To successfully achieve marketing goals, firms must use PESTLE analysis to assess the market conditions so that they can plan and strategize accordingly.
Marketing is a key aspect of a firm’s products and services. The right marketing strategy allows firms to achieve goals and gain a competitive advantage. Enterprises worldwide conduct various short-term and long-term analyses to assess their business environment. Marketing is a creative message to influence business sales by capturing the interest of your target audience.
Without extensive research and analysis, a marketing campaign cannot be successful. PESTLE analysis is broadly used by businesses. The analysis focuses more on external factors, which influence the business’ progress, hence making it more reliable. As the analysis is done from a macroeconomic perspective, it can be used for planning and strategizing, helping businesses chart a course for the future. The Political, Economic, Social, Technological, Legal and Environmental factors allow firms to get an extensive understanding of the trends.
To thoroughly understand the state of the market, it is important to follow the PESTLE analysis and implement it effectively.
Political Factors
The political factors act as barriers to entry and exit for the firm’s planning and strategies. The political environment is related to the current government of the country in which the firm is established. The favorable and unfavorable conditions of the country and political matters are important for the healthy operation of the business and its marketing campaign as well. Businesses have to create a good relationship with the government to ensure they are favored.
Political factors have an effect on businesses to a huge degree as any decisions made by governments regarding laws and policies will have an impact on the business. Political and government intervention is not viable for a firm and can hurt the business setup in the long run. Similarly, trade regulations imposed by the state might impact a company’s cost of labor and their ability to target an overseas market. There are also some legal factors to be taken into consideration, including labor laws, social obligations, and taxes.
Economic Factors
Marketing is directly tied with the economic factors. Firms will not be able to promote their product and service appropriately if the economy is not steady and progressing.
Inflation will definitely have an impact on the company, as it affects the purchasing power of the consumers and the cost of the raw materials being used. This means inflation has an effect on both demand and supply. Also, the investment might be difficult to attract in times of high inflation rates, as investors won’t be confident about getting a return. Therefore, inflation and other similar factors, such as exchange rate, interest rate, and rate of unemployment, can have a direct impact on the growth of the company. Also, in most cases, economic factors are intermingled with political factors.
Socio-Cultural Factors
A marketing strategy is deployed to understand and assess the society and culture of the market to which the firm is catering. The products and services should be according to the consumers’ cultures and ethics. The success of the services and products a business offers depends on the presence of a demand for them in the market. This is why assessing the local market is crucial before a business decides to introduce a new service or product. You should also look at the purchasing power of your target audience and their standard of living.
Social factors involve the trends of population, domestic markets, cultural trends and demographics. These factors aid businesses assess the market and develop their products/services accordingly. Firms have to use information related to their target audience, for which they need to analyze demographic aspects. These include age distribution and the local population growth rate, which enables them to determine the local market and the potential for growth.
Not to mention, businesses have to price their products according to the consumers’ purchasing power, and assessing the demographic aspects is crucial for that. Social factors vary from country to country so a firm’s international marketing strategy will not work in domestic markets.
Technological Factors
The impact of technology is enormous and multifaceted. Marketing strategies should spotlight on technological changes as technology strengthens the business structure. This analyzes the technology trends and advancements in a business environment, innovations and advancements lower barriers to entry plus decrease production levels, as it results in unemployment.
Businesses have to keep pace with the latest technologies and innovation in the market, as otherwise they will lose ground to their competitors. Not to mention, the tech-savvy consumers of today consider firms which are at pace with technological advancements more reliable.
Legal Factors
Legal factors are important when it comes to marketing because laws are to be followed and respected by the firm. This accounts for the regulations, audit and legal limitations of the firm as legal factors are barriers to entry plus firms are answerable to regulatory bodies if laws are not followed.
Legal policies regarding marketing rules and laws of safety and quality as well as consumer laws are barriers to firms when marketing products and services. Labor laws are important because they ensure the safety and rights of the employees. Legal factors can be altered if the firm has a good relationship with the regulatory bodies and government audit companies.
Environmental Factors
Firms cannot survive nor market effectively if their environment is not suitable or favorable. Environmental factors are not in control of the business and important for businesses involved in tourism, agriculture, and farming. Environmental factors impact the business environment because the decisions businesses take affect the surrounding. Firms need to be socially and environmentally responsible because it favors the goodwill and reputation of the business.
The location impacts the firm’s marketing plans since changes in climate plus consumers’ desire for a particular offering can be an issue. Geographical location, waste disposal laws, energy consumption regulation and people’s attitude towards the changing environment all affect the long-term planning of the business.
PESTLE analysis provides a vast study of the external and internal factors that pose a challenge to firms marketing strategy. PESTLE analysis works on the contingency plan a firm can implement to be successful, plus it points out the possible issues a firm can face when entering a new market. To successfully achieve marketing goals, firms must use PESTLE analysis to assess the market conditions so that they can plan and strategize accordingly.
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