What Are the Five Environmental Forces in Marketing? – Complete Guide

Every business organization aims to achieve its goals and maximize its profits for its owners and contributors. If you want to flourish your business, there is a need to know what are the five environmental forces in marketing.

Here I have discussed 5 main environmental forces, their importance, and how they affect marketing.

Let us start!

5 Environmental Forces in Marketing

All of those forces which affect marketing activities directly or indirectly are called marketing environment or, you can say, surrounding Marketing.  Before moving to what are the five environmental forces in marketing, let’s see the type of marketing environment.

Internal Environment:

The factors that can be controlled, changed, and modified as per the demand of the business are called internal environmental factors. These environmental factors are within the organization.

They affect the business progress, marketing decisions, and relationships with the customer. These factors include organizational culture, organizational philosophy, employees, and machines.

External environment

 The external environment is of two types.

Microenvironment

Environmental factors are just outside the organization and can be controlled and cannot be controlled depending upon the organization’s capacity and ecological situation. These include customers, suppliers, and competitors.

Macro environment:

This environment is uncontrollable, and we have to make strategies according to our business marketing need.

We are here to focus on PESTLE, the environmental forces that affect marketing.

1. Economic Environment:

The economy of any country decides the success of a business. In simple words, when a country’s economy is growing, the business flourishes because people have money to buy products. On the other hand, unemployment rises when the economy slows down, and people don’t have money to buy products, affecting marketing.

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Inflation is the factor that affects customers’ purchasing affordability. The higher the inflation rate, the more people’s purchasing power declines.

The income that is left after paying local, state and, federal taxes. Disposal income is the factor in determining the customer’s spending. The company that offers specialty items and services will be at a loss because the people will only buy food and basic household.

Upscale goods such as houses, cars, and jewelry, are bought on credit. When the interest rate increases, these goods become expensive and are not affordable for most people. This environmental force does not affect people that can pay cash to buy things.

A recession is a period in which economic activity is not stable, which lasts more than 6 months. It affects unemployment rates, income and, customers’ demands. The demand curve will go down.

2. Political and Legal Environment

The marketing of an organization and the progress of a business depend upon the political situation of the area or country. The behavior of the government and the working way of the government decide the fate of any organization.

Political thinking and stability are essential in marketing. Whether the political environment of a country is stable or unstable, being a businessman, we cannot change it, but we can adopt different strategies to overcome it.

Every state make rules and regulation for a business. The purpose of these regulations is the protection of buyer and seller. Due to these rules, some companies suffer losses, and some get a chance to increase their profitability.

For example, the tobacco industry is not allowed to promote its business by running its commercials on TV and radio.

Changes in the rates of taxes influence business, and this is an example of a political environment that affects business marketing. The government has a right to change the tax rates on a particular industry’s products, which affects the business.

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When the government gives the right to the customer to talk about the quality of sellers’ products, it will directly affect the business marketing.

3. Competitive Environment

A system in which different marketers work to compete by making strategies, methods, and plans. Being a businessman, there is a need to watch what’s your opponent is doing. When a business person ignores his competitor’s activity, he will be at a loss.

Let’s talk about how your competitors affect your business.

Imagine two online clothing stores are competitors of each other. If one store gives 50% off at any special event, the different stores will also have to make an offer to not only do cheap goods increase the rate of your product purchasing power, but the quality of your products affects purchasing power.

The competition environment is one of the five environmental forces that

improve the quality of the company’s products. And company tries to meet all the demands of buyers at affordable rates.

You should know the strength and weaknesses of the company with which you are competing.            

Moreover, you must know the position of your product and your competitor’s product in the market because, by this, you can improve your product quality. Must consider it while discussing what are the five environmental forces in marketing.

4. Technological Environment

The technological environment is one of the major environmental forces in marketing.

This is related to the development and evaluation of technology. This development and assessment may affect the company’s progress negatively or positively.

If technology increases the production of products, then there will be more products per unit, and as a result economy of the company will grow. Technology also helps to produce new products meeting the demands of customers.

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Technology also makes other brands or company goods out-fashioned. For example, after the launch of high-resolution cameras, there is less interest in conventional cameras.

It affects organizations differently; for example, online stores are more dominant than physical stores, directly affecting business strategies.

The employees are not supposed to work in the office; they can also do it in their homes on their laptops.

Now, marketers can analyze their work in a bit of time by using a database system, and in this way, they can invest more time to make strategies to grow their business.

5. Social and Cultural Environment

An environment includes values, language, traditions, beliefs, education, social status, cast system, and lifestyle of the people and its effects marketing of the business. The marketers have to make strategies and plans according to these factors. This decides what type of things will be bought by customers and what they will buy.

The education and awareness level in the residents of the society affects the marketing also. For example, in the community, most people have high secondary educations then business owners have to add more details while advertising and promoting their products.

Which language the marketer should label and advertise the products depends upon the spoken language of the community.

The social status of the people also affects the marketing of the business because the role of a person in society affects his decisions for buying products. For example, if a person belongs to an upper-middle-class family, he would spend on luxurious things. I hope now you understand what are the five environmental forces in marketing.

To Sum up

In short, all these forces have a powerful effect on marketing. So before launching a new business or product, go through all these factors and study their impact on your new launch.

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