Session on PEST Analysis Presenter: Prof. K. T. Rengamani VIT Business School
What is PEST Analysis?• This analysis is essential for an organization before beginning its marketing process• Consists of internal environment and external environment
Break up of PEST• Political Factors• Economic Factors• Socio Cultural Factors• Technological Factors
Political Factors• This is the most important influence on the regulation of any business. – How stable is the political environment? – Influence the Government Policy / Law on your business – Government’s position on Marketing Ethics – Government’s policy on the economy – Government’s view on culture under religion
Political Factors - Contd. – Political System is responsible for Law Making. – Immediate laws which affect any business in general are Central Excise, Sales Tax/ VAT, Corporate Income Tax, Personal Income Tax & Service Tax – Environmental Protection Law – Controls if any on Marketing Strategies • Like Marketing / Advertising of Cigarettes, Tobacco, Alcohol etc.
Political Factors - Contd..• Control on Pricing – like sugar, drugs etc.• Government Policies on the Economy – Role of Public Sector – Role of Private Sector – Role of Joint Sector
Economic Factors• Government outlook towards – Bank Financing – Interest Rates – Exchange Rate Mechanism – Incentives for Exports – Restrictions for Imports – Inflation – Labour Policies
Economic Factors - Contd.• Level of Government Spending• Avenues for Capital Creation – Size of the Capital Market – Role of the Regulator – Type of the Instruments – Nature of the Investors
Economic Factors - Contd.• Business Cycles• Monsoon• Energy Availability• Cost of Energy
Socio-Cultural Factors• Demographics• Distribution of Income• Social Mobility• Life Style Changes• Consumerism• Educational Levels
Socio-Cultural Factors - Contd.• Demographics & Distribution of Income – Division of population - Male / Female – Age Group of the Population – Disposable Family Income • Disposable Income in the hands of the different Age Groups • Education Level of the Age Groups
Social Cultural Factors - Contd.• Life Style Changes & Consumerism – Attitude to living • Different Age Groups • In tune with available disposable income • Thrust on taking care of present needs by spending than saving for the future. • Joint living and nuclear families • Availability of various media tools • Reach of the media to the population
Technological Factors• Advantage of Technology – In terms of Economies of Scale• New Discoveries & Innovations• Speed & Cost of Technology Transfer• Rate of Obsolescence
Other Factors• Judicial System• Insurance System• Banking System• Regulatory System• Infra Structure – Communication – Transportation
Role of PEST• Helps Assess the market including Competitors from the stand point of a Particular Business.• PEST is relevant for any type of Business large, small & medium.