A marketing program affects it especially economic factors such as the current and early stages of the business cycle, as well as inflation and interest rates. 32.
Stage of the business cycle The traditional business cycle passes through four stages: prosperity, recession, depression and recovery, then the full cycle starts from prosperity. The economic strategies adopted by the Federal Government have prevented the stage of depression in the United States for about 75 years. Marketing executives need to know at what stage of the business cycle is currently the economy, because the company’s marketing programs have to be regularly modified from one stage of the cycle to another. Prosperity is a period of economic growth. During this stage, organizations tend to expand their marketing programs by adding new products and entering new markets. A recession is a period of reduction for consumers and businesses: we tighten the economic belts. People can discourage themselves, scare and get angry. As it is natural, these emotions affect their purchase behavior. For example, some consumers decrease meals and entertainment away from home. The result is that companies that serve these needs face serious marketing problems and some may suffer economic losses. Recovery is the period in which the economy passes from the recession to prosperity. The challenge for marketing marketers is to determine how quickly prosperity will return and at what level. As unemployment declines and increased income, companies expand their marketing efforts to improve sales and profits. After having maintained in the stage of prosperity, most of the 1990s, the US economy was delayed and entered into a recession in 2001. This fall, which was relatively smooth, was characterized by a decrease in the expenditure of Businesses and layoffs (especially in the technology sector) and a drop in stock exchange. The internal economy rebounded in the second semester of 2003. At the time of reading this, at what stage of the business cycle do you think the economy of your country is? Inflation Inflation is an increase in the prices of goods and services. When prices go up to pace faster than personal income, consumer purchase power decays. Inflation rates affect government policies and consumer psychology, as well as marketing programs.