Five Components of an External Marketing Environment

by Liz Gold; Updated June 27, 2018
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As a business owner, there is only so much you can control. That said, while businesses may be able to control what happens inside a company, there are always external forces at play that are unpredictable and uncontrollable.

What impacts a company's external marketing environment? A company is not alone in doing business. It is surrounded by and operates in a larger context called the macro environment. It consists of all the forces that shape opportunities, but also pose threats to the company. Five external conditions can impact an organization's health. Staying prepared and being alert to external changes can be the difference between success and adversity.

Customers

Customers are consumers who buy products or use services. To truly differentiate itself in the market, a company needs to understand its customer's needs and desires. Knowing your target market and understanding the demographics that a company serves, can improve strategic decisions that ultimately affect operations. It's always wise to listen to customers; a company can gain insightful information that can lead to improvements or new services and products while sharpening their competitive edge.

Competitors

Competition is healthy; it forces each company working in the same market to be better in providing services and products. Without competition, one company would monopolize a market and hold too much control. While it's important to pay attention to this external force and analyze a competitor's strengths and weaknesses, it's also vital for a company to feel solid in its business plan and vision for moving forward. Use competition as a resource, not a distraction.

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Labor Environment

A company's talent and workforce are growing increasingly important. Without a strong culture of employees and leaders, a company will fail. A company can rise and fall on the competence of its employees, so it's critical to find qualified candidates. In assessing the labor environment, companies should look to characteristics that include the average educational level of the community, training programs, technical know-how and diversity, which is increasingly necessary in a globally connected world.

Owners

Owners are an essential part of the equation. Many times, businesses are run by managers and employees and an owner is considered more external than internal. Though an owner or stakeholders may be on the outskirts of the internal dynamics of a company, they do expect a return on their investment. As a result, management has to pay attention to their concerns.

Suppliers and Partners

Vendors and suppliers provide a company with needed resources. It's easy for some companies to become increasingly dependent on a supplier, as they are supplying a fundamental need for the company's lifeblood: customers. A scarcity of resources will impact the supplier and, therefore, the company, perhaps in the form of price increases or supply availability.

SWOT Analysis

One way to determine the strength of a company and how it will perform in a new marketing environment is to conduct a SWOT (Strength, Weakness, Opportunities and Threats) analysis. Knowing its strengths and weaknesses will allow a company to move forward in a more successful direction, capitalizing on its effectiveness.

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