STEEP Analysis

STEEP Analysis Example of Pepsico

Many different companies around the globe rely on STEEP analysis for their brands. Their common goal is to either determine strategies for the future or to comprehend the market before launching new brands. STEEP analysis has become an essential tool for market planning and strategizing.

You should carry out this analysis to gain better understanding not only market trends, but also the systematic risks involved.

STEEP analysis provides concentrated information that covers various aspects of Social, Technological, Economic, Ecological and Political factors of a business environment.  It basically creates a snapshot of today’s socio-political reality and the existing trends.

The analysis will give you an overview of the overall situation your firm might be in because of a specific decision.

Many even describe this elaborate analysis as a bird’s eye view of the stimulus, and the situations that surround trade and business. Gaining insight into what is going on at any one moment will help you to visualize all the needs, roles and relationships amid future consumers and suppliers.

STEEP, like you might already know, is an acronym in which each of the letters denotes certain factors to be explored. All of these factors can affect the market in numerous ways and change the way strategies are made. In STEEP, S stands for social factors, T is for all the technological aspects, E stands for economic factors, the second E accounts for the ecological aspects while the P stands for Political factors.

All big and small organizations realize the benefits of this analysis and try to conduct STEEP analysis. Today, I am discussing a real life STEEP analysis example of a leading company.

STEEP analysis over the brands for beverages giant PepsiCo

[quote_box_left]Recommended: PESTLE analysis of PepsiCo.[/quote_box_left]

After its rival Coca-Cola, PepsiCo is the largest selling beverage internationally. In 2011, sales of this brand accounted for around 37% share of the global beverage market. As a result, the company felt the need to study and understand every country’s market by conducting STEEP analysis. The aim was to maintain the market position.

No one will disagree that Pepsi is a big brand. At the time of analysis, it was at the 23rd spot in the Interbrand’s report for the World’s Leading Brands. The beverage’s advertisements feature famous celebrities and athletes. Past ads have flaunted stars like David Beckham, Britney Spears, Robbie Williams and Michael Jackson.

You might have noticed that Pepsi’s market reach is also quite diverse. From the US to New Zealand, you can find Pepsi in almost every country.

Below, I have provided a STEEP analysis example for the firm, with a detailed explanation for all 5 factors:

Social

It was found upon analysis that social factors impact Pepsi greatly.

I believe the main reason is that Pepsi is a non-alcoholic beverage, which has to maintain the strict and stark differences in cultures around the globe. Pepsi must communicate its image as a global brand in order to change people’s perception. The company expects consumers to be able to think of the drink as something that connects the world together.

Most often, the social implications are visible in marketing campaigns. A good example would be featuring religious festivals in TVC ads. Therefore, Pepsi has to keep in line with all of those festivals if the team wants to understand the essence of their market. Analyzing the social factor would help cash upon the opportunity.

Technological

As the technology is advancing with passing time, big and small companies feel the pressure to completely integrate themselves with the recent changes. Social Media is a very recent yet viral trend that every business is turning toward. The social media blast has increased interactive engagement with the customers and offers real time results too.

So, Pepsi has to make attempts to stay ahead of all such developments. It is essential to give importance to how today’s youth is utilizing technology for their benefit and how Pepsi can reach them to continue increasing brand engagement and brand recall.

Economic

As you are aware, the economic downturn plagued the economy and companies had to completely restructure their marketing and sales campaigns. The reduced profits led them to downsize internally and reconsider about how they should penetrate the market.

I think economic conditions influence the business most, regardless of what kind of business it is. I would say in Pepsi’s favor that when the economic downturn started in 2008, it resulted in increased sales for the company. This is because people started spending more time with friends and family, or at home, when they got laid off from jobs.

Ecological

Ecological factors might affect Pepsi, but it will not have any immense toll on its trade and profit generation. Ecological factors usually affect agricultural businesses more directly.

Political

As I mentioned previously, Pepsi is a non-alcoholic beverage and so the FDA regulates it. Pepsi is expected to maintain a firm standard of the laws that the FDA sets with consistency. Many different markets across the world follow different set of regulations, which are either relaxed or severe.

Pepsi’s competitors like Coca-Cola presents competitive pricing and this is a factor, which the firm should keep in mind all the time. The political scenario is very important because there can be certain civil disturbance in some markets. Another reason could be fall in sales due to inflation. The most important element of all is that cross-border situations are extremely different.  As a result, Pepsi has to stay in line with all changes and policies in order to adapt to them accordingly.

Image “Pepsi bottle” by Håkan Dahlström is licensed under CC BY 2.0

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