PEST Analysis

Environmental Change

Why did
Dinosaurs
extinct?
 Environmental Change

It could not adapt

itself to the
changing
environment
 Environmental Change

It is not the strongest of the species that

survive, nor the most intelligent, but the
one most responsive to change. 
-Charles Darwin
 Environmental Change
Adapt or Die
 Environmental Change
Another example of failure : Kodak
• Founded in 1880, known for its pioneering technology & innovative marketing.
• It built one of the first digital cameras in 1975
• Until 1990s it was rated one of the world's five most valuable brands.
• In 1988, Kodak employed over 145,000 workers worldwide

Why did it failed?

 Kodak: Failure

• It became myopic
• It became product- centric
• Resistance to change
• Underestimated threat digital
technology revolution
 The External Environment
• Unless product managers understand the external environment,
the firm cannot intelligently plan for the future.

Environmental Management is…

when a company implements strategies

that attempt to shape the external
environment within which it operates.
 General Environment
• General environment/ Macro
• the economy and the technological, sociocultural, and political/legal trends that indirectly
affect all organizations
• Firm cannot control it

• Specific environment/ Micro

• unique to a firm’s industry
• directly affects the way its conducts daily business
• Firm can control it
 Environmental change
All firms compete within the same macro-environment.

The nature of this environment is determined by

a wide variety of factors usually summarised as:

• Political and legal

• Economic
• Social
• Technological

Hence, PEST analysis

General and Specific Environment
Social Factors

Describe the
social factors
that affect
marketing
Social Factors
Attitudes
Attitudes

Values
Values

Lifestyle
Lifestyle
 Social Factors
Social
SocialFactors
FactorsInfluence:
Influence:

Products
Products purchased
purchased

Prices
Prices paid
paid for
for products
products

Effectiveness
Effectiveness of
of promotions
promotions

How,
How, where,
where, and
and when
when people
people purchase
purchase
 Component Lifestyles
The practice of choosing goods and
services that meet one’s diverse needs
and interests rather than conforming to
a single, traditional lifestyle.
•Changingrole of families and
working women
 Demographic Factors
People are the basis for any market
• Demographic characteristics relate to buyer
behavior
• Demographic cohorts have their own
needs, values, and consumption patterns
• The study of people’s vital statistics, such as
age, income, education, marital status, gender
Economic Factors

Identify consumer and

marketer reactions to the
state of the economy
Economic Factors
Consumers’
Income

Purchasing
Power

Inflation

Recession
Technological Factors

Identify the impact of

technology on a firm
Political and Legal Factors

Discuss the political and

legal environment
Competitive Factors

Explain the basics

of foreign and domestic
competition
Competitive Factors

How many competitors?

Control
How big are competitors?

How interdependent is
the industry?
Competitive Factors
Competition for Market
Share
and Profits
• Firms must work harder to
maintain profits and
market share.
Global Competition
• More foreign firms
are entering Indian
market.
• Foreign firms in India
now understand and
adapt to Indian
consumer needs.
Environmental Factors

Identify the impact of

environmental factors
on a firm