Analyzing the macroenvironment


Successful companies recognize and respond profitably to needs and trends which could not be carried out earlier. Companies could make a fortune if they could solve any of these problems: a cure for cancer; chemical cures for mental diseases; desalinization of seawater; nonfattening, tasty nutritious food; practical electric cars; and affordable housing.

Needs and Trends

Enterprising individuals and companies manage to create new solutions to unmet needs. FedEx was created to meet the need for next-day mail delivery. Dockers was created to meet the needs of baby boomers who could no longer really wear or fit into!—their jeans and wanted a physically and psychologically comfortable pair of pants. Amazon was created to offer more choice and information for books and other products.

Likewise in Indian metros Big Bazaar and Giant super market chains are satisfying customers’ needs of high quality and very reasonable prices with lots of incentives and discounts. Even a lower than average income Indian can visit these stores and afford purchases within his budget and still end up with a little surplus.

We can draw distinctions among fads, trends, and mega trends. A fad is “unpredictable, short-lived, and without social, economic, and political significance.� A company can cash in on a fad, but this is more a matter of luck and good timing than anything else.

A trend is a direction or sequence of events that has some momentum and durability. Trends are more predictable and durable than fads. A trend reveals the shape of the future and provides many opportunities. The percentage of people who value physical fitness and well-being has risen steadily over the years, especially in the under-30 group, the young women and upscale group. Marketers of health foods and exercise equipment cater to this trend with appropriate products and communications

Mega trends have been described as “large social, economic, political and technological changes that are slow to form, and once in place, they influence us for some time between seven and ten years, or longer.

Trends and mega trends merit close attention. A new product or marketing program is likely to be more successful if it is in line with strong trends rather than opposed to them. But detecting a new market opportunity does not guarantee success, even if it is technically feasible. Today some companies sell portable “electronic books�; but there may not be a sufficient number of people interested in reading a book on a computer screen or willing to pay the required price. This is why market research is necessary to determine an opportunity’s profit potential.

To help marketers spot, cultural shifts that might bring new opportunities or threats, several firms offer social-cultural forecasts. One of the reputed survey company ‘Monitor’ interviews 2,500 people nationally each year and has tracked 35 social trends since 1971, such as “anti-bigness,� “mysticism,� “living for today,� “away from possessions,� and “sensuousness .� It describes the percentage of the population who share the attitude as well as the percentage who do not share the same.

Identifying the Major Forces

Companies and their suppliers, marketing intermediaries, customers, competitors, publics all operate in a macro environment of forces and trends that shape opportunities and pose threats. These forces are not controllable but the company must monitor and respond timely to these forces. In the economic arena, companies and consumers are increasingly affected by global forces.

The beginning of the new century brought a series of new challenge: the steep decline of the stock market, which affected savings, investment, and retirement funds; increasing unemployment; corporate scandals; and of course, the rise of terrorism. These dramatic events were accompanied by the continuation of other, already-existing longer-term trends that have profoundly influenced the global landscape.

Within the rapidly changing global picture, the firm must monitor six major forces: demographic, economic, social-cultural, natural, technological, and political-legal. Although these forces will be described separately, marketers must pay attention to their interactions, because these will lead to new opportunities and threats. For example, explosive population growth (demographic) leads to more resource depletion and pollution (natural) , which leads consumers to call for more laws(political-legal), which stimulate new technological solutions and products (technological), which, if they are affordable (economic) , may actually change attitudes and behavior(social-cultural)

1. The substantial speedup of international transportation, communication, and financial transactions, leading to the rapid growth of world trade and investment, especially tri-polar trade (North America, Western Europe, East).

2. The movement of manufacturing capacity and skills to lower-cost countries.

3. The rise of trade blocs such as the European Union and the NAFTA signatories.

4. The severe debt problems of a number of countries along with the increasing fragility of the international financial system.

5. The increasing use of barter and counter trade to support international transactions.

6. The move towards market economies in formerly socialist countries along with rapid privatization of publicly owned companies.

7. The rapid dissemination of global lifestyles.

8. The development of emerging markets, namely, China, India, Eastern Europe, the Arab countries, and Latin America.

9. The increasing tendency of multinationals to transcend location and national characteristics and become transnational firms.

10. The increasing number of cross-border corporate strategic alliances-for example airlines.

11. The increasing ethnic and religious conflicts in certain countries and regions.

12. The growth of global brands across a wide variety of industries such as autos, food, clothing, and electronics.

In this article we have gone into details about global macro environment and the information we are sure useful for marketing managers all over the world. As the details are outlined in a lucid manner no further conclusion may be necessary.