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PESTLE Analysis

 

DisciplinesMarketing > Understanding Markets > PESTLE Analysis

Description | Example | Discussion | See also

 

Description

Seek information on the size, power and dynamics of market forces as indicated in the table below.

 

Force Examples
Political Recent national and local government decisions.

Nature of lobbying systems.

Influence competitors have over politicians.

Stability of political parties and political system.

Economic Growth rate of markets.

Value of markets.

National inflation rate.

Availability and interest rates of bank loans.

Comparative exchange rates.

Social-Cultural Demographic patterns of buyers (eg. affluent middle classes).

Distribution and and value of different age groups.

Availability of local sales agents.

General social stability (or unrest).

Technological Dynamics of technology innovation, including sudden shifts.

Availability of technology resources (eg. bandwidth).

Use of technology by competitors.

Legal

Laws about employment, competition, standards, etc.

Power and style of the judiciary in enforcing laws.

The tendency of companies and individuals towards litigation.

Environmental Geographic distribution of possible markets and suppliers.

Accessibility of various regions (eg. separated by high mountains).

Local concern for ecology and the environment.

 

Then analyze these in terms of opportunities and threats, for example:

  • There are opportunities that play to the company's strengths.
  • Whether competitors may be stronger or weaker in different areas.
  • Governments are likely to be supportive or obstructive of company strategies.
  • Clusters of resources and suppliers near target markets.

Use the knowledge gained to develop an effective marketing and business strategy.

Example

A company considering entering a foreign market does a PESTLE analysis and finds that there are opportunities in recent upward social mobility in particular areas. They decide to make these people a target market for new technology products.

A marketer uses PESTLE just to to check for forces that may affect the current strategy in their existing marketplace.

Discussion

This is a simple system of prompts to help remember external forces that may impact current or target marketplaces. It does not matter in which category things are found. It is only important that important forces are identified.

Remember that these are often 'neutral' forces in the way that they usually affect both you and your competitors in similar ways. The key difference that can change markets is how you and they respond to these shifting forces.

A useful question in this is what others might do. Not only may competitors be doing the same analysis as you (or maybe not) -- customers, governments, pressure groups and other interested parties may take note of changes and react in ways that may or may not be helpful. In any case, it is a good question to ask 'Who is affected by this and what might they do?'

The original variant of PESTLE was PEST, where Legal is included with Political and Environmental is not separately considered. Variants on PESTLE include STEP, SLEPT, SLEEP, PESTEL, STEEPLE ( which separates Ecological/Ethical from Environmental) and STEEPLED (which separates Demographics from Social). Further additions include forces for International, Local, National, Global and Industry factors.

See also

Porter's Five Forces

 

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