Sometimes we can get so caught up in our own little micro environment that we lose track of what is going on at a macro level.
The PESTLE analysis is a key compnent of the marketing plan’s background analysis and deals with the external or macro environment of the market that you compete in. The PESTLE analysis complements the more internal or micro focussed current market situation, and if done properly will help you identify and factor in any potential opportunities or threats the broader market may deliver your business.
PESTLE is an acronym relating to the sub-sections of informaton that make up this component of the plan. Here’s a breakdown of what each sub-section requires:
This broadly outlines any political situation or government policies that does or could impact the success of your goods and services. This analysis includes information about the stability of the political environment, upcoming elections or political risk as well as levies, laws, taxes and tax policy or regulatory bodies that could affect your success in the market. It is important to understand what is on the agenda of any government in office (domestically and internationally if you export/import), and be cognizant of how changes to legislation may impact your industry, the consumer or the market as a whole.
Information included here assess the macroeconomic situation of the market, such as exchange rates, inflation rates, consumer confidence indices, interest rates, GDP and other economic growth data. In this section you also need to look at and understand the microeconomic situation which includes information related to household incomes, discretionary spend and disposable incomes.
Social and cultural data looks into the values, beliefs, religious alignment and attitudes of the market you are targeting, as well as the broader population of the area you are active or hoping to be active in. It also looks at education/literacy levels, demographics such as age, gender, health & wellbeing and population growth data. Information here can help you identify any socio-cultural issues such as rejection of your goods or services based on conflicting values – for example operating a pub next door to a school. It can also help you identify trends in the population such as the rise of the grey dollar due to an aging population or an increased interest in health and fitness.
Technological factors can and do change at a rapid pace and it is vital to stay on top of any changes that can impact your marketing plans. From a marketing perspective this section will address not only how you will communicate/advertise to your target market, but also the role technology plays in the production and distribution of your goods or services to the market. For example, advances in technology can reduce production costs or increase speed to market, both of which can positively impact your marketing and overall business goals.
Understanding what is legally required for your goods and services to make it to market will make your life so much easier and help you avoid costly legal action should you break the law. As well as addressing packaging and labelling laws, health and safety and age classifications for instance, the legal component should also cover advertising and marketing regulations that dictate what product claims can be made, when and where you can advertise, endorsements and sponsorship restrictions. Think tobacco and alcohol industry or advertising to children here as the most obvious, however vitamin supplements, insurance, telecommunications and food are also highly regulated industries that must adhere to strict marketing and advertising guidelines.
A relatively recent addition to the marketing plan in the last 20 years, the environmental analysis is becoming more of a focus for consumers who are interested in the impact the production or consumption of goods and services has on the environment. Such considerations in this section include, ethical sourcing, pollution, carbon emissions, waste, deforestation, raw materials and transport to name a few. These factors can impact you as a brand exponentially, particularly if you are sourcing materials or using transport means, either directly or indirectly, that are negatively impacting the environment or other communities – think the garment industry and sweat shops.
Together with the other information captured in the background analysis, a PESTLE will give you and your business a thorough understanding of the market within which you intent to peddle your goods or services, and as a result, help you plan more effectively and importantly, more efficiently.