Formulation of Systemic PEST Analysis †Free Samples to Students

Question: Discuss about the Formulation of Systemic PEST Analysis. Answer: Introduction Marketing is one of the most important functions of any organization. It helps companies understand who are their customers, what their needs are, how those needs can be satisfied, how to reach these customers and lastly how to manage customer feedback. This is the reason organizations invest so heavily in their marketing management. This report throws light on four marketing strategies and how companies make use of them by industry examples. PESTLE is an analysis tool used by marketing managers to evaluate the macro marketing environment before introducing a new product or service. It throws light on the political, socio-cultural, environmental, legal, economic and technological aspect of the industry. This gives them an idea about the environment and helps organizations decide on the feasibility and sustainability of their product (Ho, 2014). For example, the company Stylerunner is an Australian based startup established in 2012. Stylerunner has created a niche by selling active wear to women. Until now it was presumed that active wear cannot be fashionable. But Stylerunner is slowly changing that mindset and people are investing on clothes that they will sweat into. This is a perfect example of an entirely new product. Let us see how they have used PESTLE analysis before entering the market. Political: Australia is a liberal-capitalistic democracy therefore the interference of government is not very high. Australia levies a corporate tax of 30% which is higher than most G7 countries (Trading Economics, 2017). However, Australia has provided Stylerunner with world class infrastructure and efficient communication systems in place. Environmental: Environmentally Australia is making a lot of changes by switching to renewable sources of energy which is great for business. In fact, Australia is a net exporter of energy resources. Social: Socially Australians are moving towards a healthier lifestyle which makes the market for Stylerunner very attractive. High level of education among individuals is also helping them adopt to changes and accepting active wear as fashionable. The average age of Australians is not very high and hence the youth can be targeted for selling active wear. Technological: Technologically the Australians are way advanced. Over 70% people own a smartphone and 40% of people prefer shopping online. This provides for a great platform for launching Stylerunner online or as a mobile application. The entire country is well connected with the use of internet and hence technologically it is a perfect platform to promote, sell and target customers. Legal: Three major taxes levied are Corporate Tax, GST and Capital gains tax. The procedure of opening a new business in Australia is simple. Australia ranks 10th in the world in terms of ease of doing business. This makes Australia an attractive destination for starting a new business. Economic: Australia is the largest capitalist economies in the world. Demographically Australia is a perfect market for Stylerunner active wear. The interest rate is at an all-time low of 1.5% which makes it cheaper to borrow money from the banks (RBA, 2017). Ease of doing business and contained inflation are other attractive factors for Stylerunner. Although the retail sales have shown a slight decline in the recent years, the growth is expected to pick up especially for a niche segment like active clothing. SWOT analysis is a tool used by marketers to understand the internal and external environment of any already existing business (Hollensen, 2015). It throws light on the strengths, weaknesses, opportunities and threats of any company. The strengths and weaknesses are for internal analysis and understanding the details of the company better whereas the opportunities and threats are for external environment and understanding the industry better. For example Aldi discount Stores SWOT is as below: Strengths: One of the biggest strengths upon which Aldi positions itself is its low prices and its fast check out process that saves time of customers. Aldi discount stores places various barcodes on a single product and claims to be 40% more faster than other retail stores in the industry. Weaknesses: In order to maintain low cost and fast speed, Aldi offers very less variety of brands for customers to choose from. There are not more than two brands of the same product line. Opportunities: Tying up with E-commerce websites especially in this global era of technology is a big opportunity for retail stores. Starting membership cards for consumers and offering further membership discounts and bonuses can help attract more customers leading to an enlarged customer base. Threats: Retail industry in Australia is a heavily competitive market. There are various big players like Coles and Woolworths and they have a high market share and brand presence. Segmentation, Targeting Positioning STP is a tool used by marketers in order to analyze the industry. It is predominantly used for customer profiling. This is important because it helps companies divide the entire region into simpler and well defined segments and help understand the needs of customers of that particular segments. This helps organizations understand a need gap and fill that gap by delivering products that are required by the consumers. The best example for this is McDonalds Australia who is clear about its customers in every country and exactly offers them what they need. Segmentation: Segmentation refers to dividing the market into segments as per the needs of the consumers (Pike, 2014). McDonalds divides its market as below: Demographic Segmentation: Considering demographics, McDonalds should segment the market into various age groups, working and non-working professionals, income groups and gender. Psychographic Segmentation: Psychographic segmentation is done on the basis of consumer lifestyle, eating habits, religious beliefs and spending patterns. Targeting: Once the Segments have been defined, Targeting helps in understanding which particular customers need to be targeted in that segment. Demographic: McDonalds targets school and college students looking for low priced snack option. Another target market involves office goers who are looking for a quick and convenient breakfast option. Psychographic: People are not very health conscious and believe in a convenient lifestyle are targeted. Positioning: Positioning is the image in the minds of the consumers about the product (Armstrong, 2015). McDonalds has positioned itself as a low price, quick and convenient snack station meant to satisfy small hunger pangs. Moral principles guiding the product and its marketing are simply marketing ethics. Every organization must ensure that the product and its marketing is ethically correct and not offensive to any social, cultural or political group (Eagle, 2015). Marlboro marketing campaign Dont be a maybe, be a Marlboro had pictures of youngsters smoking which led to various anti-tobacco campaigns across the globe. This campaign was introduced in 50 countries with posters showing youngsters acting radical, adventurous and decisive ways. This kind of marketing is ethically wrong as it is promoting bad habits among youngsters. While creating marketing strategies, marketers must keep in mind the effects of such marketing upon society. References Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015.Marketing: an introduction. Pearson Education. Eagle, L. and Dahl, S. eds., 2015.Marketing Ethics Society. Sage. Ho, J.K.K., 2014. Formulation of a systemic PEST analysis for strategic analysis.European academic research,2(5), pp.6478-6492. Hollensen, S., 2015.Marketing management: A relationship approach. Pearson Education. Pike, S. and Page, S.J., 2014. Destination Marketing Organizations and destination marketing: A narrative analysis of the literature.Tourism management,41, pp.202-227. Reserve Bank of Australia, 2017, Interest rate decisions 2017, https://www.rba.gov.au/monetary-policy/int-rate-decisions/2017/, retrieved on 8 October, 2017. Trading Economics, 2017, Australian corporate tax, https://tradingeconomics.com/australia/corporate-tax-rate, retrieved on 8 October, 2017