Introduction
Representatives of modern business face challenges in decision-making, which is associated with constant changes in the world. In such conditions, it is essential to monitor the marketing environment to predict demand (Bhasin, 2018; Zhang & Watson IV, 2020). The environment includes micro and macro levels, and the latter embraces economic, political-legal, natural, social-cultural, demographic, and technological factors. Despite the complexity of the environment, it is possible to distinguish patterns that help make forecasts and build a marketing strategy.
Economic Factor
The purchasing power of consumers depends on the economic environment. Low income predicts less spending and demand for inexpensive goods. Depending on the income distribution – the presence of the middle, rich, or poor class – experts can make assumptions about the demand for products (Becerril-Arreola et al., 2021). Consumers’ behavior is also determined by the correlation of income, savings, credit availability, and debt practices (Kotler & Keller, 2016). For example, a high debt-to-income ratio can slow down the possibility of making large purchases.
The use of MarketPlace Simulation helped to gain practical experience within the educational process. In particular, the analysis of potential consumers helped develop a strategy and set prices for products. The price sensitivity of buyers was taken into account, and data on competitors to understand fees in the market and production costs. Moreover, prices on bikes have undergone the necessary changes as new challenges appeared in simulation. Another critical aspect of the simulation is understanding the coordination of work between different departments since their coherent work impacts profit.
Political-Legal Factor
Political forces, such as laws, pressure groups, or organizations, significantly influence the market, creating obligations, constraints, and opportunities. Marketing decision-making is affected by an increased number of legislations that seek to make businesses honest and protect consumers. Different interest groups also protect buyers’ rights, which puts pressure on companies. For instance, the consumerist movement made significant changes to the standards and requirements for products (“Consumer rights,” n.d.). At the same time, new threats to consumers have appeared requiring the companies’ attention, for example, privacy issues (Wang et al., 2020). The business environment is becoming more complex, affecting decision-making and strategic thinking.
The political aspect was quite challenging but exciting in MarketPlace Simulation. In some cases, the desire to gain more from created products may encourage excitement and the desire to use cunning. As a result, deceptive ads or the desire to copy the product from competitors appear. From the business representative’s position, regulations prevent such manipulations and maintain healthy competition. From a consumer perspective, preventing deceptive advertising promotes trust and better relationships with the company. Taking responsibility for own decisions in simulation helped develop leadership and management skills.
Social-Cultural Factor
The environment in which a person grows and lives affects perceptions of self, others, and the world. Marketers need to make decisions based on these thinking patterns. For example, the view of self often reflects people’s aspirations and determines their interests. Views of others are manifested in the desire of people to communicate and trust others similar to them. A view of organizations suggests that companies need to gain consumer confidence. Views of society define the position of people and what they want to do for society – to protect it, change it, take something for themselves, or do other actions. A view of nature describes attitudes towards nature, and at the moment, society is thinking about its fragility and striving to protect it (Saari et al., 2020). Finally, views of the universe reflect people’s religious beliefs, which also affect behavior and consumption.
The socio-cultural environment shapes people’s values, passing them from generation to generation. There are core and secondary values in society, and when making decisions in marketing, it is worth focusing on the fact that only the second type can change a little. Subcultures, groups with common interests or beliefs, also distinguish the socio-cultural factor (Choong et al., 2021). They are crucial for consideration when creating marketing strategies and making decisions.
The socio-cultural influence on simulation was most noticeable while considering brand positioning and advertising. For example, the trend of maintaining a healthy lifestyle is influential among customers. Bicycles can be connected to the vision of self as a person, which takes care of nature and health. The emphasis on environmental protection is also crucial for the brand. Thus, taking into consideration the socio-cultural factor was an exciting aspect of the work in simulation.
Technological Factor
Technology destroys old processes and brings innovation and progress, so any industry needs to monitor technological trends. The time for the emergence of new ideas and their implementation has been significantly accelerated thanks to technology. At the same time, new areas of activity are developing, and the old ones are expanding, creating an unlimited space for innovation. Research and development (R&D) budgets have changed and focused more on development. However, there has also been increased regulation of technological changes to prevent the spread of unsafe products.
The simulation also demonstrated the importance of emphasis on development in R&D. The development of bicycles and their elements was one of the critical tasks for success. It was also necessary to plan production competently to meet the market’s needs. At various stages, the technological aspect influenced pricing since the cost of production is an essential factor of influence. It is worth noting that such work in conditions of competition, limited time, and budget contributed to developing strategic thinking skills.
Conclusion
Environmental forces have a critical impact on marketing strategy, as demonstrated by theory and practice in simulation. Economic, political, social-cultural, and technological factors help predict the demand for certain products, choose successful promotion strategies, and meet the market’s needs. Every change in the business environment has consequences that companies need to prepare for to maintain their success. Therefore, their ongoing monitoring and analysis substantially impact decision-making in marketing.
References
Becerril-Arreola, R., Bucklin, R. E., & Thomadsen, R. (2021). Effects of income distribution changes on assortment size in the mainstream grocery channel. Management Science, 67(9), 5878-5900.
Bhasin, H. (2018). Importance of marketing environment. Marketing91.
Choong, K., Drennan, J., Weeks, C. S., & Weber, I. (2021). Reaching subculture markets: The cryptic marketing approach. Journal of Marketing Communications, 27(2), 160-175.
Consumer rights. (n.d.). Lumen Learning. Boundless Business. Web.
Kotler, P., & Keller, K. L. (2016). Marketing management (15th ed.). Prentice Hall.
Saari, U. A., Mäkinen, S. J., Baumgartner, R. J., Hillebrand, B., & Driessen, P. H. (2020). How consumers’ respect for nature and environmental self-assets influence their car brand experiences. Journal of Cleaner Production, 261, 1-11.
Wang, X., Tajvidi, M., Lin, X., & Hajli, N. (2020). Towards an ethical and trustworthy social commerce community for brand value co-creation: A trust-commitment perspective. Journal of Business Ethics, 167(1), 137-152.
Zhang, J. Z., & Watson IV, G. F. (2020). Marketing ecosystem: An outside-in view for sustainable advantage. Industrial Marketing Management, 88, 287-304.