocated and won the right to know the true interest cost of a loan, and the true benefits of a product. In response to consumerism, several companies have established consumer-affairs departments to help formulate policies and respond to consumers complaints. Clearly, new laws and growing numbers of pressure groups have put more restraints on marketers.
Marketers have to clear their plans with the companys legal, public relations, public affairs, and consumer-affairs departments. ECONOMIC ENVIRONMENT The economic environment affects how much we have to spend and how we are likely to spend it. Therefore it plays a significant role in determining the likely demand for products and services. Marketing is influenced by local, National and international economic factors. (Cannon T, 1986) The local economy of a region is important particularly when exception...
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Research essay sample on Macro Environment External Forces
