ASSIGNMENT

MARKETING
MANAGEMENT

MADE BY :
GAURAV SOLANKI
F.W. (09-11)
A PEST analysis most commonly measures a
market.
A PEST analysis measures the market potential and situation, particularly indicating
growth or decline, and thereby market attractiveness, business potential, and suitability of
access - market potential and 'fit' in other words. PEST analysis uses four perspectives,
which give a logical structure, in this case organized by the PEST format, that helps
understanding, presentation, discussion and decision-making. The four dimensions are an
extension of a basic two heading list of pro's and con's.

PEST analysis can be used for marketing and business development assessment and
decision-making, and the PEST template encourages proactive thinking, rather than
relying on habitual or instinctive reactions.

Here the PEST analysis template is presented as a grid, comprising four sections, one for
each of the PEST headings: Political, Economic, Social and Technological.

As previously explained, extended variations of PEST (eg., PESTELI and STEEP, etc)
include other factors, such as Environmental, Ethical, Legal or Legislative, etc., however
in most situations you will find that these 'additional' factors are actually contributory
causes or detailed perspectives which then manifest or take effect in the form or one or
several of the original four main PEST factors. For example, Ethical and Environmental
factors will always tend to produce an effect in at least one of the main four headings
(Political, Economic, Social, Technological), but it will tend not to work the other way.
Hence why the basic PEST model is often the most powerful - it puts more pressure on
strategic appreciation and analysis than a longer list of headings. When you next see a
PESTELI or a STEEPLED analysis ask yourself (or the author): "Okay, I understand that
customers tend to be more ethically minded now, but what does that mean in terms of the
basic four PEST factors - what's the effect going to be?..." or: "Okay we know that
carbon emissions is an issue, but tell me where in the main four PEST factors will it
impact..?

You will gather I am not a fan nor a particular advocate of extending the PEST model. It
works great as it is - why make it more complicated and less specific? If you are worried
about missing or forgetting a crucial point of ethics or legislation (or anything else) keep
a reference list of these headings, and only build them into the model if you are sure that
doing so will make it work better as a strategic tool.
PEST Analysis:
Political

Political factors include government regulations and legal issues and define both
formal and informal rules under which the firm must operate. Some examples
include:

• ecological/environmental issues
• current legislation home market
• future legislation
• international legislation
• regulatory bodies and processes
• government policies
• government term and change
• trading policies
• funding, grants and initiatives
• home market lobbying/pressure groups
• international pressure groups
• wars and conflicts

Economic
Economic factors affect the purchasing power of potential customers and the
firm's cost of capital. The following are examples of factors in the macro
economy:

• home economy situation

• home economy trends
• overseas economies and trends
• general taxation issues
• taxation specific to product/services
• seasonality/weather issues
• market and trade cycles
• specific industry factors
• market routes and distribution trends
• customer/end-user drivers
• interest and exchange rates
• international trade/monetary issues

These factors have major impacts on how businesses operate and make decisions. For
example, interest rates affect a firm's cost of capital and therefore to what extent a
business grows and expands. Exchange rates affect the costs of exporting goods and
the supply and price of imported goods in an economy
Social

Social factors include the demographic and cultural aspects of the external
macro environment . These factors affect customer needs and the size of
potential markets. Some social factors include:

• lifestyle trends
• demographics
• consumer attitudes and opinions
• media views
• law changes affecting social factors
• brand, company, technology image
• consumer buying patterns
• fashion and role models
• major events and influences
• buying access and trends
• ethnic/religious factors
• advertising and publicity
• ethical issues

Social factors include the cultural aspects and include health consciousness,
population growth rate, age distribution, career attitudes and emphasis on safety.
Trends in social factors affect the demand for a company's products and how that
company operates. For example, an ageing population may imply a smaller and less-
willing workforce (thus increasing the cost of labor). Furthermore, companies may
change various management strategies to adapt to these social trends (such as
recruiting older workers).
Technological

Technological factors can lower barriers to entry, reduce minimum efficient

production levels, and influence outsourcing decisions. Some technological
factors include:

• competing technology development

• research funding
• associated/dependent technologies
• replacement technology/solutions
• maturity of technology
• manufacturing maturity and capacity
• information and communications
• consumer buying mechanisms/technology
• technology legislation
• innovation potential
• technology access, licensing, patents
• intellectual property issues
• global communications

Technological factors include ecological and environmental aspects, such as R&D

activity, automation, technology incentives and the rate of technological change.
They can determine barriers to entry, minimum efficient production level and
influence outsourcing decisions. Furthermore, technological shifts can affect costs,
quality, and lead to innovation.