LESSON
FIVE
SESSION OBJECTIVES
At the end of the session the leaners should be able to;
 Describe the macro environment of the organizations in the Ugandan
context
THE MACRO/ EXTERNAL ENVIRONMENT
The company and all of other actors operate in the larger macro environment to pose that
shapes the opportunities and posed threats. The macro environment is therefore referred to as
the larger societal forces that affect the whole environment.
1.
Demographic Environment
Demography is the study of human population in terms of size, location, age, gender,
occupation and other statistics. The demographic environment is of interest of marketers
because it involves people and people make up market. Changes in the world demographic
environment have major implications in business. Thus, marketers should keep close track of
demographic trends and developments in their markets both at home and abroad. They should
track changing age and family structures, geographic population shifts, educational
characteristics and population diversity.
The following are the major important demographic trends:
 The population stracture i.e. different age groups buy different products so changes in
the population affect the demand for products that firms make.
 The working population for instance people aged between 16 and 65 who are able to
work. This is important to firms since it will determine the number of workers
available to them.
 The increased divorce rate shall also have the impact on marketing decisions. The
higher divorce rate results in additional housing units, furniture, appliances and other
house-hold appliances. Similarly, when spouses work at two different places, that also
results in additional requirement for housing, furniture, better clothing, and so on.
 The rising number of educated population
 The increasing number of working women
 The increasing diversity
It is important to note that, the world population and the Ugandan population in particular is
growing at an explosive rate. This has major implications for business. A growing population
means growing human needs. Depending on purchasing powers, it may also mean growing
market opportunities. On the other hand, decline in population is a threat so some industrial
and the boon to others. The marketing executives of toy-making industry spend a lot of
energy and efforts and developed fashionable toys, and even advertise “Babies are our
business, our only business”, but quietly dropped this slogan when children population gone
down due to declining birth rate and later shifted their business to life insurance for old
people and changed their advertisement slogan as “the company has not babies the over 50s”.
2.
The Economic Environment
The economic environment consists of the factors that affect that affect consumer purchasing
power and spending partner. Nations vary greatly in their levels and distribution of income.
Some countries have subsistence economics whereby they consume most of their own
agricultural and industrial output. These countries offer few market opportunities.
The Economic / Financial environment includes considerations such as:
 The bank interest rate
 The financial health of a region i.e. companies making profits able to hire a lot of
workers, so employees have money and they can spend this money on consumer items
 Can the currency of the country be used to purchase required imports i.e currency
convertibility
 Rate of inflation / deflation
 Rate of minimum wage
 Ability of the government to finance infrastructure i.e. through the government's use
of taxation and the money supply
3.
Political Environment
The rules and regulations created by the politicians, government agencies and pressure
groups (means a group of people who have similar views and beliefs) have significant
influence on the cost of running a business and the way it can market products and services
for example in Canada there are severe regulations about advertising for alcohol and tobacco.
The following are the most important aspects political environment:
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Regulations governing how businesses can interact with overseas companies
Regulations and laws limiting or restricting importing
Increased emphasis on ethical and social corporate responsibility
Regulations limiting the operations of foreign companies
How the national government is influenced by larger governments or special
interests outside the country
 Laws and rules reflecting social/cultural changes in the demographic make-up of
the citizens
4. Technological Environment
Technology advancement has benefited the society and also caused damages. Open heart
surgery, satellites all were marvels of technology, but hydrogen bomb was on the bitter side
of technology. Technology is accelerating at a pace the many products seen yester-years have
become obsolete now for instance type-writers being replaced with computers. Alvin Toffler
in his book ‘The Future Shock’ has made a remark on the accelerative thrust in the invention,
exploitation and diffusion of new technologies. There could be a new range of products and
systems due to the innovations in technology. This technology developments has tremendous
impact on marketing and unless the marketing manager cope up with this development be
cannot survive in the competitive market.
5. Socio-cultural Environment
The socio-cultural environment comprises of the basic beliefs, values and norms which
shapes the people. Some of the main cultural characteristics and trends which are of interest
to the marketers are:
 Core Cultural Values: People in a given society hold many core beliefs and values,
that will tend to persist. People’s secondary beliefs and values are more open to
change. Marketers have more chances of changing secondary values but little chance
of changing core values.
 Each culture consists of sub-cultures: Each society contains sub-cultures, i.e. groups of
people with shared value systems emerging out of their common life experiences,
beliefs, preferences and behaviors. To the extent that sub-cultural groups exhibit
different wants and consumption behaviour, marketers can choose sub-cultures as
their target markets.
 Shifts in secondary cultural values: Secondary cultural values undergo changes over
time. For example ‘video-games’, ‘playboy magazines’ and other cultural phenomena
have a major impact on children hobbies, clothing and life goals. Marketers have a
keen interest in anticipating cultural shifts in order to identify new marketing
opportunities and threats.
 Marketers must be aware of cultural influences and how they vary across societies
and in the market. Every community has their own values that they cherish which the
marketers through market research need to take care of.
6. Physical/Natural Environment
Natural environment involves the natural resources that are needed as inputs by marketers all
that are affected by marketing activities. For instance, there are certain finite renewable
resources such as wood and other forest materials which are now dearth in certain parts of
world. Similarly there are finite non-renewable resources like oil coal and various minerals,
which are also not short in supply. In such cases, the marketers have to find out some
alternative resources. For instance, the marketers of wooden chairs, due to shortage and high
cost of wood shifted to steel and later on fiber chairs. Similarly scientists all over the world
are constantly trying to find out alternative sources of energy for oil due to dearth in supply.
There has been increase in the pollution levels in the country due to certain chemicals for
instance, As Uganda plans to designate Namanve as an Industrial park they country should
be ready to plan how to manage the development in the face of increased pollution due to
the presence of different industries. Marketers should be aware of the threats and
opportunities associated with the physical environment and have to find other alternative
sources of physical resources. Like many opinion leaders have put it should the industries be
set up and sacrifice the natural resources like forests, wet lands that have dearly contributed
to the natural climate that makes it friendly for agriculture which is the main source of
income for the locals.
Marketing management cannot always control environmental forces. In many cases,
management must settle for simply watching and reacting to the environment for instance a
company would have little success try to influence the geographical population shift, the
economic environment or major cultural value. But for whoever possible, smart marketing
manager must take proactive rather than a reactive approach to the marketing environment.
Guiding Questions
1. Describe the environmental forces that affects the companys’ ability to service its’
customers.
2. “Marketing is far too important to be delegated solely to the marketing department.”
Discuss the implication of this statement.
3. Assuming you are a marketing manager of Blessing 5000 Services, a company
dealing with industrial products. Which type of publics would have the greatest
impact on your marketing strategy?
4. Explain how changes in demography and economic environment affect marketing
environment.
5. Explain the impact of micro environmental actors on marketing management of a
firm.
6. Discuss how the macro environment forces affect the opportunities of a firm.