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The Role of PEST Analysis in Marketing

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The average business owner associates ‘marketing’ with simply promoting a product/service and encouraging people to buy it. It’s a creative message to directly influence a sale using a variety of platforms and media. But this is a very simplistic, and one must say very outdated as well.

Marketing encompasses virtually everything that happens between the business and the customer, and it is the perfect blend of the interests of both parties. Marketing is innovation, using killer research and intuition to get inside the soul of the customer to develop a product that perfectly his/her needs. This is the business model that always works.

Take Steve Jobs as an example.  Do you think that Apple Inc. would have been so successful if it mass produced generic smartphones and tablets and hired the most prestigious ad agency in America to promote them? Maybe, but if it were that easy, we would have many Apple Inc’s on the market instead of just one. But what makes this company stand out is its ability to identify a niche, developing products that niche would happily buy and then using relevant promotion, packaging, pricing, and distribution to ‘close the sale’.

But this article is not about marketing. Such a lengthy introduction was necessary though, for there are many business concepts, tools, and strategies that as relevant to marketing as any other aspect of your organization. The case in point is what we call PEST analysis.

A Brief Definition

PEST analysis is a market analysis tool that takes external factors that can affect a business into account (read also a more descriptive PEST analysis definition). Here is a summation of these major factors:

Politics

As governments intervene in the economy, businesses are bound to be affected. Indeed, employment policies, tax laws, trade restrictions can impact your business directly and indirectly, along with political stability and how foreign markets operate.

Economic

This is easy to understand. Macro and micro-economical economic factors such as interest rates, exchanges rates, inflation, and disposable incomes influence how you will manage your business at present and in the long run.

Social

This has to do with the beliefs and culture of the society you are operating in. Population trends, dietary considerations, ethics and media, and spend habits are some of the factors that come under social considerations that you need to observe in your business activity.

Technological

Finally, businesses also have to deal with production, distribution, and communication changes imposed by new technology in order to stay afloat in a competitive economic landscape.

Note that in other versions of the PEST analysis (PESTLE analysis for example), environment and legal factors are also taken into account. So how important is PEST Analysis in marketing?

PEST Analysis in Marketing

While PEST only takes external factors into account, it offers crucial contributions to a company’s marketing efforts (i.e. if we believe marketing to encompass virtually everything that happens between the business and the customer).

For example, if you do not take social factors into account, you can lose sales, face legal issues, and worse still, offend your customers. A case in point is Pepsi. When the global brand opened shop in China, they used the Slogan ‘Pepsi brings you back to life’ which actually translated to ‘Pepsi brings your ancestors back from the grave’!

Not to mention, if you fail to use modern digital marketing techniques (such as mobile optimization and whiteboard animation), you will lose a hefty part of your clients to competitors.

These are some of the ways in which PEST analysis helps your marketing strategy and efforts.

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