PEST analysis (STEP in some sources) is a marketing technology that allows you to determine the aspects of the external environment that affect the company's activities. The analysis covers political, economic, social and technological spheres (Political, Economics, Social, Technological, respectively).
The role of PEST analysis in the modern world is great. It allows you to systematically look at a particular industry, assess the most important external threats and favorable factors, as well as provide redundant information about the company's development opportunities. Its use allows a much better assessment of the current position of the company, not only on the regional, but also on the national and even international market. PEST analysis is used both at the micro (individual products and categories) and at the macro level (competition, industry regulation).
Politics
Politics comes first for a reason. It is she who determines the specific environment for the formation and development of the company. She is also the main supplier of key resources for the success of the firm. In one minute, the state can not only stop the operation of the enterprise, but also completely get rid of the industry in the controlled market.
But these are extreme situations. Typically, PEST simply analyzes the current political situation, laws affecting operations, and other possible factors. For example, the entry of the country into some supranational structure.
Economy
Economics allows you to determine the ability of the firm based on the current situation in the markets of all levels. As a rule, the analysis is carried out not only for the domestic state of affairs, but also the position of the industry throughout the world is assessed. Most often this, of course, concerns high-tech areas of activity.
The economy also depends on the additional resources of the firm, which are often critical. It is not enough just to found a company, its existence must be constantly maintained, and for this it is necessary to permanently replenish the factors of production. Studying economics makes it possible to predict the most and least favorable situations for significant decisions.
In addition, based on the current state of affairs, one can draw a conclusion about the profitability of a particular product. This principle has found application in marketing. In particular, if the level of well-being of residents grows, then they are more inclined to buy expensive goods and vice versa. Thus, we can conclude about the launch of a project.
Society
Social factors determine the attitude of people to a particular product or service area. The analysis here is carried out simultaneously in many directions. For example, the basic values of the target audience are taken into account, the attitude to rest and work. Religious factors are also important.
The media are also not in the last place. Depending on how great their influence is on a particular market, it can be concluded about the effectiveness of promotional activities, the importance of press releases and the role of information for residents, etc. In addition, demographic changes are being studied. For example, the current growth in the birth rate, which has a beneficial effect on the children's goods market.
Technologies
Depending on the development of technology in the industry, it can be assumed that the company can develop. For example, if an enterprise uses outdated technologies, then their competitiveness is questioned. As a rule, three main indicators are assessed here: new products, new patents and the development of technology in general.
