For example, air and water pollution are key issues to watch and keep track of the trends. Businesses must consider the current changing environmental policies of the U.S.
that may impact the organization’s production. There are also the natural non-renewable resources: oil, coal, minerals, etc. Natural forces in the macro environment are important because they are natural resources which are needed as production inputs for businesses. Natural/physical forces – The Earth’s wide variety of natural resources such as forests, agricultural products, marine products, minerals, water resources, etc. Other factors include: Gross Domestic Product (GDP) and its growth rate, tariffs/trade policies, consumer sentiment, and the foreign exchange rate.Īn example is the drastic change in the rate of inflation from the high of 12.3% in 1974 to the low of 1.9% in 2019. unemployment, tax policies, and the fiscal policies of the federal government. adult generation sometime during 2019.Įconomic Forces – factors that affect consumer buying power and patternsĮconomic forces impact consumer purchasing power and spending patterns and influence the success or failure of businesses and products. It’s crucial to review how the economic factors impact your business. You should consider the following economic factors: rate of inflation (CPI – Consumer Price Index), level of interest rates, stock market trends, current U.S. You can use demographic segmentation and socioeconomic characteristics of your market niche to classify customers and determine an effective product development and marketing strategy.Īn example of changing demographics: the number of Millennials, born between 1981 to 1996, is forecast to surpass baby boomers, born 1946-1964, as the largest U.S. People are the driving force in the development and growth of your business. Today, we have larger and more diverse demographic groups that offer more challenges to businesses than ever before. We are experiencing rapid world population growth and significant demographic change. This makes the analysis of what population groups are important to your company and your future marketing strategies. Knowing the demographics of current and potential customers is crucial. The following are examples of key demographic breakdowns: age, children, disabilities, education, employment status, gender, home ownership (length of residence, home size, mortgage), household income, location, marital status (head of household, spouse), occupation, ethnicity, and type of automobile. Demographics are the average or typical characteristics of your target market - the people who buy your products or services.
For example, Pizza Hut competes indirectly with Chick-fil-A, but directly with Domino's. Indirect Competitors – Firms seeking business from similar customers but offer different products or services that satisfy the same needs.A good example of direct competitors are the large original equipment manufacturers: FCA, Ford, General Motors, Toyota, Renault, and Volkswagen. Direct Competitors – Firms that offer essentially the same products or services targeted to your primary market and customers. These competitors often use similar marketing and supply chain models.One way to complete your analysis of the competitive forces is to group your competition into three categories: Direct Competitors, Indirect Competitors, and Substitute Product Competitors. It’s crucial to know and understand your competition and their strengths and weaknesses. A measure of the competitive force is how hard is it to remain competitive and earn above average profits within your market niche. One key measurement of the environment in which your business competes is the rivalry among firms competing with your business and selling similar products or services. All firms within your market niche are striving to increase market share, revenue, and profits. Competitive Forces – rivalry among firms who serve your target market with similar products and services
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