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Today, we want to share with you another term – PEST analysis.
P – Political
E – Economic
S – Social/Cultural
T – Technological
There are suggestions that it could be changed to PESTLE to include Legal & Environmental, but frankly we think that is making it far more complicated than it needs to be, and you can include both of those within the standard PEST framework.
Political – yes, it does mean about which political party is in power – but this is relevant no matter what your own political persuasion. It has less to do with which colour is nailed to number 10, and more to do with the focus of Government, legislation and their initiatives. And, of course, if you trade across the globe, this is just as relevant to any country you operate in.
For instance, if you rely on a Government scheme for a large part of your business – such as the Growth Voucher scheme, you will need to have a fall back plan, for when a scheme comes to an end.
Economic – this is about the economy of the country – boom, recession etc – this will have an impact on public spending, which has implications if you have a big customer base in the public sector. It will also impact on people’s disposable income, the housing market etc. If you are trading internationally, you will also need to be aware of exchange rates, and the economic stability of other countries.
To give you an example, a few years ago we worked with a company who specialised in providing HIPs (those plans that were needed before you sold a house). We asked the business owner what would happen to his business if the bottom fell out of the property market. He assured me that wasn’t going to happen. Guess what? It did, and his business failed.
Social/Cultural – this requires a little more thought. Partially it is about the demographic of the country, so, in the UK, for example, it is well known that we have an ageing population and that is likely to increase as the Baby Boomer generation is getting older. This is further impacted by the advances in medicine, that mean our life expectancy is better too. This is also about social behaviours, religious beliefs and lifestyle choices.
Technological – advances in technology, and this includes telephony, computing, television etc. Who would have thought 20 years ago that some of the exciting technology we have to today would have even been possible? And the impact? More of us work from home now, which is a direct result of technological advances.
You are probably thinking this is all a bit “pie in the sky”, and we will admit when we learned this as part of our marketing training many years ago, we couldn’t really see the point. But since working in marketing, we’ve recognised it is relevant – as our example of the HIP company showed.
You are not fortune tellers and you cannot predict the future. However, based on previous experience, and by reading you can look at what opportunities and threats these factors could have on your business. And it needs to be part of your marketing plan.
Remember this is the macro environment, ie outside of your business, so don’t spend weeks agonising over this.
But don’t ignore it – you could be perfectly poised to take advantage of a changing landscape at just the right time – and steal a march on your competitors!
If you would like help with getting your marketing sorted, give us a call on 01256 83 11 10.