The first step in carrying out a PESTEL analysis in a marketing environment is to understand the PESTEL model itself. Specifically, marketers need to know which are the six categories that make up a PESTEL analysis.
The six general categories of business variables, which the PESTEL analysis draws from, are:
All companies are affected by political factors and especially those which operate across borders. Broadly speaking, political factors include taxation policies, trade tariffs as well as a number of other rules and regulations.
Local, as well as global economies, play a significant role in business. It’s the economic factors of PESTEL analysis which describe this role. Examples of these types of factors include:
- Gross Domestic Product (in other words the total value of goods as well as services which are produced in a year),
- Exchange rates, as well as
Sociocultural factors, which are sometimes referred to as ‘social’ factors, account for how the societal, as well as cultural aspects of a chosen market, may affect business. These factors include:
- Ethnicities, and
- Cultural differences.
One particularly exciting example is the prominence of consumerism in a specific demographic.
Technology is also a vital factor in business analysis. In PESTEL analysis, the term ‘technological factors’ may refer to the:
- Development of new technologies,
- Infrastructure for, and access to, established technology.
Examples include the:
- Increasing importance of cybersecurity,
- Pervasiveness of mobile phones, as well as
- Access to an Internet connection.
An increasingly important category is environmental. If a business is directly linked outdoors or not, factors such as the reduction of natural resources, climate change as well as pollution could very likely affect its operations.
Knowing where to source your information is another tough aspect of PESTEL analysis. There’s a massive amount of data which is available on the Internet. Aside from the World Wide Web, there are two other notable choices for sourcing information:
- The first of these are government reports, which usually contain a large amount of reliable data on specific topics.
- The second is third party reports by professional companies, which usually cost a fair bit of money, but contain reliable, industry-specific information which you might not find elsewhere.
Legal factors tend to have a significant overlap with political elements in PESTLE analysis, but they broadly refer to the laws and regulations a business is required to adhere to. Examples include import as well as export laws or copyright laws.
The six categories of the PESTEL analysis give you a good idea of what kind of information to include in your analysis. It’s your job to make a decision on what data is relevant to the scope of your analysis. A good PESTEL analysis necessitates a good understanding of the organisation (which is something that you, as a marketer, should have). The more that you know about your business, the more relevant information you’ll choose for analysis.
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