WWhat is PEST Analysis

By Frank Rivera,2014-10-17 08:31
12 views 0
WWhat is PEST Analysis

;What is PEST Analysis?

    ;It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning.

;The organization's marketing environment is made up of:

    ;1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc.

    ;2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc.

    ;3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors.

;Political Factors.

    ;The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You must consider issues such as:

    ;1.How stable is the political environment?

    ;2.Will government policy influence laws that regulate or tax your business?

    ;3.What is the government's position on marketing ethics?

    ;4. What is the government's policy on the economy?

    ;5. Does the government have a view on culture and religion?

    ;6. Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others?

;Economic Factors.

    ;Marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. You need to look at: ;1. Interest rates.

    ;2. The level of inflation Employment level per capita.

    ;3. Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on. Sociocultural Factors.

    ;The social and cultural influences on business vary from country to country. It is very important that such factors are considered. Factors include:

    ;1.What is the dominant religion?

    ;2.What are attitudes to foreign products and services?

    ;3.Does language impact upon the diffusion of products onto markets?

    ;4.How much time do consumers have for leisure?

    ;5.What are the roles of men and women within society?

    ;6.How long are the population living? Are the older generations wealthy?

    ;7.Do the population have a strong/weak opinion on green issues?

;Technological Factors.

    ;Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points:

    ;1. Does technology allow for products and services to be made more cheaply and to a better standard of quality?

    ;2.Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc?

    ;3.How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc?

    ;4.Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc?

Strengths, Weaknesses, Opportunities and Threats (SWOT).

;SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of

    planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses,

    opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are

    external factors.

    In SWOT, strengths and weaknesses are internal factors.

;For example:

    ;A strength could be:

    ;Your specialist marketing expertise.

    ;A new, innovative product or service.

    ;Location of your business.

    ;Quality processes and procedures.

    ;Any other aspect of your business that adds value to your product or service.

;weakness could be:

    ;Lack of marketing expertise.

    ;Undifferentiated products or services (i.e. in relation to your competitors). ;Location of your business.

    ;Poor quality goods or services.

    ;Damaged reputation.

SWOT, opportunities and threats are external factors.

;For example:

    ;An opportunity could be:

    ;A developing market such as the Internet.

    ;Mergers, joint ventures or strategic alliances.

    ;Moving into new market segments that offer improved profits. ;A new international market.

    ;A market vacated by an ineffective competitor.

threat could be:

;A new competitor in your home market.

    ;Price wars with competitors.

    ;A competitor has a new, innovative product or service.

    ;Competitors have superior access to channels of distribution. ;Taxation is introduced on your product or service.

Simple rules for successful SWOT analysis.

;Be realistic about the strengths and weaknesses of your organization when conducting SWOT


    ;SWOT analysis should distinguish between where your organization is today, and where it could be

    in the future.

    ;SWOT should always be specific. Avoid grey areas.

    ;Always apply SWOT in relation to your competition i.e. better than or worse than your competition.

    ;Keep your SWOT short and simple. Avoid complexity and over analysis

    ;SWOT is subjective.

    6types of customer market ;Consumer market

    ;Business market

    ;Reseller market

    ;Institutional market ;Government market

    ;International market Publics

;A public is any group that has actual or potential interest in or impact on an organization’s ability to

    achieve its objectives.

Report this document

For any questions or suggestions please email