What is Environmental Analysis? Definition of Environmental Analysis, Environmental Analysis Meaning and Concept

The analysis of the environment is the analysis that a company performs of the complete situation it faces, in order to be able to make decisions that are market-oriented and to be able to specify its marketing strategies.

The analysis of the environment allows a company to carry out a correct marketing plan that includes its segmentation process. Likewise, you will be able to correctly select your target market and establish a suitable positioning according to your particular situation.

Also, it allows you to plan and implement your marketing mix , specifically you can determine the type of product that you will offer to the market, the price that you will charge for it, the distribution system that you will use and the forms of communication that you will use to reach your target market.

How is the environment analysis done?

On the one hand, the analysis of the environment includes a series of steps, to achieve knowledge and relevant information about the environment or environment that surrounds a company and thus make the best decisions that positively influence the performance of the company.

The environment analysis can be divided into internal and external analysis.

Internal analisis

Indeed, the internal analysis is fundamentally based on the knowledge of the company. It is particularly important to know the strengths and weaknesses.

In the internal analysis we are interested in knowing the following:

1. Mission of the company

Since, the mission represents the fundamental reason why a company exists. The mission is what allows us to justify the activity that the company is carrying out at a given time.

For example, the mission of a company might be to be environmentally friendly.

2. Market orientation

So, market orientation is the business philosophy or culture, which guides the planning and implementation of the marketing process. In the same way, it guides the form of management and the general direction of the company.

In other words, market orientation becomes the philosophy that is followed so that all departments of the company move in the same direction, but emphasis is placed on the marketing department.

Regarding this point, the ideal is for every company to be customer-oriented and all its strategies revolve around it.

3. Delivery of value

Therefore, the delivery of value for a company represents the set of benefits that it offers to the consumer to satisfy their need in exchange for paying a price and deciding to buy the products that are sold in the market.

External analysis

On the other hand, external analysis focuses more on understanding the threats and opportunities offered by the external environment that surrounds the company.

Then, the external analysis must be carried out constantly, since the company's environment is always changing continuously.

The main elements considered in the external analysis are the following:

1. Customer analysis

A customer is the person who buys the products of a company. To do a customer analysis, all the customer data that companies have must be taken into account.

In the same way, this data can be used to generate models to predict customer behavior, in addition this data helps to determine who are the best customers of the company.

So, additionally with this analysis, important information can be obtained about the potential value that customers have both in monetary and non-monetary terms. Above all, taking into account that it will be easier for a company to design its marketing strategies more effectively.

2. Competitor analysis

Competitors are all companies that market similar products or that meet the same consumer needs in the markets in which a company participates.

It turns out that it is called direct competition when competing companies sell products similar to ours and indirect competition when they market substitute products.

Also, the analysis of the competition is very important because it allows us to know the actions of the competitors, as well as their strategies and thus take preventive actions that provide us with a superior advantage.

3. Analysis of collaborators

Since the collaborators of a company are all the partners who help and support the company so that it can achieve its objectives, the most important collaborators are the distributors, suppliers and advertising or transport agencies.

  • Distributors : Distributors are all intermediaries that make the products of a company reach the final consumer, they are in charge of carrying out the process of marketing the products.
  • Suppliers : These are all the companies that supply the inputs and raw materials that a company requires in order to develop its production process.
  • Agencies: They are all companies that support companies to carry out their communication processes, transportation logistics, portfolio management, among others.

Therefore, the information of the collaborators allows the company to develop comparative advantages and add greater value in the delivery to the customer.

4. Analysis of the external environment

It is also convenient to know how demographic, economic trends, lifestyles, technology, policies and regulations evolve, since all of them determine and define the way of acting and actions of the company.

Finally, we can say that the development of the marketing plan must begin with the internal analysis of the company and in order to develop the marketing strategies and tactics, the company must carry out the external analysis.

In any case, the internal analysis helps the company know its strengths and weaknesses. Meanwhile, external analysis allows knowing the threats and opportunities that the company may encounter in the competitive environment.