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Question 2:

The macro environment consists of six forces that affect the whole microenvironment, demographic, economic, natural, technological, political and cultural forces.

The Toyota Prius is such a highly technologically advanced vehicle with its four cylinder petrol engine and 33-kilowatt electric motor. This could be one of the demographic factors that prompted the introduction of the Prius for Toyota. The Prius appeals to Generation Y also known as the 'echo boomers' who were born between 1977 and 1994. Their comfort with computers, digital technology and overall technical advances prove they are and attractive target for marketers wanting to create a device at the high end of new, innovative devices on the market today e.g. iPad , Toyota Prius.

The economic environment consists of the factors that affect consumer buying power and spending patterns. With many countries experiencing economic recession, consumer purchasing power is reduced. People have less money and now have to spend more carefully. The recent high petrol prices are causing a rising demand for greener, more fuel efficient cars that are cheaper to run. Several governments are providing incentives to people to buy these hybrid cars. In the UK, the government is offering reduced car tax on initial purchase. Electric car drivers can also avoid the ￡8 per day Congestion Charge in London.

Toyota must be aware of and keep up with the technological environment which includes the forces that create new technologies, creating new product and market opportunities. This is the most rapidly changing environment. By introducing the Toyota Prius, the company has gained a technological initiative in the hybrid market. Toyota knew that their target market for this product would include technology enthusiasts, or 'techies' as they are known, and included reference to the cars leading technology in their advertisements.

Natural forces also affected Toyotas decision to manufacture a hybrid car. Consumers are becoming more concerned about the environment and about how the products they purchase have an effect on it. Petrol and diesel are both non-renewable fossil fuels which release carbon emissions that contribute to global warming. Therefore there is a demand in the market for alternatives to petrol-powered vehicles, such as electric cars. Hybrid cars like the Toyota Prius offer improved gas mileage and emissions standards. Toyota have used this opportunity to position themselves in the market as an 'environmentally concerned company'

Toyota needs however, to be aware of the political environment which may pose restrictions on its business activity. The political environment includes laws, government agencies and pressure groups that influence and limit various organisations and individuals in a given society. Recently, the EU commission announced new legislation which will be brought in that requires all manufacturers selling cars in the European Union to lower average CO2 emissions of new cars. The governments of some countries have intervened and offered tax incentives to stimulate the purchase of clean-fuel and high-mileage hybrid cars.

Cultural values have an effect on the products people choose to buy. Although core values and beliefs held by society are quite persistent, secondary cultural values are more open to change. Recent changes in cultural values in