Question

Provide a critical analysis of FIVE (5) Macro Marketing Environmental forces affecting the financial service sector today. The macro-environment refers to all forces that are part of the larger society and affect the micro-environment. They include the demographic environment, political environment, cultural environment, natural environment, technological environment and the economic environment. The purpose of analyzing the macro marketing environment is to understand the environment better and to adapt to the social environment and change through the marketing effort of the financial institutions to achieve the goal of the financial institutions marketing.

Answer 1

The macro-environment is more general - it is the environment in the economy itself. It has an effect on how all business groups operate, perform, make decisions, and form strategies simultaneously. It is quite dynamic, which means that a business has to constantly track its changes. It consists of external factors that the company itself doesn’t control but is certainly affected by. The factors that make up the macro-environment are economic factors, demographic forces, technological factors, natural and physical forces, political and legal forces, and social and cultural forces.

FIVE (5) Macro Marketing Environmental forces affecting the financial service sector are:

1. Economic factors

Basically, the very environment of the economy can have an effect on two essential aspects – company’s levels of production and the decision-making process of customers. The same is the case with financial service sector as well. Some examples of economic factors affecting financial service sector:

• Interest rates
• Exchange rates
• Recession
• Inflation
• Taxes
• Demand / Supply

2. Demographic forces

Each and every chunk of the market is affected by universal demographic forces. These are age, education level, cultural characteristics, country and region, lifestyle, and so on. The crucial variables include:

• How income variables influence the financial service sector
• Age variables that affect the financial service sector
• Geographic Region Variables
• Education Level as a Variable

3. Technological factors

These factors are related to skills and ability that are implemented into production, as well as all the materials and technology that a particular product requires to be made. They are essential and can have a big impact on every sector today. It boils down to even the most basic factors, such as what kind of application the financial service sector uses to be connected with the customers, the internet banking facilities provided by a bank, etc. Some of the most common technological factors are:

• Automation
• Internet connectivity
• 3D technology
• Speed/power of computer calculation
• Engine performance and efficiency
• Security in terms of cryptography

4. Political and legal forces

The market develops according to the political and legal environment in various areas. This means that every sector needs to be up to date with such forces worldwide in order to be able to make the right decisions. This includes the regulatory laws to be followed such as laws made by SEBI to be followed by all the financial advisories and mutual funds. This generally includes legal factors such as:

• Employment law
• Fraud law
• Discrimination law
• Import/Export law

5. Social and cultural forces

Finally, it is crucial to understand that the product that you bring to the market can have a strong impact on society. For example, your service needs to eliminate every practice that is hazardous to society, and show that it is socially responsible. There is a wide variety of social and cultural factors, some of them being:

• Purchasing habits
• Level of education
• Religion and beliefs
• Social classes
• Structure and size of a family
• Growth rate of the population
• Emigration and immigration rates
• Life expectancy rates and age distribution
• Different lifestyles