We are an ever-evolving species. Every evolution is a culmination of responses to adapt to changing environmental factors. We adapt as per the seasons, socio-political changes, technological advancements, and whatnot, to keep up with the changes. But nothing is as dynamic as a marketing environment. A famous trend today becomes obsolete tomorrow. So, why should our marketing strategies be any different? If anything, our marketing strategies must be flexible to changes, predictive in accounting for future trends, and fail-proof when things go south.
And this is where environmental analysis in marketing comes into the picture. With marketing environmental analysis, businesses can prepare better for the rise and fall of the market, chart out fail-proof marketing strategies, and align every aspect of a marketing campaign to the organization’s goals and vision. Marketing environmental analysis will help evolve your business, assist you in adapting your business model to changing scenarios and protect your investments from unforeseen changes. As the saying goes, it is survival of the fittest, and marketing environment analysis will certainly help you dominate this competitive ecosystem.
Marketing environmental analysis plays a vital role in the success of a business. This helps in identifying all the elements associated with the business and the roles each of these elements plays in the success of the business. Therefore, environmental analysis in marketing is not only imperative but mandatory for the long-term success of any business.
Environmental analysis in marketing is a strategic tool used by marketers and business developers to identify the internal & external, controllable and uncontrollable factors that influence the performance of the organization. Marketing environmental analysis includes all the factors outside marketing that affect the ability of a business to build and maintain successful relationships with the customers. By conducting a marketing environmental analysis, a business can identify strengths and opportunities and reduce weaknesses and threats.
Environmental analysis in marketing is usually a precursor to all marketing strategies. It is the findings via marketing environmental analysis that will be taken into consideration and function as guidelines to help create and optimize the best business strategy. By monitoring the factors that affect the marketing environment, marketers can predict changes, maximize opportunities, and optimize business strategies to fetch better and improved results.
There are two types of marketing environmental factors:
Micro-Environmental Factors: These refer to all factors that directly influence the marketing activities of a company. These are also known as the internal marketing environmental factors. Because these are internal factors, they are controllable factors. Factors that fall under this category are:
A few of the questions we need to consider while analysing the customer are: Are we reaching out to the right audience? Are our customers happy? Do our products/services fulfil the needs of our customers? Are the customers loyal to us? Do they have a timely purchase schedule?
Factors to monitor:
“Did you know Amazon’s personalization for better conveniences created a tell-tale example of customer-centric services? “
Amazon enables users to put forward their recommendations. This simple yet powerful strategy enabled Amazon to drive up its sales by 35%. As per marketingevolution.com, this simple feature enabled over 86% of the customers to play a significant role in purchasing while 56% of shoppers returned to the site with personalized recommendations. How does it work? Amazon encourages the customers to put forward their recommendations based on their purchasing history, items in the cart, items viewed recently.
By publishing these recommendations, they can drive their sales to new heights. Here, Amazon is not only prioritizing the user experience but also using the same to bring in new customers. Just like word-of-mouth marketing, Amazon added the recommendation feature for the customer and by the customer.
“Cola-wars is the epitome of competitor analysis. The long-time rivalry between these two soft-drink companies fueled the best marketing campaigns and resulted in huge sales. From creative packaging of the bottles to slashing the prices, Cola-War between Coca-Cola and PepsiCo drove both the labels to new levels of fame & branding. And although, it may seem that Cola-Wars was an extreme form of consumerism, nevertheless, keeping an eye out on your competitors helps in brand-building.”
Macro-Environmental Factors: These refer to all the external factors that indirectly affect the performance of the company. Because these factors are external, as opposed to micro-environmental factors, macro-environmental factors are uncontrollable factors. Factors that lie out of the hands of an organization but affect the overall marketing performance. Macro-environmental factors are:
The launch of Levi Strauss & Co. “use and reuse jeans” redefined how marketing campaigns run. Recycled jeans with a simple tagline: Clothing that is built to last, and style that endures. The campaign aimed to reduce carbon footprints by recycling and reusing jeans. In the press release that followed, Levi Strauss & Co. explained that over half of the garments made are annually buried and disposal is a major issue. This clothing line reiterates how can we extend the lifespan of the jeans: washing the jeans less often, repairing & reinforcing the jeans, or even donating the jeans people are no longer wearing instead of disposing of them randomly can go a long way to reduce the carbon footprint.
What is more? They are also cleaning the plastics from the ocean and reusing the plastics to make jeans. Such initiatives go a long way in building a brand image.
Five key features shape and characterize the modern marketing environment:
Because the marketing environments are dynamic and transient, it keeps developing every day and changes swiftly. By using this strategic analytical tool, you can gain a certain edge over your competitors, stay ahead of the curve and be a market leader. The objectives of any marketing environmental analysis are as follows:
So, now that you know the basics of marketing environmental analysis, the next question is: How do we do it?
The first step toward conducting a full-fledged marketing environmental analysis is to perform “Environmental Scanning.” Environmental scanning is the method of assembling information about events and their interactions within an organization’s internal & external environments.
Environmental scanning helps the management in determining the future direction of the organization and in the decision-making process. It is a continuous and dynamic process. As a part of environmental scanning, four essential attributes to track are:
Several techniques can be employed to conduct a thorough Marketing Environmental Analysis:
Strengths: These are the characteristics of a business that give it advantages over its competitors. We should Improve our strengths.
Weakness: These are the disadvantages of a business relative to its competitors. We should REMOVE our weaknesses.
Opportunity: Elements that allow the company to formulate and implement a strategy to increase profitability. We should IDENTIFY & GRAB our opportunities.
Threats: These are the factors that endanger business integrity and business profitability. We should REDUCE our threats.
In this technique, you analyze, research, and study each of these factors in detail to draw your marketing conclusion.
Political: Factors included are govt policy, political stability, corruption, foreign trade, tax policy, labor law, and trade restrictions.
Economic: Factors included are economic growth, exchange rates, interest rates, inflation rates, disposable income, and unemployment rates.
Social: Factors included are population growth rate, age distribution, career, safety emphasis, health consciousness, lifestyle, attitudes, and cultural barriers.
Technology: Factors included are technology innovation, tech incentives, automation, R&D activity, tech awareness, tech changes, and tech friendliness.
Environmental: Factors included are weather, climate change, environmental policies, pressure from NGOs, and sustainability programs.
Legal: Factors included are discrimination laws, antitrust laws, employment laws, consumer protection laws, copyright patent laws, health & safety laws, contract acts, etc.
ETOP Model of Analysis: ETOP analysis stands for Environment, Threat & Opportunity profile is the process by which organizations monitor their relevant environment to identify the opportunities & threats affecting their businesses to take strategic decisions.
QUEST Model of Analysis: Pioneered by Burt Nanus & Selwyn Enzer in the early 1980s, QUEST stands for Quick Environmental Scanning Technique, a procedure designed to assist, execute, and plan changes side by side and its implication on organizational strategies.
By studying the market environments, you can build and foster a fully customized environment for your business to grow and flourish. The marketing landscape is always changing. You might have new working members, changing client preferences and demands, or a not-so-distant Covid-19 pandemic that altered the working environment completely.
By keeping an eye on your marketing settings, your company may initiate marketing decisions before it is too late. Tracking your marketing environment has further advantages, such as:
Analysis of marketing environments is a rigorous task. It requires detailed research, extensive surveys, and years of experience. And despite your best practices, it can get arduous. It is only natural to hit roadblocks once you start your analysis. No matter how well you monitor, how accurately you predict the trends, or even use predictive tools to keep an eye out, some changes cannot be forecasted or controlled.
And because the environments are diverse, it may so happen that one technique or strategy does not apply to some environments as compared to others. The best way to get around these problems is to stay nimble, on your feet, flexible, and ready to change and optimize as called upon.
However, a marketing environmental analysis is bound to give you a few definite outlines to center your strategy around.
Valasys Media enables businesses to classify, examine, and enhance their marketing environments in the following ways:
Are you in control of your business? Or is your business controlled by the marketing environment? Take control of your marketing environment today. Contact us for a free consultation and let us perform a detailed marketing environmental analysis for your business.