PESTEL Analysis_Supporting Literati Re

8/8/2019 PESTEL Analysis_Supporting Literati Re

1/6

www.imis.ac.in

Prof. Suvendu Kr. Pratihari Go to Marketing Audit

Page

1

PESTEL Analysis- Prof. Suvendu Kr. Pratihari

1. PoliticalA. Taxation:

a. When the taxation decreases, this will lead to increase in the disposableincome (gross income minus income tax on that income). When the

normal individual's disposable income increase, this will results in

increasing the buying power, which means the individuals are becoming

more able to buy things and facilities, so you have a good chance to make

a profit from selling your product to that country (which has a

good buying power).

B. Protection of the Environment:a. Are you going to manufacture a product which could harm the

environment?b. If you are going to harm the environment in small extent, you should

know that there is are tax and penalties from the government for the

environmental damage you make. Also you should select the place of your

factory, if your company is going to build a factory that manufacture your

product, then choose a region that is close to factories environmental

areas and try to be away from the main populations.

c. Do you have manufacturing wastes that could harm the environment? Youshould consider this issue well, because there are millions of dollars could

be spent on making products, developing factories which its wastes are

less harmful to the environment and human health. And by the way this

will get you a profit on long term and you will have a good corporatesocial responsibility (CSR) towards society, environmental groups, and

pressure groups, legal and regulatory authorities in your country.

C. Environmental lawa. What about the hiring and firing costs in the country that you are going to

market your products in?

b. Are employees in your country having instability in their job? Do theyhave stability with their job?

c. You should know how much the normal cost that you are going topurchase to your employees (if you are going to make new companies) or

your employees (are they satisfied with their salaries), what about the

compensation and benefit schemes? Do you have a good compensationand benefit scheme to your employees (because the normal people of your

country are stable at their job)?

D. Health and safetya. You should know that your product has the highest safety profile and

minimum hazard on consumers' health. Also you need to read and apply

the 'Consumer Safety Act 1974'.

E. Foreign Trade Agreement
http://en.wikipedia.org/wiki/Gross_incomehttp://en.wikipedia.org/wiki/Income_taxhttp://www.howtobeamarketer.com/articles/marketing-planning-introduction/what-is-corporate-social-responsibility-csrhttp://www.howtobeamarketer.com/articles/marketing-planning-introduction/what-is-corporate-social-responsibility-csrhttp://www.howtobeamarketer.com/articles/marketing-planning-introduction/what-is-consumerism-in-marketinghttp://www.howtobeamarketer.com/articles/marketing-planning-introduction/what-is-consumerism-in-marketinghttp://www.howtobeamarketer.com/articles/marketing-planning-introduction/what-is-corporate-social-responsibility-csrhttp://www.howtobeamarketer.com/articles/marketing-planning-introduction/what-is-corporate-social-responsibility-csrhttp://en.wikipedia.org/wiki/Income_taxhttp://en.wikipedia.org/wiki/Gross_income


2/6

www.imis.ac.in


Page

2

a. The Foreign Trade Agreement (FTA) gives the companies that are fromforeign countries to penetrate your country market and marketing their

products there. So you should know if the Foreign Trade Agreement

(FTA) applied in your country or not.

b. If the no. of imported products (that comes from the foreign countries)decrease, that will help you to establish your product in the market (if yourproduct is newly starting its business in that market).

F. Stability of the Political Systema. You should know and study the political stability of the country that you

will market you products in. This issue affects your long term investment

of your products; also it gives you indication about the duration that you

should spend in marketing your products in that country.

2. EconomicA.

Inflation Ratea. The inflation rate is affecting the Purchasing Power in each country, which

affects the ability of the consumers to buy, that affecting your chance of

making profit and hinder any new entrants in the market.

b. When the inflation rate increase, the purchasing power decrease, andthe disposable income decrease then chance of making profits of your

product decreases.

B. Interest Ratea. Increasing the interest rate will be decrease the purchasing power of the

consumers, which affect their ability to buy your products.

C. Income Levela. The income levels of the country you are going to market your product in,

is determine the pricing strategy of your products or services. This will

indicate if the people in that country are being able to purchase your

products or not.

D. Resource of Countrya. Increasing country resources are affecting organizations and companies to

release new product, also this is telling you which are the industries that

you need to invest your money in.

E. GNP (Gross national Product) and GDP (Gross Domestic Product)a. Gross domestic product (GDP) is defined as the "value of all final goods

and services produced in a country in one year". On the other hand, gross

national product (GNP) is defined as the "value of all (final) goods and

services produced in a country in one year, plus income earned by its

citizens abroad, minus income earned by foreigners in the country"

F. Employment LevelG. Exchange rate-Currency ValuationH. Consumer Spending Pattern

3. Social
http://www.howtobeamarketer.com/articles/marketing-mix/5-price/59-what-are-pricing-strategies-in-marketing-mixhttp://www.howtobeamarketer.com/articles/marketing-mix/5-price/59-what-are-pricing-strategies-in-marketing-mix


3/6

www.imis.ac.in


Page

3

To know about the social factors affecting the business environment in the target

market, it is needed to understand the social contribution of the consumers in country

being planed to market product in.

Given below different types of social factors that affect the business environment in

the marketing plan:

A.

DemographyB. SocietyC. Culture

a. Languageb. Religionc. Valuesd. Attitudese. Healthcaref. Educationg. Occupationh. Social organizationi.

Any other cultural factorTo study each social factor affecting business environment in the marketing plan

in a effective manner, it is needed to collect all of the data you need to customize

your product to them, it has to be selected the your way of communication that match

their language, develop a product that is not contradictory to their religion and values,

create a product that match their real needs. Each age' needs, for each sex's needs has

to be considered.

4. TechnologicalThe technological factors affecting business environment in marketing planning

includes the entry of new technologies either in Products or Processes or both.

i. Productsa. Improvement in the current products

Technical improvement of the current products means the creation or the

development of new technology that related to the product usage.

b. Products outdated or obsoleteExample: transformation from the old camera films to the digital cameras

c. Change in usage patternE.g. when people or organizations were looking for files or documents

transfers, they were communicating by the courier companies which were

costly and times consuming. But with the new technologies as internet, the

people found it easily to communicate by e-mails and sending their files

through different Microsoft office formats and PDF format.

ii. Processesa. EPOS (Electronic Points of Sales)

i. EPOS (electronic points of sales) is a smart technology that had enabledreaching impressive improvements in Shops (food, fashion,

computersetc) its a system that discovers what the consumer like andgives the marketers valuable information about the consumer needs.


4/6

www.imis.ac.in


Page

4

ii. EPOS (electronic points of sales) is a system that put on cashier system,which record all of the products for each consumer. When the

marketers start to analyze that system, they found some common needs

between consumers; like they found all of the consumers who like to buy

pampers, buy peers too. So the marketers make a special offers for thosesegment who buy twelve pampers packs take a peer for free.

iii. The EPOS (electronic points of sales) includes loyalty cards distributed forthe consumers, so they fill their personal information in those cards, the

marketers analyze the buying behavior of those consumers, their ages, sex,

income levels, personal interests, geographic locations of the

consumersetc.

iv. So if the system discovers that there is a big segment of the pregnantwomen, this helps the marketers to develop a new partition in the market

for the infants (after 2 or months) so those consumers will buy theseproducts.

b. Internet based supply chainIt's a system that makes the balance between the stock and the new orders for

the Shops.

e.g. if you go to VIRGIN megastores, you will find that every book bought are

recorded on the system (Internet based supply chain) and if the stock reached

a specific levels (e.g. 2 or 3 books) it will automatically request a new

quantities for backup (Extranet system).

The previous system found in books stores, mobile shops, hypermarkets,

computer shops and many shops of different categories.

c. Outsourcingi. What is the outsourcing?

The company A makes a contract with another company (Company B) to

conduct its business. Company B is recruiting their own employees, and

work for company A as outsourcing company to promote their products

and services to selected target segments.

ii. Why organizations need outsourcing?As it is found in the Political factors affecting business environment in

marketing plan, in Employment law, you will find a high cost spent on the

hiring, firing, and compensations. So Organizations are looking for

2nd

organizations that didn't belong to the employment law of the country

(which the 1storganizations exists in) and also their salaries, hiring and

firing costs are profitable for the 1st

companies also.

For example:


5/6

www.imis.ac.in


Page

5

VODAFONE telecommunication company wants to open a new branch

for it in Australia to handle the customer needs there (as Customer Service

department). VODAFONE will spend millions in the hiring, firing and

paying compensations for their employees in Australia. So they make a

deal with other companies like India telecommunication companies or any

other companies in the Middle East, and recruiting employees who havethe same capabilities of Australian employees and matching the same

standard of skills of those employees. VODAFONE may pay thousands

instead of millions by the idea of outsourcing.

5. EnvironmentalThe environmental aspect ofPESTEL is very important for the marketers. One

should understand the environment of the country that your product will be released

in and the effect of the weather on the industry, agriculture and on human health.

Environmental factors includes the effect of the weather on three factors; industry,

agriculture and on human health.

A. Effect of the weather:More hot days, more frequent heat waves.

More frequent heavy participation, intense tropical cyclone activity.

More areas affected by drought.

Rise in the sea levels.

B. The impact of the weather on:On industry, human settlements and society

On agriculture, forestry, ecosystems, and water

On human health

At the time of the study of the environmental factor well, it has to be considered how

to create or develop a product that match the environmental aspect of your country, or

may be find a solution that make your product persistent for many environmental

factors that other products suffers from. Also you should assess the environmental

threats to predict the actions you will take before they could happen.

So any environmental threat could happen, should be analyzed from its probability of

occurrence (high or low) and its impact on your business (high or low).

6. LegalThere are two types of legal factors that are affecting the business environmentof the marketing plan:

a. Legal factors affected by industry:Each industry has its own code of ethics and code of conducts to make an

established rules, policies and regulations in business ethics. Most -if not all- of

the companies are asked to sign on code of ethics.

b. Legal factors affected by environment:


6/6

www.imis.ac.in


Page

6

As; laws, legislations, and regulations from the government, environmental

groups, and pressure groups that are affecting your business and companies

should follow those laws and regulations, otherwise penalties would be imposed.

There are also many factors that could affect the Legal aspects of the external audit

i. Monopolies and mergersii. Competitive activitiesiii. Unfair tradingiv. Consumer legislationv. Trade descriptionsvi. Health & Safetyvii.Professional Code of Conducts

Source for Data:http://www.icmrindia.org

http://www.euromonitor.com

http://www.mckinsey.com

https://www.cia.gov
http://www.icmrindia.org/http://www.euromonitor.com/http://www.mckinsey.com/https://www.cia.gov/https://www.cia.gov/http://www.mckinsey.com/http://www.euromonitor.com/http://www.icmrindia.org/

PESTEL Analysis_Supporting Literati Re

Documents

Transcript of PESTEL Analysis_Supporting Literati Re