5C - 5D Marketing & The external environment

What are operating factors?

Operating factors are the primary external factors impacting a business which it has some control over. They include customers, suppliers and competitors

What are the three operating factors?

- Customers

- Suppliers

- Competitors

Why are customers important as an operating factor?

Customers generate the majority of a business's revenue through purchases. Therefore, businesses should develop customer-focused marketing strategies that prioritise customer needs and preferences.

What does customer-focused mean?

Customer-focused means prioritising customer needs and preferences.

How can customer needs and preferences affect the customer base?

Marketing strategies that communicate how products fulfil customer needs can establish and expand the customer base. Products that continuously satisfy customer needs can also create brand loyalty.

How can customer needs and preferences affect brand identity?

Customer-focused marketing can improve customer perceptions of products. Products designed to meet customer needs and preferences can cause customers to positively perceive the business and its offerings.

How can customer experience affect a business?

Customers are more likely to continue purchasing from a business that treats them well and values their time and money. This can increase customer loyalty and improve perceptions of the business.

How can suppliers influence marketing?

Suppliers that provide products for resale may influence how the business markets those products. Suppliers may also provide marketing material that helps customers recognise products through logos and branding.

How can competitors affect marketing?

Businesses should monitor competitors because competitors are likely to target the same market. A business can differentiate its marketing by creating strategies that generate greater customer value. This may attract customers from competitors, expand the customer base and improve brand identity.

How can a business use competitors to strengthen its brand identity?

It can analyse competitors' marketing strategies and identify opportunities to offer greater customer value. A unique marketing strategy can differentiate the business, attract customers from competitors and improve the business's brand identity.

What are macro factors?

Macro factors are social, legal, technological and economic conditions that a business operates in and has no control over.

What four macro factors must businesses consider when marketing?

- Economic factors

- Technological factors

- Legal factors

- Social factors.

How can economic factors affect marketing?

During strong economic growth, disposable income is generally higher and consumers are more willing to purchase goods and services, providing opportunities to expand the customer base. When economic growth and disposable income are low, consumer confidence decreases, so businesses may emphasise lower prices and use fewer marketing strategies to attract price-conscious customers.

How can technological factors affect marketing?

Changes in technology can alter how businesses promote and sell products. Businesses need to consider technological developments and adapt marketing strategies so they can effectively reach customers.

How can legal factors affect marketing?

Changes to laws can affect how businesses market and promote products. Businesses therefore need to consider legal requirements when developing marketing strategies.

How can social factors affect marketing?

Changes in society can affect consumer purchasing behaviour and therefore the way businesses market products. Businesses need to adapt their marketing to changing social expectations and consumer behaviour.

What is the key difference between operating and macro factors?

Operating factors are external factors over which a business has some control, including customers, suppliers and competitors. Macro factors are broader external conditions over which a business has no control, including economic, technological, legal and social factors.