(Macro Environment)

ANALYZING NEEDS AND TRENDS IN THE MACROENVIRONMENT

- Successful companies recognize and respond profitably to unmet needs and trends in the macro
environment.

Examples:

- Cure for cancer

- Chemical cures for mental diseases
- Desalination of sea water
- Practical electric cars
- Voice-controlled computers

Many opportunities are found by identifying trends.

TRENDS- A trend is a direction or sequence of events that have some momentum and durability.

Examples:

- Women in a workplace
- Microwavable foods
- Office oriented clothing lines for women.

FAD- Is unpredictable and short-lived.

Example:

- Tamagotchi

MEGATRENDS- Long term trend.

Demographic Environment

Is about the characteristic of the population in a specific area and includes multiple factors like age,
gender, income distribution, family size, occupation, education level and religion

Population Size

The size of the population is an important determinant of demand for many products.

Poor countries with small population are generally less attractive, than big countries with large
population.

Educational Groups

The high number of educated people in the United States spends a high demand for quality books,
magazines, and travel.
- Illiterates

- High school drop outs

- High school degrees

- College degrees

- Professional degrees

House Hold Patterns

The task of integrating family research needs to start with defining the family itself. family's consists of
members with very different perspectives, needs obligations and resources.

Geographical Shifts in Population

This involves the population movement, it occurs from rural to urban areas and then to suburban areas.

People’s location makes a difference in their goods and service preferences.

Example: The movement to Alaska has increased the demand for jackets or warm clothing and lessens the
demand for air-conditioning.

Those who live in an urban area like in Manila accounts for much trendy stuffs like clothing, sneakers,
etc. and more on technologies. While Filipinos who live in a rural area like provinces lead to more casual lives,
have more outdoor living, and have neighbor interaction.

Shift from a Mass Market to Micro markets

The effect of all these changes is fragmentation of the mass market into numerous micro markets that is
differentiated by age, sex, ethnic background, education, lifestyle, geography, and goes on. Example of this is
the brand Celeteque, they have moisturizers that are typical for consumers but they also made another
moisturizer specifically for consumers who have pimple problems.

Economic environment

Markets require purchasing power as well as people. The available purchasing power in an economy
depends on current status. Marketers must pay close attention to major trend in income and consumer-spending
patterns.

Income Distribution

A major determinant is the nation’s industrial structure. There are 4 types of industrial structures

1. Subsidence Economies- A subsistence economy is a non-monetary economy which relies on natural

resources to provide for basic needs, through hunting, gathering, and subsistence agriculture.
"Subsistence" means supporting oneself at a minimum level; in a subsistence economy, economic
surplus is minimal and only used to trade for basic goods, and there is no industrialization. Example of
this is people from provinces who harvest their own crops and consume it.
 2. Raw-Materials Exporting Economies- These economies are rich in one or more natural resources
respects. Much of their income comes from exporting those resources. Example of this is the country
Saudi Arabia, their raw material is oil, and their income comes from exporting it to other countries.
3. Industrializing Economies- As manufacturing increases, the country relies more on imports of raw
materials, steel, and heavy machinery and less on imports of finished paper products, and processed
foods. The industrialization creates a new rich class and a small but growing middle class, both
demanding new types of goods, some of which can be satisfied only by imports. Example of this is our
country Philippines.
4. Industrial Economies- Major exporters of manufactured goods and investment funds. They buy
manufactured goods from each other and also export the, to other types of economies in exchange for
raw materials and semi-finished goods.

Income distribution is related to country’s industrial structure but is also affected by the political system.
Marketers often distinguish countries with five different income-distribution patterns:

1. Very low incomes

2. Mostly low incomes
3. Very low, very high incomes
4. Low, medium, high incomes
5. Mostly medium incomes

Savings, Debt, and Credit Availability

Consumer expenditures are affected by consuming savings, debt, and credit availability. Marketers must
pay careful attention to any major changes in incomes, cost of living, interest rates, savings, and borrowing
patterns because they can have a high impact on business, especially in companies whose products have high
income and price sensitivity.

Natural Environment

In many World cities, air and water pollution have reached dangerous level. There is great concern about
certain chemicals causing air, soil, and water pollution. This includes Natural resources that a company uses as
inputs that affect their marketing activities.

Marketers need to be aware of threats and opportunities associated with four trends in the environment:
The Shortage of Raw Materials, The Increased Cost of Energy, The Increased Levels of Pollution, and The
Changing Role of the Government.

Shortage of Raw Materials

Raw Materials are the resources used by a company to produce its finished goods and products.

• Direct Materials - are used within the final product.

• Indirect Materials - are used throughout the production process are not directly included in the final product.

Increased Energy Cost

The primary energy consumption in the Philippines was exactly 47 million tons of oil equivalents in
2017. The consumption of primary energy in the country increased over the last ten years.
Ways to Lower Energy Consumption:

1. Wash laundry with cold water

2. Consider your light bulbs.

3. Unplug electronics.

Increased Pollution levels

Globally, levels of air pollution and releases of nutrients from agriculture and wastewater remain high,
causing acidification and eutrophication in ecosystems and losses in agricultural yield. In the coming decades,
overall pollution levels are projected to increase strongly, particularly in Asia.

Tips to Reduce Pollution

• Carpool, use public transportation, bike, or walk whenever possible.

• Use environmentally safe paints and cleaning products whenever possible

• Avoid burning leaves, trash, and other materials.

Environmental Protection

is the practice of protecting the natural environment by individuals, organizations and governments. Its
objectives are to conserve natural resources and the existing natural environment and, where possible, to repair
damage and reverse trends.

Many constitutions acknowledge the basic right to environmental protection and many international
treaties acknowledge the right to live in a healthy environment. Also, many countries have organizations and
agencies devoted to environmental protection. Although environmental protection is not simply the
responsibility of government protection acts, most people view these agencies as being of prime importance in
establishing and maintaining basic standards that protect both the environment and the people interacting with
it.

Technological Environment

Refers to the state of science and technology in the country and related aspects such as rate of
technological progress, institutional arrangements for development and application of new technology, etc.

Businesses are affected by changes in the technological environment. Technological change offers risks,
opportunities and threats to businesses. Some businesses can leverage changing technology to improve products
and processes or even create new products and processes that will expand markets and profits.

General examples of Technological Factors affecting business include:

• The existence of 3D technology.

• Computer calculation speed/power.

• The ability of computers to create truly 'random' numbers.

• Engine efficiency.

• Internet connectivity.

• Automation.

The rapid and accelerating pace of technological change poses problems for financial services firms. In a
digital environment, firms need to develop whole new ways of working. They need not only need new
approaches to IT, but new approaches to helping workers adapt to a digital culture and new ways of doing
things.

The impact of technological change is evident almost everywhere, but the speed of technological change
is increasing, as well. The telephone, for example, took 39 years to reach a 40 percent penetration of the
market, while it took the Smartphone just 10 years to reach the same level of acceptance.

Another example, 30 years ago some people did not know the personal computer, video recorder or fax
machines in the office. The advent of personal computers and fax machines has made it possible for people to
telecommunicate that is, work at home instead of travel to office that may be 30 or more minutes away. Some
hope that this trend will reduce auto pollution, bring the family closer together and create more home centered
entertainment and activity. It will also have substantial impact on shopping behavior and marketing
performance.

Unlimited Opportunities for innovation

As the speed of technological revolution increases there will be an ever-increasing number of virginity is
that open up.
 for example is the internet, the internet has been the most notable one in the last couple decades
but there have been an excessive impact of other countries and opportunities pop up as a result of this
technological revolution.

New knowledge is about more than just technology though it's about finding better ways of doing things
and improving processes. your company should look after this knowledge for ways it can improve.

Another example scientist to they are working on a range of new technologies that will
revolutionize products and production processes. In terms of Biotechnology, researches working on aids
cure painkillers contraceptives and patterning foods.

Some companies are already harnessing the power of virtual reality the combination of technologies that
allows users to experience the three-dimensional computer generated environments through sound, sight and
touch. To develop a word of all version of these products

Research and development (R&D)

Research and development (R&D) expenses are associated with researching and developing a company's
goods or services. Companies in the industrial, technological, health care, and pharmaceutical sectors have the
highest levels of R&D expenses.

Research and development is a systematic activity that combines basic and applied research in an attempt to
discover solutions to problems or to create or update goods and services.

Increased in regulations of Technological Changed

For example; the telephone is an example of a product that has undergone a technological change. It has
undergone many different changes over the years that have made it more efficient.

When telephones were first invented, the object was to be able to verbally communicate with someone. Due
to technological changes, we have multiple ways to communicate using our phones, such as text, email, or talk.

Technology makes it possible to perform everyday tasks faster and with less energy on our part.

Political-Legal Environment

Political stability in a country is essential for a stable economy and stock market. Also, various political
groups also hold a lot of influence on businesses and unions. So the political environment of a country is a
major factor in the success of a firm.

Legal system is essential to the success of any business. So a country must have a sound and functioning
legal system with laws that equally protect both consumers and manufacturers. There are various other matters
like company law, royalties law, patent law, intellectual property rights.

1. LEGISLATION REGULATING BUSINESS

3 main purposes

- To protect companies from unfair competition

- To protect consumers from unfair business practices

- And to protect the interest of society from unbridled business behavior

It is also the marketers’ responsibility to have a good working knowledge of the major laws protecting compey,
consumers and society.

2. GROWTH OF SPECIAL - INTEREST GROUP

Consumer movement an organized movement of citizens and government to strengthen the rights and
power of buyers in relations to seller. Consumerist have advocate and won the right to know the true interest
cost of loan, the true cost per standard unit of competitioning brand, the basic ingredients in a product the
nutritional quality of food, freshness of products and the true benefits of the product.

3. SOCIAL/CULTURAL ENVIRONMENT

- The society in which people grow up shapes their beliefs, values and norms. People absorb, almost
unconsciously a world view that defines their relationship to themselves, to others, to nature, and to universe.

PEOPLE VIEWS OF THEMSELVES - "pleasure seekers" want to have fun. Desires

PEOPLE VIEW OF OTHERS - Are concerned about the homeless, about crime, and victims and other social
problems. They would like to live in a more humane society.

PEOPLE VIEW OF ORGANIZATION

PEOPLE VIEW OF SOCIETY

PEOPLE VIEW OF NATURE

PEOPLE VIEW OF UNIVERSE

4. EXISTENCE OF SUBCULTURES

5. SHIFTS OF SECONDARY VALUES THROUGHT TIME - Marketers have been interest in

spotting cultural shifts that might augur new marketing opportunities or threats.