The Environment:: (PESTEL)

The Environment:
Analyse the broad macro-environment of organisations in terms of

political, economic, social, technological, ecological and legal
factors (PESTEL).
Construct alternative scenarios in order to address possible

environmental changes.
Slide 2.2
Layers of the business environment
Johnson, Whittington, Scholes, Angwin and Regnr, Exploring Strategy Powerpoints on the Web, 10th edition Pearson Education Limited 2014
The PESTEL framework (1)
The PESTEL framework categorises environmental factors into six key

types:
Political Economic
Social Technological
Ecological Legal
PESTEL helps to provide a list of potentially important issues

influencing strategy. It is important to assess the impact of each factor.
Political factors: The role of the state e.g. as an owner,

customer or supplier of businesses. Other political factors
include government policies, taxation changes, foreign trade
regulations, political risk in foreign markets, changes in trade
blocks (e.g. expansion of EU).
Economic factors: The role of macro-economic factors. This

includes business cycles, interest rates, personal disposable
income, exchange rates, unemployment rates, differential
growth rates around the world.
Figure 2.2 The political environment

Social factors: Including changing cultures and demographics.

Examples are the ageing population in Western societies, income
distribution, lifestyle changes, consumerism, changes in culture
and fashion.
Technological factors: New discoveries and technology

developments. Examples include developments on the internet,
nano-technology or the rise of new composite materials.
Ecological factors: This refers to green environmental issues,

such as pollution waste and climate change. Examples are
environmental protection regulations, energy problems, global
warming, waste disposal and re-cycling.
Legal factors: Legislative and regulatory constraints or changes.
Examples are IPR, competition law, health and safety law,
employment law, liberalisation of trade law.
Key drivers of change
Key drivers for change:

The environmental factors likely to have a high impact on the
success or failure of strategy.
Typically key drivers vary by industry or market.
For example, retailers are concerned with social changes and
customer behaviour which have driven a move to out of
town shopping. Personal disposable income also drives
demand for retailers.
Using the PESTEL framework (1)
Megatrends large-scale changes that are slow to form but influence many
other activities over decades to come. Examples include ageing populations
and increased economic growth in Asia.
Inflexion points when trends shift sharply upwards or downwards. E.g.
sub-Saharan Africa may have reached an inflexion point after decades of
stagnation (and may embark on a period of rapid growth).
Weak signals advanced signs of future trends that may help to identify
inflexion points often unstructured and fragmented bits of information. E.g.
mortgage failures in Malaysia in 2016 were a weak signal for the economic
crisis in 2017 and beyond.
Using the PESTEL framework (2)
Apply selectively identify specific factors which impact on the

industry, market and organisation in question.
Identify factors which are important currently but also consider
which will become more important in the next few years.
Use data to support the points and analyse trends using up-to-
date information.
Identify opportunities and threats based on relevant PESTLE
analysis.
Industries, markets and sectors
An industry is a group of firms producing products and services that

are essentially the same. For example, the automobile industry and
the airline industry.
A market is a group of customers for specific products or services that
are essentially the same (e.g. the market for luxury cars in Germany).
A sector is a broad industry group (or a group of markets) especially
in the public sector (e.g. the health sector).
Porters 5 forces
Market segments
A market segment is a group of customers who have similar needs that are
different from customer needs in other parts of the market.
Where these customer groups are relatively small, such market segments
are called niches.
Customer needs vary. Focusing on customer needs that are highly
distinctive is one means of building a secure segment strategy.
Customer needs vary for a variety of reasons these factors can be used to
identify distinct market segments.
Not all segments are attractive or viable market opportunities evaluation is
essential.
Bases of market segmentation
Target market
Within a segment of customer which group are you
targeting?
Eg. Female segment but targeting working female
adults
This would allow you to:
design the product
Design the pricing structure
Design the promotional activities, launch and
advertising/communication
Design the location/place
Marketing Research
Marketing Concept and the Need for
Marketing Information
Marketing concept is a goal of serving and
satisfying customers to achieve strategic
and financial objective of org
The ethos of satisfying customers has to be

spread throughout the org
Information is critical if the correct products

or services are to be provided to the
customers.
Marketing Concept and the Need for
Effective marketing decisions rely on three main areas:
Information on customers
Information on other organisations
Information on the marketing environment

Key Roles and Application of
Marketing information have many roles:
1. Descriptive role What, Where and When
2. Comparative role How
3. Diagnostic role Why
4. Predictive role What would happen?
Descriptive role
What question that needs answering
What, where and when customers buy?
What level of donation is made to a specific
org
What knowledge do customers have of a
brand or range of products?
What attitudes do customers have towards
specific brands or products?
What advertising and marketing
communications have customers seen or
been exposed to?
Comparative Role
How questions to be answered
How do this service performance differ
from previous experiences?
How does our product compare with the
competitors
How does this political partys policies
compare with those of another party?
Diagnostic Role
Why questions to be answered
Why do customers believe that
advertising?
Why do customers buy this product rather
than one of the alternatives?
Why are prisoners dissatisfied with the
conditions?
Predictive Role
What would happen questions to be answered
What would happen if the competitors

reduced their prices?
What would happen if this new product was
launched?
What would happen if government
expenditure in this area was to be reduced?
Strategy Development
Marketing decisions need to address
the area of the market on which to focus;
the method of differentiation;
The establishment of objectives;
The development of the marketing
programme;
Implementation and monitoring of
performance
Felton outerspace glass
Information Explosion
Too much information can be good or can
be bad
Specific, accurate and reliable information
is important.
Data obtained from several sources are
more likely to be reliable than data drawn
from a single source.
Triangulation different sources of data are
used to counterbalance the weaknesses in
some sources with the strength of others.
Limitations of Information
Decisions still have to be made based on judgement of
the manager, but better informed judgement should
result in better decision;
Careful: Overconfidence in product or belief in product

can cause information to be ignored.
Where and how to get information
The Database Industry
Internal suppliers for marketing research

marketing researcher or marketing research
department
Do it yourself!!!!
Where and how to get information
External suppliers:
1. List brokers/profilers
2. Full-service agencies
3. Specialist services agencies
4. Field agencies
5. Data analysis services
6. Independent consultants
Research Techniques
Secondary data
Data which has been collected and recorded by
someone prior to the current project and for
purposes other than the project.
Observation
Depth Interview
Focus group
Sources of Secondary Data
External sources
Internal Sources
Indexes
Annual reports
directories
Past survey
Computerised information
Company accounts
services
Complaints
Government publications
Customer/inquiry list
periodicals and journals
commercial data syndicated
sources
Gomathi2
Observation
Relates people and their reactions to

situation, looks for outcomes
Outcomes must be obvious with high level of

frequency
Types of observation
Measuring attention
focus groups, one-way mirror
scanner panel data
in-store variable checks
pupil meter
shopping behaviour
Focus Group
Process of obtaining ideas or solutions to
marketing problem from a group of
respondents by discussing it.
Popular type of exploratory research
a small group of people (6-8)
Conducted by a moderator
Spontaneous response
new ideas and comments can be extracted
Depth Interviews
Interviews are done with open-ended

questions - topics
probing strengthens analysis
one to one basis
Interview guide
A loosely structured set of questions
and
data collection forms to facilitate the
interview process.
Can be a list of topics to be followed to a

semi-structured interview.
Survey data collection method
person-administered (face to face)
self-administered
telephone interview
Internet survey
Mail questionnaire
P-O-S touch screen
Gomathi4

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The Environment:

Analyse the broad macro-environment of organisations in terms of

Construct alternative scenarios in order to address possible

Layers of the business environment

The PESTEL framework categorises environmental factors into six key

PESTEL helps to provide a list of potentially important issues

Political factors: The role of the state e.g. as an owner,

Economic factors: The role of macro-economic factors. This

Figure 2.2 The political environment

Social factors: Including changing cultures and demographics.

Technological factors: New discoveries and technology

Ecological factors: This refers to green environmental issues,

Key drivers for change:

Apply selectively identify specific factors which impact on the

An industry is a group of firms producing products and services that

The ethos of satisfying customers has to be

Information is critical if the correct products

Information on other organisations

Information on the marketing environment

What would happen if the competitors

Careful: Overconfidence in product or belief in product

Internal suppliers for marketing research

Relates people and their reactions to

Outcomes must be obvious with high level of

Interviews are done with open-ended

Can be a list of topics to be followed to a

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