The Macro Environment Explained

For a while now, we have brought you blogs about the fundamentals that make premier companies in Zambia special. We have talked about how the macro environment has influenced some of the success and failure of these companies. But whilst drinking a glass of wine at an exclusive pub in Lusaka, a native asked the question “this macro you keep blabbering about on your ka blog, it’s just politics affecting business!!” as he scoffed at the thought that it was only in one dimension. Putting down my glass of 2010 Merlot from the vineyards of the south of France, I endeavored to empower this entrepreneur on the macro environment. Or simply put, the marketing environment.

Know the 3 Cs

Premier companies know that it’s all about customers, company and competition. Any company that forgets any one of these Cs has no right to be in business. Yes TFHZPC said it. Understanding the external forces allows a management team to understand the various elements that affect the 3 Cs and how the course of the company can ultimately change overtime (when fortunes turn). The 3 Cs allow companies to bring visibility to what they are doing: marketing. In order to achieve this however, they must conduct market research.

Although, market research is an arduous task, it is a necessary ‘evil’. Some companies have convinced themselves that they have the ultimate product and hence do not need to do any market research (marketing myopia). Other companies have enjoyed so much power that they have extended their stranglehold to their suppliers (“Boss, will only pay you for this supply if customers buy, if they don’t sorry your goods will be a waste”). Others find themselves at odds as to whether adoption of technology is the right way to do it (think of those banks that have taken so long to bring ATMs to their customers). And finely, our favorite is the lies that customers tell. It’s often hard to tell whether a customer is telling the truth as to whether they will buy your latest offering or not. Think of the paradox of pub goers. A new place opens up and the owner of the establishment decides to put a surcharge at the door after building up the hype and “BOOM”, customers don’t show up even when they promised!  

Survival Toolkit

The marketing external environment is influenced by a number of factors but for simplicity they can be categorized as Social, Technological, Economic and Political and Legal forces (STEPL or PESTL). Social demographics looks at what trends are in the environment. What is moving and shaking your customers in the moment? Technology changes are key to understanding how consumer experiences are evolving (the rise of social media through the use of smart gadgets). Economic issues evolve around your GDP, Taxes, Interest rates etc. Political and Legal are interlinked as depending on who is in charge the legal system does get a nudge. However, understanding the political landscape is vital as it can allow a company to position itself accordingly depending on how and what policies are implemented (one policy statement can bring a rise in the number of your competitors in a heartbeat).

The market research process can feel like an academic exercise, however we believe with the way the marketing environment has evolved premier companies and others will need to consider investing in it in order to remain relevant. The times are changing, companies must stay in tune or else they risk ignoring one or all of the 3 Cs.