Introduction

In the last chapter we reviewed the micro-economic factors that an organisation must consider in order to assess the impact of the Internet. In this chapter, we will review how the macro-economic factors can influence the way in which the Internet is used to support marketing.

We present the macro-environment factors using the widely used SLEPT framework. SLEPT stands for Social, Legal, Economic, Political and Technological factors. Often, these factors are known as the PEST factors, but we use SLEPT since it is useful to stress the importance of the Law in influencing Internet marketing practices. The SLEPT factors are:

• Social factors - these include the influence of consumer perceptions in determining usage of the Internet for different activities.

• Legal and ethical factors - determine the method by which products can be promoted and sold online. Governments, on behalf of society, seek to safeguard individuals' rights to privacy.

• Economic factors - variations in the economic performance in different countries and regions affect spending patterns and international trade.

• Political - national governments and transnational organisations have an important role in determining the future adoption and control of the Internet and the rules by which it is governed.

• Technological factors - changes in technology offer new opportunities to the way products can be marketed.

Together, these macro-economic factors will determine the overall characteristics of the micro-environment described in the previous chapter. For example, the social, legal, economic, political and technological environment in any country will directly affect the demand for e-commerce services by both consumers and businesses. Governments may promote the use of e-commerce while social conventions may limit its popularity. For instance, some southern European countries traditionally do not have a culture suited to catalogue shopping since consumers tend to prefer personal contact. In these countries there will be a lower propensity to buy online.

While it can be considered that the macro-economic factors will influence all competitors in a marketplace, this doesn't mean that the macro-environment factors are unimportant. Changes in the macro-environment such as changes in social behaviour, new laws and the introduction of new technologies can all present opportunities or threats. Organisations that monitor and respond best to their macro-environment can use it as a source of differentiation and competitive advantage.

An indication of the challenge of assessing the macro-environment factors is presented in Figure 3.1. This figure of the 'waves of change' shows how fluctuations in the characteristics of different aspects of the environment vary at different rates through time. The manager has to constantly scan the environment and assess which changes are relevant to their sphere of influence. Changes in social culture and particularly pop culture (what's 'hot' and what's not) tend to be very rapid. Introduction of new technologies and changes in their popularity tend to be frequent too and need to be assessed. Government and legal changes tend to happen over longer time scales, although since this is only a generalisation new laws can be introduced relatively fast. The trick for Internet marketers is to identify those factors which are important in the context of Internet marketing which are critical to competitiveness and service delivery and monitor these. We believe it is the technological and legal factors which are most important to the Internet marketer, so we focus on these.

Pop culture

Social

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Technology

Commerce

Government

Technology

Commerce

Government

Infrastructure road, railways

The natural environment

Infrastructure road, railways

The natural environment

Figure 3.1 'Waves of change' - different timescales for change in the environment

Figure 3.1 'Waves of change' - different timescales for change in the environment

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