Marketing environment is a set of internal and external factors that influence a company's activities related to the promotion of a product. Tracking the marketing environment helps a business avoid possible threats, make the right business decisions, develop relevant marketing campaigns, and allocate resources efficiently.

In this article, we’ll unveil the importance and types of the marketing environment. We’ll also review 7 factors affecting it.

The Importance of Marketing Environment

Many factors influence the existence, activity, success, and profitability of a business, and it’s essential to be aware of them. After researching the marketing environment, entrepreneurs make well-informed business decisions, understand customer needs and behavior, create efficient budgeting, recognize potential opportunities and threats, and develop an effective marketing strategy.

Since the market constantly evolves and customer demand changes, you need to explore the marketing environment before entering the market. Pay attention to ecological, demographic, economic, political, and socio-cultural factors before entering the market in new locations. This will help you provide customers with the product they need.

After analyzing your marketing environment, you’ll understand which features, promotional strategies, and marketing channels perform better and resonate with your target market. You’ll be able to find out what customers needs and what they search for in competitors' products.

If you aren’t new to the market, you still have to check the threats that can negatively affect your company. Conduct comprehensive research to identify trends and the level of competition, etc. Track changes in competition, prices, and customers’ preferences to stay updated. Knowing the market situation enables you to adapt fast: modify your marketing strategy, launch new products, communicate via new channels, add features, improve delivery and customer service, etc.

Now that you know why you should be aware of your marketing environment, it’s time to jump into the factors that have an impact on your company. After reading this section, you’ll know how to avoid threats and receive opportunities.

7 Factors Affecting Marketing Environment

To prevent a business from failing within the market, you need to know the factors that affect your business environment. We’ll list the most prominent ones for you to consider.

  • Ecological. Nowadays, it’s vital to produce products in an eco-friendly way to prevent any harm to our natural environment. If you don’t comply with these rules, the government can take measures, and customers won’t buy your product. That’s why you need to pay close attention to things related to the environment. You should control your use of natural resources, production process, technology, disposal of wastes, use of plastic, etc. To draw attention to your brand, you should be eco-friendly, care about our planet, and protect it from different types of pollution.
  • Demographic. Since the market consists of people, entrepreneurs should study the population. A company needs to create a buyer persona to identify the target audience. You can do it after the analysis of demographics. You should pay attention to the following factors: total population, migration rate, family system, occupations, geographical concentration of people, etc. Demographic factors are basic characteristics your potential customers have in common. They are age, gender, geography, and income. For example, if you decide to target young people aged 25-35 with online courses about marketing and this audience segment increases in your location, this means that it’s a great idea. On the contrary, if this segment is limited, it’s better to choose another location or audience segment. Once your team finishes with the research, they can segment the market and identify audience segments that might be interested in the product.
  • Economic. These factors influence customer buying decisions and the performance of your business. The economic environment of your company depends on government funding, credit availability, market trends, interest rates, and shifts in the global economy.
  • Political. Since politics impacts the economy, you should be aware of these factors when doing business. Based on the type of business and industry you are in, pay attention to tax incentives, FDA regulations, employment laws, health and safety laws, etc. To be more competitive within the market, consider PEST (political, economic, social, and technological) analysis. Evaluate each of the external factors that affect your company.
  • Socio-cultural. These factors refer to the way people interact with each other and their cultural heritage. Examples include culture, customs, traditions, beliefs, norms, etc. Every country differs in culture, the way people communicate, their values, and preferences. Brands should take them into account. People’s culture influences their buying behavior. Even huge companies like McDonald’s adapt to the needs of their consumers in various countries. For example, in addition to french fries and burgers, you can find rice on McDonald’s menus in Vietnam, Thailand, and Indonesia.
  • International. World Bank and International Monetary Fund are the international institutions responsible for worldwide fair trade. International companies can become huge competitors and threats if you decide to open a business in the same industry. That’s why you need to conduct research and find out whether you will have direct international competitors.
  • Technological. These factors relate to the technology you use to produce, control, and distribute your product or service. Since technology evolves fast, you need to be aware of all changes. This is necessary to incorporate new technologies and improve your manufacturing process and project management.

Now that you know the factors, it’s time to review the types of environment. You need to keep track of them.

Types of Marketing Environment

There are different types of marketing environments businesses should explore. In this section, we’ll uncover them for you to consider.

  • Internal marketing environment. These operations take place within the company. Examples include work with materials, systems, and professionals. This type of marketing environment influences the tasks of marketing and production teams and their efforts. Marketers develop strategies and campaigns and select suitable channels based on internal factors. Your brand’s culture reflects on the behavior of your employees and business operations. For instance, a company open to new ideas from active employees is more competitive within the market.
  • External macro environment. These factors influence an industry. Examples include demographic, economic, technological, ecological, political, legal, and socio-cultural conditions. You can’t control these factors, and they can influence your company and operations within it. For instance, the COVID-19 pandemic changed the way businesses operate. Most companies have their employees working online, accept contactless payments, have visitor restrictions, and other requirements.
  • External microenvironment. Customers, vendors, partners, and competitors belong to marketing environment because they influence your business operations. The behavior and actions of these people and companies set the direction for your further actions, strategies, and activities. You can control these factors yet can’t prevent them from impacting your brand’s success and proper operation of your brand.

Now you know what a marketing environment is and why it’s vital. Knowing your marketing environment helps you make well-informed decisions and prevent threats.

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