Economic

• Overall

  • Effect on business: Economic conditions impact their ability to compete as a number of elements are affected such as number of competitors, cost of inputs and sales volume
  • Effect on customers: the state of the economy influences their willingness, and ability to spend their money
• Boom

  a period of low unemployment and rising incomes

  Expanding economy, increased optimism, increased competition, businesses maximise their production and promotions to increase market share

  As customer feel secure about their jobs and sources of income, they are willing to spend more

  As the potential for high sales is very large, all forms of promotion tend to be effective
• Bust/recession

  when unemployment is high and incomes fall

  Decline in economic activity

  customers and businesses lack confidence and outlooks are pessimistic

  resulting in customer spending reaches very low levels

  customers will be price conscious and look for products that are high-value, very functional and long-lasting

  To ensure the business survive, marketing plans should stress the value and usefulness of a product

  Instead of increasing sales and market share, marketing should be maintaining market share at existing levels