MODULE 4

Marketing Management

SESSION TOPIC 4: Scan the Marketing Environment

LEARNING OUTCOMES:
The following specific learning objectives are expected to be realized at the end of the session:
1. To determine the key methods for tracking and identifying opportunities in the macro
environment.
2. To identify the important macro-environment developments.

KEY POINTS:

Opportunities Developments
Macro Environment

CORE CONTENT:
Introduction
By now you should have a better understanding about what marketing represents and why your
organization needs to continually satisfy customers.

Just take a minute to think about how the world has changed over the last 30 years. Technology
has accelerated the rate of change in ways that have affected our lives beyond recognition. Therefore,
every organization has to continually monitor the factors that are operating outside the organization as
well as inside it, to ensure it changes with the times. These factors are known collectively in marketing
terms as the ‘marketing environment’.

IN-TEXT ACTIVITY

Marketing Environment

The marketing environment consists of:

1) those factors that are external and beyond the control of the organization – they are
known collectively as the ‘macro environment’ or the ‘situational environment
2) those factors that are more specific to particular industries or sectors and where an
organization, to a degree, has a certain amount of control over them; this is often
referred to as the ‘micro environment

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The Macro Environment

The macro environment is perhaps the most feared by businesses as it consists of a set of uncontrollable
factors that are external to the organization.

If they are uncontrollable, why does an organization need to know about them?

Good question. Even though the organization cannot control what happens in the external
environment, the factors within it can have a massive impact upon a business. Therefore, there is a key
need to monitor these factors closely and, if possible, to take advantage of the opportunities that arise
and to steer clear of the underlying threats.

Although there are potential threats that can adversely affect your business if not addressed
appropriately, the macro environment can also be viewed as highly positive, because it also provides
many substantial opportunities for your business to exploit, giving it the ability to grow and prosper.

The factors in the macro environment

The acronym ‘PEST’ is often used to describe the key factors that make up the macro environment. PEST
stands for the following factors:

Political

Economical

Social/Cultural and

Technological

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Political factors

The government of any country has the ability to affect organizations and consumers. It can
introduce new legislation that can affect organizations and customers alike.

Within the economy, factors such as unemployment rates, interest rates, taxation and exchange
rates can all affect your business and consumers.

Social/cultural factors

Socially, factors such as age, sex, income and occupation affect what customers demand.
Culturally, factors such as religion, language, values and beliefs can also affect what customers demand
and require.

Technology

The arrival of the internet and related information communication technologies (ICT) has changed
the way we run our lives in relatively recent years.

While the macro environment is uncontrollable, its impact can have a dramatic impact on your
organization. You therefore need to continually monitor and scan the external environment looking for any
particular trends, issues or factors that may eventually affect you. If you do this, you can take advantage
of any key opportunities that may arise.

The Micro Environment

As stated earlier, this consists of factors that are close to the organization and may affect its
ability to serve its customers. These factors usually consist of:

 suppliers;
 distributors/intermediaries;
 competitors;
 customers;
 publics (employees, management, shareholders, etc).

Suppliers

Very few organizations can create a product or service on their own. We often need suppliers to
help us. They are usually a vital component of any organization and some would state are in fact a
‘partner’ in our obligations to satisfy customers.

Distributors

Many organizations use intermediaries such as retailers to get their product to the customer.

Competitors
Competitors can affect what we produce, how we price our produce, where we sell, etc. Most
organizations need to be competitive. If they are not, customers will purchase their competitors’ products.

Customers

We need to listen to our customers and monitor their preferences, habits and attitudes. As they
change, an organization also needs to change to be able to continue providing the products and services
the customer demands. If an organization ceases to satisfy a customer, quite simply the customer will go
elsewhere.

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Publics

These are individuals or groups who have a vested interest in the activities of an organization. It
could be the local community, pressure groups, the media, even the employees.

Employees

(A key component of publics, hence worthy of closer consideration.) We must always remember
the people who work for and with us. Without their effort, skill and knowledge we quite simply would not
have an organization. We have just as much responsibility to respect and value our colleagues and form
trustworthy relationships with them as we do with our suppliers and distributors. Hundreds of studies have
shown the benefits to be gained from treating staff well. Employees are consistently one of the best
sources of new ideas and information. This is unfortunately an aspect that many managers fail to
recognize to the extent that they should.

Do marketers really have control over the micro environment?

They certainly have influence! Your organization has relationships with these groups. Therefore,
strengthening these relationships and investing in them and listening to each other helps to create a more
settled environment.

Again, the issue of relationships is rearing its head. A key skill of effective marketers is to identify
the key groups with whom they need to communicate and develop meaningful relationships over the long
term.

Monitoring the micro/macro environments

To keep up to date with all the changes occurring within and around your organization, a
monitoring system needs to be employed.

For monitoring factors in your macro environment, simple things such as keeping up to date with
current affairs by reading newspapers, or logging onto the news website on a daily basis are a start, but
we can become more sophisticated. Government statistics are published regularly, showing trends in
population, age, immigration and migration, death rates or divorce rates. This is key social information
that you may find useful to monitor. The government and local authorities also publish national and local
economic information on employment status, economic growth, average income, occupation, etc that you
may find useful.

With regard to monitoring factors in your micro environment, visiting trade shows and collecting
competitor information from the stands and reading articles in the trade press can help you keep up to
date with competitors. Regular contact and feedback with sales teams can help to create two-way
communication with customers, whether they are end-user customers or business-to-business customers.
Regular and accurate communication and the exchange of information are essential in the development
of a trusting relationship.

What you need to be is creative, yet practical, to create simple yet effective monitoring systems
that will help you keep an eye on the dynamic marketing environment.

What you also need to understand is that the marketing environment can be very different in the
various markets you serve. A key weakness of many organizations is that they try to emulate success in
one market with the same magical formula in another. Caution is needed. Therefore you need to
undertake a separate analysis for each market you serve.

The marketing environment is extremely powerful. As mentioned previously, it can create many
potential opportunities for an organization; however, it can also be the cause of many problems and

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underlying threats to the business. If you ignore the marketing environment – you do so at your own
danger!

SESSION SUMMARY
Marketing Environment consist of Macro and Micro Environment. The factors in the macro
environment. The acronym ‘PEST’ is often used to describe the key factors that make up the macro
environment. PEST stands for the following factors: Political, Economical, Social/Cultural and
Technological. Micro environment consists of factors that are close to the organization and may affect its
ability to serve its customers. These factors usually consist of: suppliers, distributors/intermediaries,
competitors, customers and publics (employees, management, shareholders, etc).

ASSESSMENT/EVALUATION

Self Assessment.
Instruction: Modified True or False. Write True if the statement is correct then answer False if the
statement if incorrect then write the answer to make the statement correct.

1. Technology has slow down the rate of change in ways that have affected our lives beyond recognition.

____________________________________________________________________________________

2. The micro environment is perhaps the most feared by businesses as it consists of a set of
uncontrollable factors that are external to the organization.

____________________________________________________________________________________

3. The government of any country has the ability to affect organizations and consumers. It can introduce
new legislation that can affect organizations and customers alike.

____________________________________________________________________________________

4. The arrival of the internet and related information communication technologies (ICT) has changed the
way we run our lives in relatively recent years.

____________________________________________________________________________________

5. Many organizations can create a product or service on their own. We often need suppliers to help us.
They are usually a vital component of any organization and some would state are in fact a ‘partner’ in our
obligations to satisfy customers.

____________________________________________________________________________________

Essay of Quiz.
Instruction: Read the following article Using The P.E.S.T. (Political, Economical, Social-Cultural and
Technological) Explain one by one the effect of COVID19 and Pandemic.

Coronavirus Disease (2019) COVID-19 now poses a more serious downside risk to the global
economy. The World Health Organization (WHO) declared the COVID-19 outbreak a pandemic on March
11 to signify its severity and global coverage and urged countries to take ‘urgent and aggressive action.’

As a result, several countries have taken a variety of measures from mass testing, travel/border
restrictions, to lockdowns in a bid to contain the virus. Governments and central banks have likewise been
adjusting the monetary and fiscal policy to mitigate the economic impact. This means that we are now in

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the second chapter of the crisis where the pandemic has translated into an economic crisis. In a way, the
second chapter is inevitable since part of the response to address the pandemic is to slow down
economic activity. If we are unsuccessful in navigating through this pandemic-induced economic crisis,
then we enter the third chapter: social and political crisis.

REFERENCES

Refer to the references listed in the syllabus of the subject.

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