From time to time, questions come up in my inbox about specific models and analysis tools in marketing.
Personally, I think these tools can be great to have in mind for inspiration if you work in this field daily.
For those who have studied or are currently studying marketing, these analytical models are likely a mandatory part of the curriculum.
For those curious about learning more about classic tools used in marketing, these models will hopefully provide inspiration.
In this post, we’ll focus on the PESTEL analysis, which is used to examine external macro factors that can potentially impact a business, both positively and negatively.
The PESTEL analysis at a glance
The PESTEL analysis consists of a range of external macro factors that businesses can analyze to better understand their environment as a whole.
This tool is most commonly used by startups, both nationally and internationally, to gain insight into which factors require special attention when entering a new and unfamiliar market.
The components of the PESTEL model
PESTEL is an acronym for the factors the model seeks to analyze: Political, Economic, Social, Technological, Environmental, and Legal factors.
Political factors
Political factors encompass all political decisions that could potentially impact your business.
These might include the introduction of taxes and fees, which directly affect the market your business operates in.
Economic factors
Economic factors refer to market conditions like economic stability, inflation, growth rates, exchange rates, and more.
Social factors
Social factors cover prevailing societal trends, such as age and income distribution, lifestyle, values, career levels, and more.
In other words, these factors help define target groups for businesses.
Technological factors
The technological development of products and services is crucial to consider when launching a business domestically or internationally.
Is there a real opportunity within the market’s boundaries to produce your products innovatively and profitably? Or do you need to pivot your investments?
These are the types of questions typically arising from an analysis of technological factors.
Environmental factors
Environmental factors include sustainability, specific environmental policies, and, above all, environmental responsibility, which companies need to be particularly mindful of.
Legal factors
Legal factors are an essential aspect to consider when starting a business.
These include all legal regulations relevant to business operations, such as competition law, product liability, and consumer protection.
The PESTEL analysis is, as mentioned, used to assess external factors in a given market.
The analyses and conclusions derived from the PESTEL tool provide insights that help businesses make informed strategic decisions.
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