Session on PEST AnalysisSession on PEST Analysis

Presenter: Prof. K. T. Rengamani

VIT Business School

What is PEST Analysis?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 PESTBreak up of PEST

• Political Factors

• Economic Factors

• Socio Cultural Factors

• Technological Factors

Political FactorsPolitical 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 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..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 FactorsEconomic Factors

• Government outlook towards – Bank Financing – Interest Rates– Exchange Rate Mechanism– Incentives for Exports– Restrictions for Imports– Inflation – Labour Policies

Economic Factors - Contd.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.Economic Factors - Contd.

• Business Cycles

• Monsoon

• Energy Availability

• Cost of Energy

Socio-Cultural FactorsSocio-Cultural Factors

• Demographics

• Distribution of Income

• Social Mobility

• Life Style Changes

• Consumerism

• Educational Levels

Socio-Cultural Factors - Contd.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.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

• Advantage of Technology– In terms of Economies of Scale

• New Discoveries & Innovations

• Speed & Cost of Technology Transfer

• Rate of Obsolescence

Technological FactorsTechnological Factors

Other FactorsOther Factors

• Judicial System

• Insurance System

• Banking System

• Regulatory System

• Infra Structure – Communication– Transportation

Role of PESTRole 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.