The Key to Business Success : Developing a Marketing Environment Analysis

It is fundamental for marketers to do a thorough analysis of the business environment to understand the factors that might affect their organization.

According to Keller (2015), the analysis of the Marketing environment consists of analyzing both the broad environment and the task environment (Kotler & Keller, 2015).

The broad environment includes all the external elements that may influence the company’s operation. Indeed, it is crucial for companies to understand where they are doing business in order to make the right decision.

The analysis of the broad environment is also known as PESTEL analysis that stands for the evaluation of the political, economical, social, technological, environmental and legal environment (Kotler & Keller, 2015). Being aware of the trends helps companies identify the right marketing strategies that should be implemented. It is important to understand each element of the PESTEL Analysis to have a well-developed broad environment analysis.

According to the Corporate Finance Institute, the PESTEL Analysis can be defined as followed :

Political : It consists of the government policies and regulations. Here you can assess the political stability and the legislation of the country where the company operates. It includes anything that relates to bureaucracy, tax policy, trade restrictions and tariffs that can affect the running of a business.

Economic : It is important for companies to have a clear overview of the economic situation as a country’s wealth is an important determinant for a company’s success. Those factors should be analyzed in the economic analysis : unemployment rate, interest rate, inflation rate, exchange rate, economic growth rate, etc.

Social : The social environment analysis enables to understand what drives the potential customers as it assesses the society trends and culture. Here are some examples of social norms that can be analyzed : health awareness, cultural perceptions, age distribution, career intentions, population age, growth rate, etc.

Technological : Nowadays, understanding the technological environment is key as technology is becoming predominant and is crucial for company’s success. It is important for organization to be aware of the most recent technologies used to produce and deliver products or services and communicate. Here, you can evaluate the industry’s research and development activity, innovation, automation, etc.

Environmental : Nowadays, the environmental analysis is important as companies have been increasingly interested in protecting the environment. Indeed, climate change has been a growing concern for companies who try to implement sustainable strategies and develop green initiatives to save the planet. Indeed, reducing the carbon footprint has been one of the biggest priorities for companies over the past few years. Some ecological factors that might affect a business are : natural disasters, weather conditions, pollution, climate change, etc.

Legal : The legal environment is all about the laws that companies need to understand to know what is allowed and not allowed in regards to business operations. Examples of elements that can be analyzed in the legal environment analysis are labor laws, intellectual property, permits and licenses, industry regulations, etc (Corporate Finance Institute, 2020).

 The task environment which is the analysis of the internal environment of the company also needs to be done when developing a marketing plan. The task environment includes the analysis of the customers, suppliers and competitors (Kotler & Keller, 2015).

Customers : It is important to define well the target market of the company in order to identify customer’s needs and develop strategies aiming at attracting them. Companies should have a well-detailed description of the target market in their marketing plan.

Suppliers : Companies need to identify the vendors and distributors the company use to operate the business and analyze their efficacy. Some examples of suppliers are advertising and marketing research agencies, telecommunications, insurance, banking and transportation companies, etc (Kotler & Keller, 2015).

Competitors : The competition should be well-analyzed in order for the company to be able to distinguish itself in the market. Here, it is important to engage in a lot of research regarding the competitors products or services, strategies and market share.

After performing the broad and task environment analysis, one should be able to develop a SWOT analysis with the findings of the environmental scanning (Esther, 2021). A SWOT analysis allows to analyze the company’s internal strengths and weaknesses and external opportunities and threats.