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In this blog, we're going to be looking at how to effectively analyse the marketing environment.
Detailed and specific market analysis is the backbone of a successful marketing strategy. It will arm you, the marketer, with the kind of knowledge and self-awareness that can provide serious competitive advantage.
What is the marketing environment?
The marketing environment is the S of the STRATEGY framework: Scenario. A marketing environment is the scenario you'll be working within. It's the wider situation and context within which your marketing occurs.
You can broadly divide the marketing environment as a whole into two sub-environments: the micro and the macro.
The micro marketing environment
The micro marketing environment is comprised of internal factors. If it helps you to remember, think mIcro, with an I, for Internal. It consists of the factors which affect an organisation internally, and the resources which help it to respond to these factors.
Examples of micro environment factors include:
- Team skills
- Financial resources
- Intellectual property
- Supplier relationships
- Brand reputation
The macro marketing environment
The macro marketing environment consists of external factors, over which the organisation has little to no control. Examples include the state of the economy, current events and political issues.
Remember that ship that got stuck in the Suez Canal in 2021? Companies all over the world are reliant on materials coming through the Suez Canal. The six-day blockage caused huge delays to trade, estimated at $10 billion worldwide. Marketers had to work overtime to get the right messaging out to impatient customers.
The Suez Canal situation was a macro environmental factor over which companies had no control. However, as with all macro factors, the right knowledge helps marketers pitch messaging well and achieve positive outcomes for their brands.
What are the benefits of analysing the marketing environment?
Knowledge is power. Or, at the very least, knowledge will give you a strong competitive advantage.
By analysing the marketing environment, you arm yourself with a strong understanding of what your customers want, what your customers need, and how you can best deliver these.
A detailed analysis will also put you way ahead of the competition. Evaluating your own micro environment next to that of your competitors will give you valuable insight into your comparative strengths and weaknesses. You can then work up a strategy that combats your weaknesses and makes full advantage of your strengths, while simultaneously providing value that your competitors cannot.
Regular analysis also helps you to spot patterns and trends that you can use to optimise your marketing.
Here are the key questions to focus on answering within your marketing environment analysis:
- Where is the business now, and where would you like it to be?
- What is changing in the macro environment?
- What is changing in the micro environment?
- Who are your key competitors?
- Who are your audience?
- What trends and patterns can you spot in the macro environment?
- What strengths can you draw on to set yourself apart from your competitors?
It can help to frame these questions within four key models: SWOT, SWOTELL, PESTLE, and COMPETE.
Key models to use when analysing your Scenario
SWOT and SWOTELL are used to analyse the micro environment. PESTLE and COMPETE are for the macro environment. Here's a quick rundown of how they work.
SWOT
SWOT is a time-honoured framework for analysing the micro marketing environment. It's relatively simple: the acronym stands for Strengths, Weaknesses, Opportunities, Threats.
A good SWOT analysis will give your organisation self-awareness. It will clarify what your organisation and its marketing efforts are good at, what you need to work on, and how you can put your resources to good use in taking advantage of opportunities and dodging threats.
SWOTELL
The SWOTELL is an extension of the SWOT, solely focused on analysing your organisation's marketing efforts. The added ELL stands for Existing, Limitations, Leverage.
Existing refers to your existing marketing activity. Limitations covers marketing-specific issues that may be holding your marketing back. And Leverage helps to identify resources, strengths, and skills you can leverage to take your campaign to the next level.
PESTLE
PESTLE is a useful tool for analysing the macro marketing environment. The framework focuses on these factors:
- Political
- Economic
- Social
- Technological
- Legal
- Environmental
By gathering and analysing relevant information on all of these factors, you can get a decent idea of how the macro environment is shaping up, and how macro factors could impact your marketing.
COMPETE
The COMPETE framework is designed to provide a comprehensive analysis of one of the most important aspects of the marketing environment: your competition. COMPETE stands for:
- Current operators
- Offering
- Market share
- Price
- Expertise
- Target
- Employees
Through a COMPETE analysis, you can gain useful insights about your competition. These will help you to position your own offering, brand, and marketing in ways that give you a competitive advantage.
Pulling it all together with VRIO
Having analysed your marketing environment, it's time to apply what you've learned to your own offering. One of the best ways to do this is with the VRIO framework. VRIO stands for:
- Value. Is what you're offering of genuine value for customers?
- Rarity. How unique and exclusive is your product?
- Imitability. Can a competitor easily imitate your offering?
- Organisation. Are you well-organised enough to pull off the kind of campaign needed?
With VRIO, you can put together everything you've learned from your analyses and focus these insights onto your own specific offering. This will give you a useful foundation on which to build the rest of your strategy.
