A market threat is an external challenge that may negatively impact your company's ability to meet its marketing and sales goals. Part of any standard marketing plan is a SWOT analysis, which assesses the strengths, weaknesses, opportunities and threats that make up a company's current business conditions. Threats should not be confused with weaknesses, which are a company's internal challenges.

Economic Change

In difficult economic times, private spending tends to decrease across most industries and product categories. Luxury categories such as cruise vacations are usually the first industries to see revenues drop, but almost all segments will be affected to a degree by a contracting economy. Conversely, some lower-end manufacturers may find their market share increasing as consumers opt for the less expensive good over a more expensive, brand-name product.

Competitive Innovation

Sometimes a product improvement can take market share away from existing sellers without changing the size of the market. For example, the latest smart phone may outsell competitors in the same space until the next improvement is released to the market. In other cases, a disruptive innovation is introduced, which can drastically reduce the overall market or make it obsolete. For instance, a company that only produced traditional cell phones might be threatened with extinction if consumer demand moves entirely away from regular cell phones to smart phones. In the latter case, the innovation creates a new product category that may eventually replace the old product category entirely.


The regulatory environment can have a profound effect on a company's costs and available markets. Examples of regulation that could have far-reaching implications are laws dealing with environmental protection, interstate or international commerce, or consumer safety. Some companies have issued highly expensive recalls for products, had to conduct costly studies or even shut down operations in response to certain legal changes.

Consumer Perception

Consumer tastes change over time, especially in categories such as clothing and accessories. These changes may be gradual and fairly cyclical, like fad diets, or they may be sudden and severe, as in consumer backlash in response to negative media coverage of a particular industry. For instance, purchasing of ground beef or imported fresh fruit might drop off sharply in response to a widely publicized food safety scare.

Addressing Threats

The best way to overcome marketing threats is to be aware of them as far in advance is possible. A company should monitor legislative activity for potential impact to its industry and continually assess what changes its competitors are making that may present threats. Marketing research can be used to gauge consumer preferences and provide early warning of a shift away from a certain product or category. Finally, a diversified product and service offering helps to ensure that even if an unforeseen threat suddenly begins to impact sales, other products remain profitable while the company makes adjustments in an attempt to recapture lost sales revenue.