The Effect Of Environmental Factors On Marketing Decisions Essay

Living as we do in the 21st century, there are various factors that influences our daily lives. Businesses are of no exception either. This Report is a coherent presentation of the idea that marketing decisions are affected by environmental factors. Supported by numerous references and articles, the marketing concepts and theories mentioned are related to current business world scenarios. Moreover, the entire report is an elaboration of analysis of the factors discussed above.

Eventually, this Business Report not only portrays theoretical concepts but also entails an understanding based on real life situations, undoubtedly. Table of Content Introduction 3 Analysis and Understanding 4 Application of Pestel on IKEA 5 Conclusion 6 Appendix and References 7-9


Macro Environment factors or Environmental factors are factors outside of the industry that influence the survival of the company, these factors are not directly controllable by the organization. (Elliott, Rundle-Thiele and Waller, 2014) There are six major macro environmental factors (Illustration of PESTEL available in Appendix) that determines marketing decisions: Economical, Socio Cultural, Legal, Political, Technological and Environmental. (Oxford College of Marketing Blog, 2018)

Economical: Components that affect the number or amount people and organizations can spend and how much they are willing to spend it. (Elliott, Rundle-Thiele and Waller, 2014) This has a vital impact on how an organisation performs and profitable they are. The economic factors that needs to be taken into consideration are economic growth, interest rate, inflation, real disposable earning of customers and businesses. (Professional Academy, 2018)

Socio Cultural: The social and cultural factors that affect people’s attitudes, beliefs, behaviour, preferences, customs and lifestyle. (Elliott, Rundle-Thiele and Waller, 2014) More elaborately, these involve the population growth, age distribution, health and career attitudes. (Professional Academy, 2018)

Legal: Marketers need to perceive legal and regulatory influences such as, laws including the Competition and Consumer Act, Regulation from Advertising Bodies, etc. (Elliott, Rundle-Thiele and Waller, 2014) Legal matters include health and safety, equal opportunities, consumer rights and laws, product labelling and product safety. It is clear that companies need to know what is and what is not legal in order to trade successfully. (Professional Academy, 2018)

Political: The influence of politics on marketing decisions. (Elliott, Rundle-Thiele and Waller, 2014) This includes government policy, political stability or instability in overseas markets, foreign trade policy, tax policy, labour law, environmental law, trade restrictions and so on. (Professional Academy, 2018)

Technological: The Technological factors that influences marketing decisions. (Elliott, Rundle-Thiele and Waller, 2014) Technological factors affect marketing and the management thereof in three distinct ways:

New ways of producing goods and services

New ways of distributing goods and services

New ways of communicating with target markets (Professional Academy, 2018)

Environmental: The Environmental factors that influences individuals, customers and societies. (Elliott, Rundle-Thiele and Waller, 2014) They have become important due to the increasing scarcity of raw materials, pollution targets, doing business as an ethical and sustainable company, carbon footprint targets set by governments. (Professional Academy, 2018)

Analysis and Understanding

Economical: Economic factors are enormously interrelated with goods, services and money. For instance, valuation of Interest Rates might stand as a major factor for businesses who are dependant on immense loans. Similarly, organisations whose base is import and export, exchange rate of currency plays a vital role for them. An economic downturn such as recession can hinder customer purchase behaviour. (Claessens, 2018)

Socio Cultural: A society is formed and shaped according to the rituals, culture and beliefs of individuals and these in turn influences their purchasing behaviour. Its salient to understand that businesses can stand as a complete disaster if marketeers and businesses do not perceive the cultural differences. (Claessens, 2018) Such as, in China, Red is a color that expresses happiness, whilst in other nations its a color of danger.

Legal: Laws and new form of legal agreements in a society such as a prohibition in specific products for age restriction can create a hazard for businesses who are selling such. A new taxation policy can influence or limit the marketing strategies. (Morello, 2018)

Political: Before entering into a new business, how a specific legislation affects a business needs to be taken into account. For example, laws covering issues such as environmental protection, product safety regulations, competition, pricing etc. might require the firm to adapt certain aspects and strategies to the new market.

Technological: Development of the wireless internet, easy access of smart phones, tablets, etc. has created immense opportunities for businesses. A time where technological progress such as innovation of robots was considered a threat for humans, today innovation of technology in terms of internet was made it opposite. For instance, websites has made it easier for businesses to introduce them to a large audience with minimum expense. (Morello, 2018)

Environmental: Pollution such as Air, Water, Gas, etc. are significant factors which will influence a marketeers decision as these factors influence humanity’s survival on earth. Application of PESTLE on IKEA (Leading Household Brand)

Economical: The great recession of 2007-2008 (Amadeo, 2018) has made many big brands and IKEA was also of no exception. Buying decisions and behaviours changed for the time being. Consumers hesitated to purchase new beds, let aside upgrading existing ones. (Frue, 2018)

Socio Cultural: IKEA had to adopt differences in cultures while maintaining global business. While its entry in Russia, it pulled off an advertisement showcasing a homosexual couple. However, Russia still being a conservative nation considering such topic, IKEA lost its image in the first place. However, afterwards it changed the particular advertisement. (Frue, 2018)

Legal: IKEA followed laws in every country they operate in, such as following updated Labour Law. Once IKEA was in the news for providing low quality furnitures which resulted as a threat for many families. Soon it changed its quality to avoid strict law that is set against offense like such. (Frue, 2018)

Political: A government which is not friendly to import and export of furnitures can stand as a barrier for IKEA. For instance, India and China has presented a friendly business attitude and IKEA has decided to move a lot of its business into Asian market. (Frue, 2018)

Technological: Like every other business in the world, IKEA has its website where it showcases its products online. Not only can customers see them but also compare them with other brands. Several categories in their website has made it easier for customer to enjoy a wide variety of products in the click of a button. (Frue, 2018)

Environmental: It’s amazing that in considering the world and environment IKEA constantly invests for it. One of the major investment towards a better world is by investing in solar panels and wind panels. Conclusion A business is never alone while doing business. It is surrounded by numerous factors that influences its growth. It has to run its activities in an enormous arena and this arena is called Macroeconomic Environment.

Marketeers need to make decisions considering all these factors for success and profitability, undoubtedly. Eventually, macroeconomic factors cannot be controlled internally within the organisation, however, keeping these factors into consideration will help marketers to take legit decisions, undoubtedly.


Elliott, G., Rundle-Thiele, S. and Waller, D. (2014). Marketing. 3rd ed. Queensland, p.1.

Academy, P. (2018). Marketing Theories – PESTEL Analysis. [online] Professional Available at:—pestel-analysis

Claessens, M. (2018). The Macro Environment – Six Forces (DESTEP). [online] Marketing-Insider. Available at: [Accessed 1 Sep. 2018].

Academy, P. (2018). Marketing Theories – PESTEL Analysis. [online] Available at:—pestel-analysis

rue, K. (2018). PESTLE Analysis of IKEA. [online] PESTLE Analysis. Available at: [Accessed 2 Sep. 2018].

Oxford College of Marketing Blog. (2018). What is a PESTEL analysis? – Oxford College of Marketing Blog. [online] Available at:

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