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There are several factors which affect a firm. Few of these factors can be controlled by the firm but not all. In order to deal with these factors, firm must understand their market environment so that positive and negative factors would be managed accordingly. The firm can control these factors. External environment consists both Micro environment and Macro Environment. There are two types of the external environment of a business.

The Supplier: Business success depends on the suppliers when they enjoy an authority. The supplier of a company holds the power when they are the only one in the market or when they are the largest supplier of the goods. The Resellers: The success of companies marketing strategy also depends on resellers if the finished goods of a company is taken to market by market intermediaries or any other third party.

These forces include wholesaler, retailers etc.

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The nature of customer such as b2c, b2b, international or local and the reason for buying the product will play a role in establishing the marketing strategy of company and how they approach the customers and serve them. The Competition: Market competition exists when two or more firms sell same or similar products and services.

The companies must take into account the way they approach the customers and sell their products to the customer, what price and product differentiation they have for their customer. These factors can be taken into account to get edge over their competitors. The General Public: The satisfaction of general public is a duty of organization. Company must take decisions while taking the perspective of general public into consideration and how they will get affected by their decision.

The customers hold the power to make a win-win situation for a company by helping it reach the goals. Demographic Factors: Demographic forces do impact the different market segments, which includes region, country, age, educational level, ethnicity, lifestyle, cultural norms and values.

The organizations production can also be affected by the non renewable resources which includes coal, oil mineral. The technology and materials used in production of goods and services helps in smoothing the process of business.

Political and Legal Factors: The organization should take into consideration the political and legal development relating to market and organization during decision-making process.

If there is any element used in production process or product that is harmful to society should be avoided as it is a social responsibility of an organization.

A most recent example is the environment and the organizations and sectors who have reviewed their services and products to be considered environmentally friendly. The study of decisions that people and businesses make for resource allocation and prices for services and goods is known as Microeconomics. The governmental regulations and tax policies are also taken into consideration.

For e. Macroeconomics, on the other hand, is the study of whole economy which includes the study of complete industry and economies, not just of a specified company. The macro and micro economics is considered as the study of two diverse divisions of economy. Whereas there are several issues in both fields that make them inter-reliant to each other.

For instance, the price of end product would increase with the increase of inflation rate, as with the increase of inflation rate, the price of raw material will increase that will end up with increase in price of finished goods. The microeconomics adopts the bottoms-up approach whereas macroeconomics has a top-down tactic to analyze the economical situation.

Studying Macroeconomics factors and microeconomics factors concurrently plays a vital role in establishing a successful business as it provides elementary means for professionals to operate the business in an efficient and effective way to generate sound revenue. Strategic marketers must take into consideration the micro-economic factors and macro-economic factors during decision-making process as these forces have a major effect on the marketing campaigns success.

Thus marketing environment forces can play a vital role in the success of a business, its marketing strategies, marketing campaigns and its branding.The marketing activities of the business are affected by several internal and external factors. While some of the factors are in the control of the business, most of these are not and the business has to adapt itself to avoid being affected by changes in these factors. These external and internal factors group together to form a marketing environment in which the business operates.

The marketing environment of a business consists of an internal and an external environment. The internal environment is company-specific and includes owners, workers, machines, materials etc. The micro or the task environment is also specific to the business but external. It consists of factors engaged in producing, distributing, and promoting the offering. The macro or the broad environment includes larger societal forces which affect society as a whole. The broad environment is made up of six components: demographic, economic, physical, technological, political-legal, and social-cultural environment.

The marketing environment is made up of the internal and external environment of the business. While the internal environment can be controlled, the business has very less or no control over the external environment. The internal environment of the business includes all the forces and factors inside the organisation which affect its marketing operations.

These components can be grouped under the Five Ms of the business, which are:. The internal environment is under the control of the marketer and can be changed with the changing external environment. Nevertheless, the internal marketing environment is as important for the business as the external marketing environment.

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This environment includes the sales department, marketing department, the manufacturing unit, the human resource department, etc. The external environment constitutes factors and forces which are external to the business and on which the marketer has little or no control.

The external environment is of two types:. The micro-component of the external environment is also known as the task environment. It comprises of external forces and factors that are directly related to the business.

These include suppliers, market intermediaries, customers, partners, competitors and the public. The macro component of the marketing environment is also known as the broad environment. The macro-environment can be divided into 6 parts. The demographic environment is made up of the people who constitute the market. These factors include the GDP, GNP, interest rates, inflation, income distribution, government funding and subsidies, and other major economic variables.

The physical environment includes the natural environment in which the business operates. This includes the climatic conditions, environmental change, accessibility to water and raw materials, natural disasters, pollution etc. The technological environment constitutes innovation, research and development in technology, technological alternatives, innovation inducements also technological barriers to smooth operation.

Technology is one of the biggest sources of threats and opportunities for the organisation and it is very dynamic. The social-cultural aspect of the macro-environment is made up of the lifestyle, values, culture, prejudice and beliefs of the people. This differs in different regions. Every business, no matter how big or small, operates within the marketing environment.

5 environmental forces in marketing

The business environment is one of the most dynamic aspects of the business. In order to operate and stay in the market for long, one has to understand and analyze the marketing environment and its components properly. An understanding of the external and internal environment is essential for planning for the future. A marketer needs to be fully aware of the current scenario, dynamism, and future predictions of the marketing environment if he wants his plans to succeed.

Thorough knowledge of the marketing environment helps marketers acknowledge and predict what the customer actually wants. In-depth analysis of the marketing environment reduces and even removes the noise between the marketer and customers and helps the marketer to understand consumer behaviour better.

Breaking into new markets and capitalizing on new trends requires a lot of insight about the marketing environment.Written by Miles Media on May 29, Posted in Small Business Marketing. There are two aspects of marketing that marketers have to understand and work with. These two factors are the controllable factors which are known as the four Ps of marketing; price, promotion, place, and product, and the uncontrollable factors, social, economic, technological, regulatory, and competition.

An organization has complete control of the controllable factors, however, what happens when a firm faces the uncontrollable factors:. Social 2 Economic 3. Regulatory 4.

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Competition 5. Example of these factors would be; consumers changing their needs and wants sociala change in technology technologygovernment setting new regulations regulatorythe state of the economy economicand a competitor entering the market competition. The marketing manager has two options, work with or against these factors. A firms success is determined by how efficiently they deal with these factors when they occur.

For example, we know that house phones are becoming extinct because of cell phone technology so the companies who offer home service have to make a change or stop selling the service. This is where planning and forecasting are huge in marketing. Source by Charles Rivers.

An organization has complete control of the controllable factors, however, what happens when a firm faces the uncontrollable factors: The 5 Environmental Forces 1. Technology Example of these factors would be; consumers changing their needs and wants sociala change in technology technologygovernment setting new regulations regulatorythe state of the economy economicand a competitor entering the market competition.

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5 environmental forces in marketing

Start a Project.The environmental factors in marketing include political, economic, social, technological, environmental and legal factors PESTEL. This PESTEL analysis is a framework that marketers use to analyze and monitor these factors in the external environment, according to the Professional Academy.

Environmental factors affect the strategies businesses use to market their products and services to customers. The external environment, or macro environment, is made of forces that organizations can't control. A PESTEL analysis is a useful tool for determining the impact of political, economic, social, technological, environmental and legal factors on the marketing strategies adopted by the business, notes the Professional Academy.

The political factors include government policy, political stability or instability in overseas markets, foreign trade policy, tax policy, labor law, environmental law and trade restrictions. Social factors are the areas that involve the shared beliefs and attitudes of the population. Technological factors include how fast the technological landscape changes, and how this impacts the way an organization markets its products.

Environmental factors relate to the use of raw materials, pollution targets and carbon footprint targets set by governments. Finally, legal factors are the laws a company must abide by to be considered a legal entity by a country's local authorities.

What Is the Definition of "retail Mix? What Is the Purpose of a Marketing Mix?For details on it including licensingclick here. This book is licensed under a Creative Commons by-nc-sa 3. See the license for more details, but that basically means you can share this book as long as you credit the author but see belowdon't make money from it, and do make it available to everyone else under the same terms. This content was accessible as of December 29,and it was downloaded then by Andy Schmitz in an effort to preserve the availability of this book.

Normally, the author and publisher would be credited here. However, the publisher has asked for the customary Creative Commons attribution to the original publisher, authors, title, and book URI to be removed. Additionally, per the publisher's request, their name has been removed in some passages.

More information is available on this project's attribution page. For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. To download a. By and large, managers can control the four Ps of the marketing mix: they can decide which products to offer, what prices to charge for them, how to distribute them, and how to reach target audiences.

Unfortunately, there are other forces at work in the marketing world—forces over which marketers have much less control. These factors—and changes in them—present both threats and opportunities that require shifts in marketing plans. To spot trends and other signals that conditions may be in flux, marketers must continually monitor the environment in which their companies operate.

Federal, state, and local bodies can set rules or restrictions on the conduct of businesses. The purpose of regulation is to protect both consumers and businesses. Businesses favor some regulations such as patent laws while chafing under others such as restrictions on advertising.

The tobacco industry, for example, has had to learn to live with a federal ban on TV and radio advertising.

5 environmental forces in marketing

More recently, many companies in the food industry have expressed unhappiness over regulations requiring the labeling of trans-fat content. All these actions occasioned changes in the marketing strategies of affected companies.Businesses large and small are affected not only by their own internal factors, but also by environmental factors over which they have little if any control.

What Are Environmental Factors That Affect Marketing Decisions?

Marketing decisions must take into account these environmental factors to create an accurate picture of the marketplace and the company's standing within it. To ignore the outside factors is to set yourself up for failed marketing and lost revenue that can, in turn, affect the health of your entire brand. Local, national and global economies are perhaps the greatest environmental factor to be dealt with for any small business. When times are good, sales are up.

When times are bad, the focus on your marketing strategies and promotional methods should multiply many times over. Both local and national economies can influence marketing decisions by determining how much expendable income your consumer base has to spend and how much fear they may have about spending it.

5 Forces Analysis Of The Environment

Businesses that deal with necessities are less likely to be seriously affected by downswings, although a reassessment of the product line and its price point may be in order. Businesses who cater to an industry driven by elective purchases can see far more serious negative effects from an economic downturn.

Changing laws affect all aspects of business, marketing included. New taxes on business can affect your bottom line and require a reduction in the amount of marketing you produce. New restrictions on purchases can affect your customers' ability to shop for your brand. New laws governing consumer age limits, licensing requirements or any number of other factors can place limits on the consumer and hinder your opportunities to sell. In some cases, new laws can be directed at controlling your marketing efforts directly.

For example, privacy laws may remove valuable access to consumers and cause a change in marketing strategy altogether. Product supply lines are affected by factors such as weather, natural disasters and the cost of fuel. When your product supply is affected, so is the way you market your products.

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If supply costs suddenly double due to political issues abroad, you may have to change your marketing from a price-focused approach. You also may have to put major marketing initiatives on hold until the supply becomes more reliable or costs level out. On the other hand, if supply costs suddenly drop due to cheaper labor and a struggling job market, your marketing may be able to shift focus to the great deals to be had.

Market trends can change the entire direction of your businesses marketing with very little notice and to great effect.

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Trends can be the result of endorsements, fads or any sudden change in consumer preference or buying habits on a large scale. When trends change, your marketing must respond to position products and the brand itself in a new light to remain a valid option for the consumer and not fall out of favor. For example, you have been touting your brand of widgets as the most stylish available for the past 10 years but the market suddenly trends strongly toward high-tech over style when it comes to widgets.

It is up to your marketing to reposition your widgets as technologically advanced and viable in the new market climate. Robert Morello has an extensive travel, marketing and business background. Morello is a professional writer and adjunct professor of travel and tourism. Economic Influence on Marketing. What Are Uncontrollable Factors in Marketing? Share on Facebook. Economic Factors Local, national and global economies are perhaps the greatest environmental factor to be dealt with for any small business.

Laws and Government Changing laws affect all aspects of business, marketing included. Consumer Trends Market trends can change the entire direction of your businesses marketing with very little notice and to great effect. Photo Credits. About the Author.By and large, managers can control the four Ps of the marketing mix: they can decide which products to offer, what prices to charge for them, how to distribute them, and how to reach target audiences.

Unfortunately, there are other forces at work in the marketing world—forces over which marketers have much less control. These factors—and changes in them—present both threats and opportunities that require shifts in marketing plans.

To spot trends and other signals that conditions may be in flux, marketers must continually monitor the environment in which their companies operate. Federal, state, and local bodies can set rules or restrictions on the conduct of businesses. The purpose of regulation is to protect both consumers and businesses. Businesses favor some regulations such as patent laws while chafing under others such as restrictions on advertising.

The tobacco industry, for example, has had to learn to live with a federal ban on TV and radio advertising. More recently, many companies in the food industry have expressed unhappiness over regulations requiring the labeling of trans-fat content. All these actions occasioned changes in the marketing strategies of affected companies. Tobacco companies rerouted advertising dollars from TV to print media.

Food companies reduced trans-fat levels and began targeting health-conscious consumers. Talent coordinators posted red flags next to the names of Janet Jackson of the now-famous malfunctioning costume and other performers.

The telemarketing industry fired workers and scrambled to reinvent its entire business model.

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Every day, marketing managers face a barrage of economic news. They must digest it, assess its impact, and alter marketing plans accordingly. At other times like todaythe news makes them nervous—our economy is weak, industrial production is down, jobless claims are rising, consumer confidence has plummeted, credit is hard to get. Naturally, business thrives when the economy is growing, employment is full, and prices are stable.

Marketing products is easier because consumers are willing to buy. Sales will slip, and to counteract the anticipated slowdown, you might have to add generous rebates to your promotional plans.

Imagine playing tennis without watching what your opponent was doing. In particular, they need to monitor the activities of two groups of competitors: the makers of competing brands and the makers of substitute products. Coke and Pepsi, for instance, are brand competitors who have engaged in the so-called cola wars for decades. Each tries to capture market share by convincing people that its soft drinks are better.

Because neither wants to lose share to the other, they tend to resort to similar tactics. In summerboth companies came out with nearly identical new colas boasting half the sugar, half the calories, and half the carbohydrates of regular colas.

Both companies targeted cola drinkers who want the flavor of a regular soda but fewer calories. By the way, both products failed and were taken off the market. Meanwhile, Coke and Pepsi have to watch Nantucket Nectars, whose fruit drinks are substitute products. What if Nantucket Nectars managed to get its drinks into the soda machines at more fast-food restaurants?

How would Coke and Pepsi respond? What if Nantucket Nectars, which markets an ice tea with caffeine, introduced an ice tea drink with mega amounts of caffeine? Would marketers at Coke and Pepsi take action? What if Nantucket Nectars launched a marketing campaign promoting the health benefits of fruit drinks over soda? Would Coke and Pepsi reply with campaigns of their own? Would they respond by introducing new non-cola products?


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5 environmental forces in marketing
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