Environmental analysis in marketing gathers external data of a company to analyze it with the products or services of the company in order to seek trends, growth opportunities and areas of weakness among broad demographics. Environmental analysis considers a vast array of environmental conditions including political, demographic, economic, legal and cultural parameters. Essentially anything that can affect sales from a national or international perspective will be considered.
Instructions
1. Review "market factors" to understand the demand of the product, otherwise termed as the "need." For example: if only 5 percent of households have HD televisions, the market has not been penetrated.
2. Review technology factors to see if trends in technological advances will create a new demand. For example: when all television broadcasting is sent strictly on HD modes, technology has created a demand of the majority of households to convert to a new technology.
3. Review economic conditions to see place products in the market. For example: in recession conditions where technology is creating a demand for consumers to convert to HD televisions but they cannot afford it, there is a need for a cost-effective solution to satisfy consumer need.
4. Understand the competition and find a niche that creates differentiation between companies. For example: while many companies produce HD televisions, there is a specific market for high-end, mid-range and low-end products. The differentiation may be in cost, consumer target or a proprietary technology that sets one company above the others in marketing.
5. Review environmental conditions to understand if the product or service will be accepted by the demographic at large. For example: expanding HD television sales to a rural region may run into problems if the people in the region are resistant to the change and don't perceive any need on their part.
Tags: environmental conditions