What is economic environment? Economic environment is an external environment of a company that includes the factors that determine the income and wealth-generating ability of the economy. It is a factor that will affect customer purchasing power and spending pattern. However not only economic factor affect customer purchasing power and spending pattern but it must also depend on the ability and willingness to buy a product. It was because everyone has their own ability to buy the products that is over their budget. Normally, the most common factors that affect customer are inflation. Inflation is the rate of change of prices. Therefore, some marketers will adjust the price of the products of the company in order to deal with this problem. For example, Carrefour as the retail company therefore the price of products will less than other hypermarket because there is no other intermediary’s interaction they directly get the goods from the manufacturer.
There are five main components inside the economic environment. The first element is economic condition. This condition has a large affect that effect in the economic environment. Any improvement in the economic conditions will affect the size of the market powerfully like the standard of living, income, demand and also supply. For example, Carrefour will target for the market which has a larger demand by consumer and when Carrefour had satisfied customer satisfaction theirs customer will come back to buy their products again and this also help them to maintain a long term customer relationship.
The second element is economic system; it is a system that a country can be said as a framework of rules, goals and incentives that controls economic relations among people in a society. Each country in the world has different economic systems and the prevailing economic system in a country affect the business units to a large extent. For example, Carrefour is capitalism.
The third element is...