Session On Pest Analysis

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.