Analyzing the Macroenvironment
Successful companies recognize and respond profitably to unmet needs and trends.
Needs and Trends
Dockers was created to meet the needs of baby boomers who could no longer fit into their jeans and wanted a physically and psychologically comfortable pair of pants. Enterprising individuals and companies create new solutions to similarly unmet needs. Let’s distinguish among fads, trends, and megatrends
Successful companies recognize and respond profitably to unmet needs and trends.
Needs and Trends
Dockers was created to meet the needs of baby boomers who could no longer fit into their jeans and wanted a physically and psychologically comfortable pair of pants. Enterprising individuals and companies create new solutions to similarly unmet needs. Let’s distinguish among fads, trends, and megatrends
- A fad is “unpredictable, short-lived, and without social, economic, and political significance.” A company can cash in on a fad such as Crocs clogs, Elmo TMX dolls, and Pokémon gifts and toys, but getting it right requires luck and good timin
- A direction or sequence of events with momentum and durability, a trend is more predictable and durable than a fad; trends reveal the shape of the future and can provide strategic direction. A trend toward health and nutrition awareness has brought increased government regulation and negative publicity for firms seen as peddling unhealthy food. Macaroni Grill revamped its menu to include more low-calorie and low-fat offerings after The Today Show called its chicken and artichoke sandwich “the calorie equivalent of 16 Fudgesicles” and Men’s Health declared its 1,630-calorie dessert ravioli the “worst dessert in America.”
- A megatrend is a “large social, economic, political, and technological change [that] is slow to form, and once in place, influences us for some time—between seven and ten years, or longer.”
Several firms offer social-cultural forecasts. The Yankelovich Monitor has tracked 35 social value and lifestyle trends since 1971, such as “anti-bigness,” “mysticism,” and “living for today.” A new market opportunity doesn’t guarantee success, of course. Even if the new product is technically
feasible, market research is necessary to determine profit potential.
Identifying the Major Forces
The new century brought new challenges: the steep decline of the stock market, which affected savings, investment, and retirement funds; rising and long-lasting unemployment; corporate scandals; stronger indications of global warming and other signs of deterioration in the environment; and continued terrorism.
Firms must monitor six major forces in the broad environment: demographic, economic, social-cultural, natural, technological, and political-legal. We’ll describe them separately, but remember their interactions 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) that, if they are affordable (economic), may actually change attitudes and behavior (social-cultural).
The Demographic Environment
The main demographic factor marketers monitor is population, including the size and growth rate of population in cities, regions, and nations; age distribution and ethnic mix; educational levels; and household patterns.
Worldwide Population Growth
World population growth is explosive: The world’s population
on July 1, 2012, was estimated at 7,027,349,193, forecasted to rise to 8.82 billion by 2040 and exceed 9 billion by 2045.22 Table 3.3 offers an interesting perspective.23 Population growth is highest in countries and communities that can least afford it. Developing regions of the world house 84 percent of the world’s population and are growing at 1 percent to 2 percent per year; developed countries’ populations are growing at only 0.3 percent.24 In developing countries, modern medicine is lowering the death rate, but birthrates remain fairly stable. A growing population does not mean growing markets unless there is sufficient purchasing power. Education can raise the standard of living but is difficult to accomplish in most developing countries. Nonetheless, companies that carefully analyze these markets can find major opportunities and sometimes lessons they can apply at home. See “Marketing Memo: Finding Gold at the Bottom of the Pyramid
Population Ag e Mix
on July 1, 2012, was estimated at 7,027,349,193, forecasted to rise to 8.82 billion by 2040 and exceed 9 billion by 2045.22 Table 3.3 offers an interesting perspective.23 Population growth is highest in countries and communities that can least afford it. Developing regions of the world house 84 percent of the world’s population and are growing at 1 percent to 2 percent per year; developed countries’ populations are growing at only 0.3 percent.24 In developing countries, modern medicine is lowering the death rate, but birthrates remain fairly stable. A growing population does not mean growing markets unless there is sufficient purchasing power. Education can raise the standard of living but is difficult to accomplish in most developing countries. Nonetheless, companies that carefully analyze these markets can find major opportunities and sometimes lessons they can apply at home. See “Marketing Memo: Finding Gold at the Bottom of the Pyramid
Population Ag e Mix
Mexico has a very young population and rapid population growth. Italy, at the other
extreme, has one of the world’s oldest populations. Milk, diapers, school supplies, and toys will be more important products in Mexico than in Italy. There is a global trend toward an aging population. In 1950, there were only 131 million people 65 and older; in 1995, their number had almost tripled to 371 million. By 2050, one of 10 people worldwide will be 65 or older. In the United States, baby boomers—those born between 1946 and 1964—represent a market of some 36 million, about 12 percent of the population. By 2011, the 65-and-over population was growing faster than the population as a whole in each of the 50 states.
extreme, has one of the world’s oldest populations. Milk, diapers, school supplies, and toys will be more important products in Mexico than in Italy. There is a global trend toward an aging population. In 1950, there were only 131 million people 65 and older; in 1995, their number had almost tripled to 371 million. By 2050, one of 10 people worldwide will be 65 or older. In the United States, baby boomers—those born between 1946 and 1964—represent a market of some 36 million, about 12 percent of the population. By 2011, the 65-and-over population was growing faster than the population as a whole in each of the 50 states.
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