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 Governments position on Marketing Ethics Governments policy on the economy Governments 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.