The Importance of Environmental Analysis Marketing

Establishing, growing, and sustaining a business is a considerable challenge. One of the ways a business owner can ensure his own success is through environmental analysis marketing. But what is this? Why is it so important to business?

What is environmental analysis marketing?

This is a strategic analysis tool that analysts, marketers, and business executives use to gauge how certain factors can affect a business’s ability to work properly. These factors can either be internal or external and may or may not have an effect on a project’s performance. Strategic marketers must also take into consideration the macro-economic and micro-economic factors during the decision-making process of marketing environmental analysis. These marketing environment factors have major effects on the success of the marketing campaign, strategies, and branding. 

While you may think that this analysis simply tells you what could go wrong, it can do so much more. Along with possible challenges, it also uncovers opportunities that marketers or businessmen may otherwise overlook at first glance.

The evaluation that comes out after the analysis will dictate future actions and influence any decisions that need to be made. It helps businesses and organizations align their plans and strategies with their current situation.

Business leaders cannot control each environmental factor, but with a carefully developed marketing strategy the response to the environment, they can minimize the risk associated.

What are the components of environmental analysis?

Environmental Analysis looks at both the external factors that affect the organization. Different circumstances and situations have an impact on businesses. That is why organizations must do continuous analysis to adjust their decisions and movements accordingly.

There are several components to consider when conducting an environmental analysis. Below are the most common ones:

Political factors

The political situation of a place can significantly influence how businesses run. The government leadership and the significant decisions that it makes can impact business decisions and even processes.

These political factors can influence things like taxes, business regulations, and government policies on businesses and organizations. Even government stability can dictate how steady your business can be.

Economic factors

Inflation, interest, and income all have an effect on businesses. Everything that concerns the economy has an impact on the business sphere because corporations are a big part of a country’s economy.

Other economic factors that may play out in your environmental analysis are credit access, unemployment, and foreign exchange rate.

Social factors

Every country is unique. Every place has its own culture, beliefs, and attitudes that are inherent to its people. Such uniqueness can have a significant impact on businesses. For example, a highly conservative culture will not tolerate or entertain a racy lingerie business.

What you need to look out for in terms of social factors are social practices, lifestyle, gender, cultural implications. 

Even educational levels and wealth distribution play a part in determining the social climate for a business. The rich and the poor and the high and lesser-educated populations tend to have different viewpoints that can influence their buying decisions.

Technological factors

Technology advances very quickly. The current technologies that your business uses may easily become obsolete in a matter of months. Such advances can affect a business.

Most of the time, you have to stay up-to-date with the latest trends and cope with the changes. Keeping up makes the company more current and relevant to the market.

Legal factors

Just like political situations, legal changes that affect industries, such as business regulations, are also part of environmental analysis. Some examples of such legal factors are product regulations, employment laws, health and safety rules, and patent infringement

Environmental factors

Finally, one more factor that can influence the outcome of your environmental analysis is the environment itself. This means that you have to consider your business location, geographical area, climate, and natural surroundings.

You also have to assess what people of the area think about the environment and your need to adhere to environmental regulations like waste disposal, water consumption, and energy use.

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Why is it important?

Now that you know what environmental analysis is and its components, you might wonder what makes it so important. Why should you know all about environmental analysis? Why is it so important?

Identify your strengths

Part of environmental analysis is to take a look at the internal and external elements that affect the company. That means that you can gain a heightened awareness of your own people, but also those of your competition.

Knowing this, you can easily spot your own strengths and advantages over others.

Spot your weaknesses and identifies threats

Aside from your strengths, Environmental Analysis also allows you to identify any weaknesses. This gives you a chance to patch up any loopholes in your marketing plans and fortify things that need strengthening or improvement.

Uncover opportunities

You’d be amazed at how many possibilities you can miss if you forego environmental analysis. It gives you a more thorough assessment of the environment and therefore uncovers paths that can drive you to succeed.

Optimize resources

Since you know your strengths and weaknesses, you can better understand where specific resources should go. You can better allocate funding, material, or manpower to projects or departments that need it the most.

Ensures business survival

Proper analysis of the environment allows you to stay on track and keep your company afloat no matter what. It lets you adjust as needed so that your business survives in the long term. It’s like knowing the course of the wind so you can adjust your sails to ride it.


The environment is prone to change. People, technologies, and governments are ever-changing. This means that you need to make a lot of decisions throughout the life of your business. Environmental Analysis gives you a clear idea about the changes that your company is facing so that you can make better decisions that have positive outcomes.

How to conduct an environmental analysis

You can conduct environmental analysis by following these steps:

  1. Take note of all the environmental factors that are at play. These are the factors that have an impact on your business or organization.
  2. Collect all of the important information.
  3. Identify opportunities, threats, advantages, and challenges from the information that you have gathered.
  4. Come up with a plan on how you can address the challenges or maximize the opportunities you identify.
  5. Take action.

If you have the fundamental knowledge of analytics, Environmental Analysis will be easier and more effective for you. Master Your Business Analysis Skills and Data Analysis Fundamentals are online courses that can help you with your data and business analysis skills.

Ready to conduct your first environmental analysis? Click here to get started.

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