PESTLE Analysis
A PESTLE analysis is a useful tool to get a clearer picture of the external environment of a business as part of the planning process for a marketing campaign. It provides a framework for the following features to be considered:
P(olitical)
External forces arising from the Government and local, devolved and political structures including pressure groups. Different political parties have different priorities so the party in power, and its policies, can make a difference to business marketing activities.
E(conomic)
External forces arising from the state of the economy. If the economy is prosperous businesses will also benefit, but when the economy is weak the opposite can be true. The state of the economy can have an effect on people’s ability to buy goods; for example, when the economy is performing poorly people may stop buying luxury goods such as holidays, new cars and meals in restaurants. This has an impact on businesses that provide these types of goods.
S(ocial)
External forces that arise from the shape and characteristics of society. Changes in society can be significant when making business decisions.
Wales, for example, has regions where a high number of houses are holiday homes. This changes the demographics of the region during the year. In summer, holiday homes are likely to be full but in winter, visitors may be few and far between. A business looking to set up or sell in the area would need to be aware of this.
T(echnological)
Characteristics with a technological basis. The technological background is significant for some businesses, such as in the information technology industry, the medical industry, the alternative energy industry. As technology develops and changes it opens up new opportunities, such as the market for electric cars.
Developments in artificial intelligence and augmented reality could have a major impact on the marketing industry.
L(egal)
Businesses are affected by legislation and regulations drawn up by the UK and Welsh Governments.
Changes in legislation can have an impact on how a business can market its goods.
For example, the UK Government has drawn up legislation that prohibits the advertising of foods high in sugar and fat between 5.30 pm and 9.00 pm from 2025 onwards. This will clearly be a threat to companies that sell sweets, chocolate, fast food etc.
The Welsh Government has changed the speed limit in residential areas to 20 mph. This can be a potential threat to some businesses but a potential opportunity to others.
Watch this video, which is available in Welsh, on the BBC Cymru Fyw website:
Which businesses are likely to be negatively affected by the policy?
Are there opportunities for businesses that manufacture bikes/scooters or other businesses?
E(nvironmental)
Environmental forces that affect business such as energy choices, pollution, the impact of weather, climate change etc. Environmental considerations can create barriers or opportunities for businesses. For example, concern about too much plastic has led to some businesses changing their packaging material. Customers are also moving away from single-use plastic goods. This is something that businesses like Ecoslurps from Cardiff have been able to benefit from:
Follow the link to read more about PESTLE analysis on the Porth website: