Economic Factors That Affect Marketing

by Andra Picincu - Updated June 25, 2018
Informal meeting in an advertising agency

The success of your marketing plan depends on various economic factors. No matter how good your strategy is, you cannot overlook or ignore economic circumstances. Inflation, demand and supply, interest rates, taxes and recession are just a few to mention. These factors have a direct impact on the market as well as your customers.

Inflation Rate

Inflation is one of the primary economic marketing aspects that affect customers' purchasing power. It represents the rate at which the price level of products and services are rising. The higher the inflation rate, the more your purchasing power decreases. Additionally, the tax rate on your real capital gains goes up as well.

Changes in Disposable Income

The changes in disposable income impact customer spending. For example, if unemployment rates increase, the demand for goods and services will drop. Your customers may no longer be able to afford your products, which will affect your revenue.

The same happens when tax rates go up. This reduces disposable income and purchasing power. Companies offering specialty products or services may experience revenue loss since most customers will only buy essential goods like food and household supplies.

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A recession is a slowdown in economic activity that lasts for more than six months. It affects employment rates, income and real GDP, leading to a decrease in customer demand.

During the Great Recession, which started in 2008, the stock market crashed. In 2009, unemployment rates reached 10 percent and more than six million people lost their jobs. Banks stopped lending money, which further affected customers' purchasing power.

However, certain recession marketing factors may work in your favor as a business owner. This economic situation allows you to promote products and services in a less competitive environment. Debt consolidation agencies, outplacement firms and companies that offer substantial discounts have higher chances to prosper.

Interest Rates

High-end goods, such as jewelry and cars, are often purchased on credit. If interest rates increase, these products become more expensive for customers who can't afford to pay cash. Additionally, high-interest rates usually translate into tighter credit, which makes it harder for customers to obtain the money they need.

Ecological Forces

Ecological concerns, such as air and water pollution, have grown over the past decades. Organizations need to be aware of these issues and adjust their business strategy accordingly. For example, increasingly more customers are choosing sustainable products. Companies that sell household cleaners, detergents and other highly-processed goods that impact the environment may lose revenue. Furthermore, governmental agencies are constantly implementing new policies to improve natural resource management.


Technological advances are a strong economy marketing factor that organizations can't afford to ignore. Social media, data-driven marketing, artificial intelligence, machine learning and other trends are disrupting the business landscape. They have the power to shape customer behavior and buying preferences while creating new market opportunities.

Businesses that want to be successful need to stay on top of the latest technology trends. They must also find ways to innovate their products and marketing efforts to avoid obsolescence.

Half of the world’s population is active on social networks. Approximately 59 percent of Millennials are using Instagram. If your business doesn't have a strong online presence, you're missing out on potential customers and sales.

These are just a few of the many economic marketing aspects that are shaping the business landscape. Government changes, fiscal policies, customer confidence and market dynamics play a key role. Consider these factors before developing a marketing plan. It could mean the difference between success and failure.

About the Author

Andra Picincu is a digital marketing consultant with over nine years of experience. She works closely with small businesses and large organizations alike to help them grow and increase brand awareness.

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