Economic Factors Affecting Marketing
To succeed in any business venture, marketing is one of great ways to rally on. Marketing is a science where you have to choose target markets through market analysis, market segmentation and comprehending consumer behaviors. It is also the link between the economic patterns and the society’s material requirements. It satisfies the needs of the clientele base through exchange processes and building long-term connections. However, there are economic factors affecting marketing.
To succeed as a marketer, it is wise to understand the impact of economic forces to a small company or even conglomerates. It is advisable to know how economic forces impact services and goods in the modesty market. The economy always has impact on marketing, whether it is a strong or weak economy. On the case of marketers, economy will affect them positively or negatively. In a sense, it is quite rewarding if you understand the market and the effect of the economy.
A shrewd marketer will continually monitor the market to easily figure out how it might impact the demand and supply of goods and services. For a venture to grow rapidly; the marketers should not only rally on good times, even a good economy can hurt a business and vice versa. What economic factors affect marketing? Despite the great roles marketing does, it does not happen in a void and it is impacted by a number of economic factors. They include;
- Unemployment level- Joblessness occurs when people are actively seeking work or are without any work. When economy is low or it has experienced recession, the unemployment rate will increase. Unemployment can harm growth not only because it is waste of resources, but because it creates redistributive pressures and subsequent distortions that push many people into poverty, constrains liquidity limiting labor mobility or it can cause unrest and decreased self-esteem. As a result of this the purchasing ability of consumers is reduced meaning the manufacturers are not able to generate enough revenue to allocate to marketing and other forms of expenditure.
- Inflation rate- inflation is the chase for more money when there are few goods and services to sell. When prices levels of products rise, there will be less sale of good and services. In essence, inflation reflects a reduction in the purchasing power due to rise of the levels of prices. High prices means reduced no of units sold and this in turn affects revenue which then affects amount spent on marketing activities.
- Competition- If there are many companies operating around your company, it may be quite challenging to advertise, market goods and services or attract many customers especially if they have more financial muscle. The cost of running a business may rise because of excessive advertising or cut-throat competition. The need for constant competitive pricing becomes a big issue as there are other companies in the market who want to attract the same clients.
- Fiscal policies- Fiscal policy is the use of government revenue collection and spending to influence the economy. Governments use fiscal policies to impact the level of aggregate demand in the economy in order to attain economic objective of full employment, price stability and economic growth and development. Any changes in the broad economy affect the business sector.
The aforementioned are some of the economic factors that marketers should be well-versed with in order to set up a great strategic view of their businesses. Understanding these factors also makes it easy come up with a good marketing plane that will make the company less susceptible to any other factors.
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