Market environment - Wikipedia
A business and its forces in its micro environment operate in larger macro The macro-environment can be analysis using PESTEL analysis which is outlined. Explaining PESTEL analysis. Lets look at each of these macro-environmental factors in turn. PESTEL All the external environmental factors (PESTEL factors) Micro-economic factors are all about the way people spend their incomes. Analysing the micro- environment. J. Porter's Five Forces analysis of market structure. K. PESTEL analysis of the macro-environment. L.
These factors are of crucial importance for strategic management. Political factors include areas such as fiscal policy, labour law, environmental law, trade restrictions, rates and political stability. Political factors may also include goods and services the Government wants to provide or does not want to provide or be provided for instance subsidies.
The Government also has great influence on the healthcare, education and infrastructure of a country or nation. Economic factors Economic factors include growth, interest rates and the inflation rate of an economy.
These factors have a major impact on how businesses operate and make decisions. Exchange rates may affect the costs of export goods and the supply and prices of imported goods. Social factors Social factors are, among other things, cultural aspects and include health consciousness, population growth, age structure, careers and an emphasis on safety.
- PEST analysis
- The Impact Of Micro and Macro Environment Factors on Marketing
- Difference Between Micro and Macro Environment
These social factors influence the demand for the products and services of an organization and how this organization responds to this demand. An ageing population, for example, may imply a smaller and less flexible staff resulting in higher labour costs. Based on social factors, organizations may change their management strategies to adapt to these developments for example by recruiting older staff on account of a shortage of knowledge workers. Technological factors influence entry barriers, minimum efficient production levels and in-sourcing and outsourcing considerations.
Governments use interest rate control, taxation policy and government expenditure as their main mechanisms they use for this. Micro-economic factors are all about the way people spend their incomes. This has a large impact on B2C organisations in particular. Social Factors Also known as socio-cultural factors, are the areas that involve the shared belief and attitudes of the population.
These factors include — population growth, age distribution, health consciousness, career attitudes and so on. These factors are of particular interest as they have a direct effect on how marketers understand customers and what drives them.
Technological Factors We all know how fast the technological landscape changes and how this impacts the way we market our products. The final aspect of the micro environment is publics, which is any group that has an interest in or effect on the organization's ability to meet its goals. For example, financial publics can hinder a company's ability to obtain funds affecting the level of credit a company has.
Media public include newspapers and magazines that can publish articles of interest regarding the company and editorials that may influence customers' opinions. Government public can affect the company by passing legislation and laws that put restrictions on the company's actions.
Citizen-action publics include environmental groups and minority groups and can question the actions of a company and put them in the public spotlight. Local publics are neighborhood and community organizations and will also question a company's effect on the local area and the level of responsibility of their actions. The general public can affect the company as any change in their attitude, whether positive or negative, can cause sales to go up or down because the general public is often the company's customer base.
And finally those who are employed within the company and deal with the organization and construction of the company's product.
Macro-environment[ edit ] The macro-environment refers to all forces that are part of the larger society and affect the micro-environment. It includes concepts such as demography, economy, natural forces, technology, politics, and culture. The purpose of analyzing the macro marketing environment is to understand the environment better and to adapt to the social environment and change through the marketing effort of the enterprise to achieve the goal of the enterprise marketing.
Demography refers to studying human populations in terms of size, density, location, age, gender, race, and occupation. An example of demography is classifying groups of people according to the year they were born. These classifications can be referred to as baby boomerswho are born between andgeneration Xwho are born between andand generation Ywho are born between and Each classification has different characteristics and causes they find important. This can be beneficial to a marketer as they can decide who their product would benefit most and tailor their marketing plan to attract that segment.
Demography covers many aspects that are important to marketers including family dynamics, geographic shifts, workforce changes, and levels of diversity in any given area. Another aspect of the macro-environment is the economic environment. This refers to the purchasing power of potential customers and the ways in which people spend their money. Within this area are two different economies, subsistence and industrialized.
Subsistence economies are based more in agriculture and consume their own industrial output.
PEST Analysis, a powerful macro environment analysis | ToolsHero
Industrial economies have markets that are diverse and carry many different types of goods. Each is important to the marketer because each has a highly different spending pattern as well as different distribution of wealth.
The natural environment is another important factor of the macro-environment. This includes the natural resources that a company uses as inputs that affects their marketing activities.
The concern in this area is the increased pollution, shortages of raw materials and increased governmental intervention.
As raw materials become increasingly scarcer, the ability to create a company's product gets much harder. Also, pollution can go as far as negatively affecting a company's reputation if they are known for damaging the environment. The last concern, government intervention can make it increasingly harder for a company to fulfill their goals as requirements get more stringent.
The technological environment is perhaps one of the fastest changing factors in the macro-environment. This includes all developments from antibiotics and surgery to nuclear missiles and chemical weapons to automobiles and credit cards. As these markets develop it can create new markets and new uses for products. It also requires a company to stay ahead of others and update their own technology as it becomes outdated.
They must stay informed of trends so they can be part of the next big thing, rather than becoming outdated and suffering the consequences financially.