Environmental Factors

Environmental Factors Paper

Dallas Brekke

MKT 461 - Marketing

March 11, 2007

Environmental Factors Paper

In any company, external factors exist that have an effect on the firms operations. Much of the time, these factors are largely uncontrollable and can only be managed and influenced to the best of the firm’s ability. These factors are what make up the marketing environment. In this paper, we will explore some of the domestic and global environmental factors that may impact Dell Computer Corporation’s marketing decisions, how technology impacts Dell’s marketing decisions, and we will also take a look at the importance of social responsibility and ethics as related to Dell’s marketing ventures.

Dell Computer Corporation is the world’s leading direct computer systems company. From the company’s very modest start in 1984 to the present day, Dell has had many different environmental factors to work with and overcome. Like most companies, Dell must consider each of the major elements of the marketing environment, which include the social, economic, political and legally, technological, competitive, and institutional environments. These elements have are usually uncontrollable, yet they have an impact on the decisions a company can control. So, a company’s marketing team must recognize opportunities and threats that exist in the marketing environment, and then factor this knowledge into marketing decisions in order to optimize the opportunities and minimize the threats. (Bearden, & LaForge, 2004, Ch 2 p 23-24)

Opportunities and threats are created through changes in the marketing environment. This can either directly affect a specific market, or it can directly influence specific marketing activities. Dell has experienced both of these situations. For instance, in past years, the economic situation had taken a downturn, and increased layoffs, unemployment, and a stock market plummet caused consumers and organizations to be more unwilling to purchase computer equipment, such as PC’s and servers. This created a new market opportunity for Dell in the low-end server departments. Many organizations still needed new servers to increase their capacity in spite of the lower economy; thus, the cheaper servers being offered by Dell were very attractive to these organizations. The downturn in the economy directly affected the PC market, and Dell spotted an opportunity in this situation and capitalized on it. During this time, Dell’s server sales increased even as the total industry sales were decreasing.

Dell has also experienced market changes that have a direct influence on certain marketing activities. This example also illustrates how technology has a profound effect on Dell’s marketing activities. “Rapid advancements in Internet technology have provided Dell with opportunities to reach new markets and to serve customers more effectively and efficiently” (Bearden, et al, 2004, Ch 2 p 24). The Internet is now Dell’s largest source of product orders and business activity with customers. Customized computer orders can be placed online, customers can receive customer service and technical support 24 hours a day using online services, and this is all accomplished with more convenience for the customer and at a lower cost to Dell. The integration of Internet technology into Dell’s marketing plan has given the company’s customers better experiences and has increased Dell’s profits. However, Dell will begin to notice threats as the market changes again and more competitors adopt the direct model with an emphasis on Internet orders and services.

With the marketing environment also come a firms obligation to protect that the marketing environment by practicing socially responsible marketing. “Consumers have many concerns about how well the American marketing system serves their interest. Surveys usually show that consumers hold mixed or even slightly unfavorable attitudes toward marketing practices” (Armstrong & Kotler, 2005, Ch 16 p 550). The views of the consumer are obviously very important to any companies marketing