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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.

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