The Marketing Environment - Environmental Forces Affecting Marketing

The marketing environment involves factors that, for the most part, are beyond the control of the company. Thus, the company must adapt to these factors. It is important to observe how the environment changes so that a firm can adapt its strategies appropriately to meet the needs and wants of the target markets.

Some of the environmental forces includes: -

Competition: Competitors often “creep” in and threaten to take away markets from firms. Note that while competition may be frustrating for the firm, it is good for consumers. Competition today is increasingly global in scope.

Economics: Some firms in particular are extremely vulnerable to changes in the economy. Consumers tend to put off buying a new car, going out to eat, or building new homes in bad times. In contrast, in good times, firms serving those needs may have difficulty keeping up with demand. In short, economic boom and bust affects demand for goods and services across different market segments.

Political: Businesses are very vulnerable to changes in the political situation. For example, because consumer groups lobbied the Parliament, more stringent rules were made on the terms of car leases. The tobacco industry is currently the target of much negative attention from government and public interest groups.

Legal: Firms are very vulnerable to changing laws and changing interpretations by the courts. McDonald’s, for example, has been sued by people who claim that eating the chain’s hamburgers caused them to get fat. Some impacts of the legal environment:

Firms are significantly limited in what they can do by various laws—some laws, for example, require that disclosures be made to consumers on the effective interest rates they pay on products bought on installment.

Changes in government's regulations and rules related to import and export of goods may have impact on firms across all sectors in the market.

Technological: Changes in technology may significantly influence the demand for a product. For example, the Internet is a major threat to travel agents.

Social: Changes in customs or demographics greatly influence firms. More women work outside the home today, so there is a greater demand for prepared foods. There are more unmarried singles today. This provides opportunities for some firms (e.g., fast food restaurants) but creates problems for others (e.g., manufacturers of high quality furniture that many people put off buying until marriage). Today, there are more “blended” families that result as parents remarry after divorce. These families are often strapped for money but may require “duplicate” items for children at each parent’s residence.