What is a PESTLE Analysis and how can it help?

What is a PESTLE Analysis?

So we have learned that Situation Analysis is the first step of the over-arching Marketing Process. One thought-provoking element of this is the PESTLE Analysis. You should sit down and consider the macro issues that are affecting or will affect your business sector.

But what is a PESTLE Analysis anyway?

PESTLE invites you to consider the Political, Economic, Social, Technological, Legal and Environmental issues, trends and changes that impact upon your sector and your ability to do business.

For example, if you want to sell your goods into politically unstable Market A, how do you propose to achieve that securely? Due to the economic downturn in Market B, might you need to down-spec the product, or reduce margin to maintain volume sales? You may first need to proof if your product is even socially acceptable in Market C, before you think about thriving there. How is the speed of technological advance impacting upon your R&D budget? How might you react to that legal change about to be introduced in key Market D? New environmental regulations in Market E might impact upon your packaging materials.

And so on.

What is a PESTLE Analysis
Factors in the Macro Environment to Consider

Let’s look at some real examples.

Some years ago, the Irish smoking ban was a legal event that impacted upon many businesses, among them aluminium fabrication enterprises that spotted an immediate need for outdoors wall-mounted ashtrays. Bingo.

The move to mobile has forced the introduction of responsive website designs. Web designers who don’t have any on offer? Bye bye.

The WEEE Directive meant electronic goods retailers suddenly had to put in place systems to take back hazardous substances in electrical and electronic equipment from consumers.

In the US recently, we’ve seen how non-compliance with that country’s EPA requirements on car emissions can have a potentially major impact on manufacturers in that sector…

PESTLE Analysis and You

PESTLE can be a slightly head-wrecking exercise and should not be attempted in one sitting. You won’t be able to take it all in. Rather, absorb what is going on in the markets that matter to you and build up a file on impacts, both current and potential. You can already see how this ties in with SWOT Analysis, also part of the first step of the Marketing Process.

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