Many external factors can affect a company's marketing strategy. It is crucial for marketing managers to account for these external variables when writing business plans. Additionally, marketing professionals should continuously research their industries so they can account for all external factors before they affect the business. Companies must be highly adaptable to survive in an ever-changing business environment.
Both local, national and European regulations can have an impact on a company's marketing strategy. On a small scale, local planning rules may prevent outdoor promotions in certain areas. On a national scale, the government often regulates certain industries more stringently than others. For example, UK law restricts the advertising and promotion of the tobacco industry. Labelling laws covering food products have changed because of the fight against obesity. Also, foreign countries can impose embargoes on European companies, which may hinder their exports to those particular nations.
The state of the economy can have a major impact on a company's marketing strategy. For example, premium-brand consumer product companies may find consumers switching to cheaper brands during economic downturns. Entire industries, such as the restaurant industry, may also experience decreases in sales because people are not dining out as much. Companies will often need to lower their prices during recessions. Conversely, economic boom periods may put a strain on a company's production and delivery times. Marketing departments need to adapt their marketing strategies to account for various economic shifts.
Competitive strategies can also affect a company's marketing strategy. Therefore, it is important for company marketing managers to monitor their competitors constantly. One way to monitor competitors is by using a SWOT (strengths, weaknesses, opportunities, threats) analysis. For example, companies can study the strengths and weaknesses of competitors and compare them to their own strengths and weaknesses. Company marketing staff can then use key strengths such as superior customer service or quality to ward off competitive strategies. For example, a company may beef up its own customer service department if a competitive company is focusing more on its own customer service.
Technology is another external factor affecting marketing strategy. All products have a certain life cycle, which includes the introduction, growth, maturity and decline stages. Products often enter the decline stage when new technologies are introduced to the market. Companies will need to decide if they will introduce their own new technology and still keep producing older products. For example, standard definition TV sets were still around after the introduction of high-definition technology. A company may even reduce the prices of older products and technologies when introducing new ones.