What is a PESTEL analysis?

When creating strategic marketing plans for our larger clients, we often include a PESTEL analysis to complement a SWOT analysis. Our PESTEL analysis audits the external macro-environmental factors that affect a company’s marketing plan.

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What is a PESTEL analysis?

It’s an acronym (Political, Economic, Social, Technological, Environmental, Legal) for the factors beyond our control. It helps identify latent or future opportunities and threats that can be applied to SWOT.

What PESTEL factors may affect your supply and demand?

1. POLITICAL

-Political climate

-Tax policy

-Labor laws

-Environmental laws

-Trade restrictions

-Tariffs

2. ECONOMIC

-GDP/economic growth

-Exchange rates

-Inflation rate

-Interest rates

-Employment rate

If inflation rises, will profits be squeezed?

If interest rates rise, will the economy slow?

3. SOCIAL

-Cultural norms

-Health consciousness

-Population growth rate

-Age distribution

-Career attitudes

-Emphasis on safety

4. TECHNOLOGICAL

-Emerging & potential enablers/threats to your product

5. ENVIRONMENTAL

-Climate

-Pollution

-Natural resources

6. LEGAL – laws concerning:

-Consumer

-Antitrust

-Employment

-Health & safety

This analysis helps create and adjust marketing strategy, objectives, investment plans, and resource preparation. Additionally, a PESTEL analysis gives your business or organization a strong basis for ethics and accountability. By understanding all of these different factors, you are able to develop a business plan that more closely aligns with the macro-environment. The world is a very dynamic place with a lot of these things changing every single day and you want to make sure you are prepared and able to execute correctly.

Obviously, every industry is different so no two analyses will be exactly the same. However, the principle remains the same: those who are aware of their external environment are more likely to adapt strategically and reap the benefits of these changes. By using a thorough PESTEL analysis, we are able to form a smart marketing strategy that will complement the SWOT analysis as well, and put you in a position to succeed.

For even more information, check out this article about the reason to do a PESTEL analysis. Click here