This post examines how your business/the brand fits into, and in particular will be affected by, the wider marketplace (external environment).
- The macro-economic environment
- Industry Analysis
- Market Analysis
- The micro-economic environment (task environment)
Environment of any organisation can be considered as "the aggregate of all conditions, events and influences that surround and affect it". Environment is complex as it consists of a lot of factors arising from different sources. The nature of environment is one of dynamic as it keeps changing continuously. The impact of environment on organisation is deep and far reaching. The main purpose of environmental survey is to learn about events and trends in the environment and to identify the opportunities and threats in the environment and also the favourable and unfavourable factors in the environment.
Marketing Environment comprises of external factors over which the organisation and management has little control. These relatively uncontrollable external forces are:
- Economic environment,
- Social and cultural environment,
- Political and legal environment,
- Technological environment,
- Competition, and
- Demand, ie., Customers who constitute business.
The marketing management must keep close contact with many uncontrollable forces. To be successful in marketing, we must learn to accommodate them, and if possible, to take advantage of them. in our marketing plans and policies. These uncontrollable forces are the parameters of the overall industry.
The following tools can be used to analyse the Macro-Economic Environment:
- PEST or PESTLE or PESTEL
- Scenario Planning
- Speed of Environmental Change
(2) Industry Analysis:
Companies, besides the market analysis that examines the environment a company operates in, need to investigate their industry in terms of long-term trends and economic forces.
The following tools can be used to analyse your industry:
- Industry Life Cycle
- Industry Cost Structure
- Industry Concentration
- Industry Value Chain
- Strategic Groups
(3) Market Analysis:
The strategic window opens out upon a market. Market analysis builds on customer and competitor analysis to allow strategic judgements to be made about a market and its dynamics. One of the primary objectives of a market analysis is to assess its prospects for participants. Another key purpose of market analysis is to understand the dynamics of the market. One needs to identify emerging key success factors, trends, threats and opportunities and to develop strategic questions that can guide information gathering and analysis.
Measuring the size of the market, identifying the trends and being able to predict how the market is going to develop in the future are critical factors in understanding the state of strategic windows. Organisations need to have a firm grasp of the methods of assessing market size and forecasting the size to which a market will grow. Both short and long term forecasts are important. Long-term forecasts are most useful for medium and long-term strategic planning purposes, whereas short-term forecasts enable organisations to monitor the effectiveness of earlier long term forecasts. Market size and projected market growth rates are not the only important dimensions of market analysis. One also needs to understand the factors which influence the profitability of a market at its various stages of development. Trying to understand the key factors which very important. This moves us on from simply of a market to consideration of cost structures, govern a firm’s looking at the distribution success are profitability systems and related trends and developments.
The following tools can be used to analyse your market:
- actual and potential market size
- market growth
- market profitability
- cost structure
- distribution systems
- trends and development
- market share
- market penetration
- market segmentation
- segment attractiveness (factors)
- market mapping
(4) Micro-economic Environment (task environment)
Here you need to examine the factors that affect all companies operating in your marketplace, and the customers that buy from them. Task environment analysis examines changes in:
- Your market place.
- Your competitors' strategy, etc.
- Your customer behaviour, demographics, etc.
- Your distribution and/or dealer network and intermediaries.
- Your suppliers situation.
- Facilitators, partners and agencies.
The following tools can be used to analyse the micro-environment:
- Porter's Forces
- 4 corner analysis
- customer insight analysis (characteristics, needs, etc)
- Suppliers analysis
- Finance providers
- Media analysis
Environmental Analysis and Marketing Plan
Environmental analysis is a crucial step in the business planning process. pest analysis identifies the elements within the environment that may affect a business’s performance and that should be considered in the planning process. These elements are often beyond the control of the entrepreneur and may be subject to high levels of uncertainty. In this case, pest analysis can be effectively combined with scenario planning techniques to generate a vivid description of the anticipated future environment in which the business may have to operate. The assumptions about the market inherent within the scenario description provide the context for many of the remaining stages of the business planning process
Dr. Antony Michail
Anacalypsis Strategy & Marketing Consultants