Discuss how the six macro-environments (demographic, economic, natural, technological, political, and social/cultural) forces may affect the marketing of a drink or food company.
Companies and their suppliers, marketing intermediaries, customers, competitors, and publics all operate in a macro-environment of forces and trends that shape opportunities and pose threats. Within the rapidly changing global picture, the firm must monitor six major forces: demographic, economic, natural, technological, political-legal, and social-cultural. Although described separately, marketers must pay attention to their interactions, because these will lead to new opportunities and threats.
In the demographic environment, marketers must be aware of worldwide population growth; changing mixes of age; ethnic composition, and educational levels; the rise of nontraditional families; large geographic shifts in population; and the move to micromarketing and away from mass marketing.
Worldwide population growth: the world population is showing “explosive” growth, totaling 6.1 billion in 2000 and will exceed 7.9 billion by year 2025. A growing population does not mean growing markets unless these markets have sufficient purchasing power. Nonetheless, companies that carefully analyze their markets can find major opportunities.
Ethnic and other markets: countries also vary in ethnic and racial makeup. At one extreme is Japan, where almost everyone is Japanese; at the other is the United States, where people from come virtually all nations. Each group has certain specific wants and buying habits. Several food, clothing, and furniture companies have directed their products and promotions to one or more of these groups.
Pepsi-Cola: since there will be more older people and Pepsi-Cola has been traditionally a young people’s drink, Pepsi will have to stimulate consumption by older members of the society. If Pepsi-Cola were to enter Japan, they may have cultural setbacks too. The reason being might be their habits of drinking tea instead of soft drinks.
Markets require purchasing power as well as people. The available purchasing power in an economy depends on current income, prices, savings, debt, and credit availability. Marketers must pay close attention to major trends in income and consumer-spending patterns.
Income distribution: 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; and (5) mostly medium incomes. Marketers must pay careful attention to major changes in incomes, cost of living, interest rates, savings, and borrowing patterns because they have a strong impact on business.
Consumers will probably still have money to spend on Pepsi. However, if the price of Pepsi accelerates dramatically, consumers will switch to substitutes like plain water.
in the natural environment, marketers need to be aware of raw materials shortages, increased energy costs and pollution levels, and the changing role of governments in environmental protection.
Shortage of raw materials: the earth’s raw materials consist of the infinite, the finite renewable, and the finite nonrenewable. Infinite resources, such as air and water, are becoming a problem such as water shortages. Finite renewable resources, such as forests and food, must be used wisely. Forestry companies are required to reforest timberlands in order to protect the soil and to ensure sufficient wood to meet future demand. Finite nonrenewable
resources – oil, coal, platinum, zinc, silver, will pose a serious problem as the point of depletion approaches.
Increased energy costs: dramatic rise in oil prices can also create a renewed search for alternative energy forms. Firms like Toyota, engaged in building practical electric automobiles like Toyota Prius.
Anti-pollution pressures: some industrial activity will inevitably damage the natural environment. About 42 percent of U.S. consumers are willing to pay higher prices for “green” products. This creates a large market for pollution-control solutions, such as scrubbers, recycling centers, and landfill systems.
Changing role of governments: governments vary in their concern and efforts to promote a clean environment. Many poor nations are doing little about pollution, largely because they lack the funds or the political will. Richer nations are able to help the poorer nations control their pollution, but even the richer nations today lack the necessary funds.
For Pepsi-Cola, the packaging of Pepsi is closely related to the natural environment. If litter and solid waste problems continue to plague nations, a bottle bill might be passed, resulting in Pepsi available only in returnable bottles. If this is imposed, additional costs will be tied to it.
This is one of the most dramatic forces shaping people’s lives. The economy’s growth rate is affected by how many major new technologies are discovered. New technology also creates major long-run consequences that are not always foreseeable. Therefore, the marketer should monitor the following trends in technology: the pace of change, the opportunities for innovation, varying R&D budgets, and increased regulation.
Accelerating pace of change: many of today’s common products were not available 40 years ago. An increasing number of ideas are being worked on, and the time between the appearance of new ideas and their successful implementation is all but disappearing. So is the time between introduction and peak production. Ninety percent of all the scientists who ever lived are alive today, and technology feeds upon itself.
Unlimited opportunities for innovation: scientist today are working on a startling range of new technologies that will revolutionise products and production processes. Some of the most exciting work is being done in biotechnology, computers, telecommunications.
Varying R&D budgets: many companies are content to put their money into copying competitors’ products and making minor feature and style improvements. Even basic research companies such as DuPont, and Pfizer are proceeding cautiously, and conducted by consortiums of companies rather than by single companies.
Increased regulation of technological change: as products become more complex, the public needs to be assured of their safety. Consequently, government agencies’ powers to investigate and ban potentially unsafe products have been expanded.
Technology might help Pepsi find some solutions to environmental issues, perhaps with the development of biodegradable containers.
Marketers must work within the many laws regulating business practices and with various special-interest groups.
Legislation regulating business: business legislation has three main purposes: to protect companies from unfair competition, to protect consumers from unfair business practices, and to protect the interests of society from unbridled business behaviour. The laws are not always administered fairly; regulators and enforcers may be lax or overzealous.
Marketers must have a good working knowledge of the major law protecting competition, consumers, and society. As more business takes place in cyberspace, marketers must establish new parameters for doing electronic business ethically.
Growth of special-interest groups: 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.
The government may require a more complete list of contents of Pepsi. This would mean changing the label and the company must also monitor the political environment of the many foreign nations in which its product is sold.
In the social-cultural arena, marketers must understand people’s views of themselves, others, organisations, society, nature, and the universe. They must market products that correspond to society’s core and secondary values, and address the needs of different subcultures within a society.
High persistence of core cultural values: People living in a particular society hold many core beliefs and values that tend to persist. Secondary beliefs and values are more open to change. Therefore, marketers have some chance of changing secondary values but little of changing core values.
Existence of subcultures: Each society contains subcultures. To the extent that subcultural groups exhibit different wants and consumption behaviour, marketers can choose particular subcultures as target markets.
Shifts of secondary cultural values through time: Although core values are fairly persistent, cultural swings do take place. Today, young people are influenced by new heroes and new activities: Tiger Woods, and extreme sports.
Pepsi has been a traditional part of the U.S. culture. If people’s values change and society becomes more vehemently anti-sugar, Pepsi would need to change its marketing policy and practices, and perhaps even reformulate its product. It can also launch healthy drink as a product line under Pepsi. The company must continue to make its product one of the central features of U.S. society. It must also continue to monitor the cultural environments of the other countries in which it does business.
Successful companies realize that the marketing environment presents a never-ending series of opportunities and threats. The major responsibility for identifying significant changes in the macroenvironment falls to a company’s marketers. More than any other group in the company, marketing managers must be the trend trackers and opportunity seekers.