PEST analysis (marketing environment)
- looking outside the company to get a feel for the marketing environment
Market research
· Political/Legal
· Economical, Competition, Infrastructure, Geographic,.
· Social/Cultural
· Technology / infrastructure
PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macroenvironmental factors used in environmental scanning. It is a part of the external analysis when doing market research and gives a certain overview of the different macroenvironmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.
It is also referred to as the STEP, STEEP, PESTEL, PESTLE or LEPEST (or Political, Economic, Socio-cultural, Technological, Legal, Environmental). Recently it was even further extended to STEEPLE and STEEPLED, including education and demographics.
- Political factors include areas such as tax policy, employment laws, environmental regulations, trade restrictions and tariffs and political stability.
- Economic factors are economic growth, interest rates, exchange rates and inflation rate.
- Social factors often look at the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety.
- Technological factors include ecological and environmental aspects and can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Technological factors look at elements such as R&D activity, automation, technology incentives and the rate of technological change.
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The PEST factors combined with external microenvironmental factors can be classified as opportunities and threats in a SWOT analysis. PEST/PESTLE alongside SWOT and SLEPT can be used as a basis for the analysis of business and environmental factors. [1]
External Links
PEST analysis method and examples from Businessballs.com
http://en.wikipedia.org/wiki/PEST_analysis
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