Impact of External and Internal Factors on the Marketing Strategy

If a business wants to be successful in the marketplace, it is necessary for them to fully understand what factors exert impact on the development of their company. Once they know about both positive and negative effects within and outside the company, they can produce suitable strategies to handle any predicted situation. Therefore, examining internal and external factors is considered the most important task for an enterprise before launch any strategic marketing plan.

Internal Environment Factors

The internal factors refer to anything within the company and under the control of the company no matter whether they are tangible or intangible. These factors after being figured out are grouped into the strengths and weaknesses of the company. If one element brings positive effects to the company, it is considered as strength.

On the other hand, if a factor prevents the development of the company, it is a weakness. Within the company, there are numerous criteria need to be taken into consideration.

(i) Corporate objectives

As with all the functional areas, corporate objectives are the most important internal influence. A marketing objective should not conflict with a corporate objective.

(ii) Finance

The financial position of the business (profitability, cash flow, liquidity) directly affects the scope and scale or marketing activities.

(iii) Human resources

For a services business in particular, the quality and capacity of the workforce is a key factor in affecting marketing objectives. A motivated and well-trained workforce can deliver market-leading customer service and productivity to create a competitive marketing advantage

(iv) Operational issues

Operations has a key role to play in enabling the business to compete on cost (efficiency / productivity) and quality. Effective capacity management also plays a part in determining whether a business can achieve its revenue objectives

(iv) Business culture

E.g. a marketing-orientated business is constantly looking for ways to meet customer needs. A production-orientated culture may result in management setting unrealistic or irrelevant marketing objectives.

Other Internal Environment Factors

• Plans & Policies
• Value Proposition
• Human Resource
• Financial and Marketing Resources
• Corporate Image and brand equity
• Plant/Machinery/Equipments (or you can say Physical assets)
• Labour Management
• Inter-personal Relationship with employees
• Internal Technology Resources & Dependencies
• Organizational structure or in some cases Code of Conduct
• Quality and size of Infrastructure
• Task Executions or Operations
• Financial Forecast
• The founders relationship and their decision making power.

External Environmental Factors

On the contrary to internal factors, external elements are affecting factors outside and under no control of the company. Considering the outside environment allows businessmen to take suitable adjustments to their marketing plan to make it more adaptable to the external environment.

There are numerous criteria considered as external elements. Among them, some of the most outstanding and important factors need to listed the are current economic situation, laws, surrounding infrastructure, and customer demands.

(i) Economic environment

The key factor in determining demand. E.g. many marketing objectives have been thwarted or changed as a result of the recession. Factors such as exchange rates would also impact objectives concerned with international marketing.

(ii) Competitor actions

Marketing objectives have to take account of likely / possible competitor response. E.g. an objective of increasing market share by definition means that competitor response will not be effective

(iii) Market dynamics

The key market dynamics are market size, growth and segmentation. Changes in any of these undoubtedly influence marketing objectives. A market whose growth slows is less likely to support an objective of significant revenue growth or new product development

(iv) Technological change

Consumer and other markets are now affected by rapid technological change, shortening product life cycles and creating great opportunities for innovation. These have to be taken into account when setting marketing objectives.

(v) Social & political change

Changes to legislation may create or prevent marketing opportunities. Change in the structure and attitudes of society also have major implications for many markets.

Other External Environmental Factors

Micro factors

• Customers
• Input or Suppliers
• Competitors
• Public
• Marketing & Media
• Talent

Macro factors

• Economic
• Political/legal
• Technology
• Social an
• Natural