PESTEL analysis is an acronym for a tool used to identify the macro (external) forces facing an

organisation.

Disadvantages:

Some PESTLE analysis users oversimplify the amount of data used for decisions – it's easy to use
insufficient data.

The risk of capturing too much data may lead to 'paralysis by analysis'.

The data used may be based on assumptions that later prove to be unfounded.

The ‘PESTEL’ framework is one of the most commonly used frameworks for problem-solving. The
different elements of the framework are as follows:

Political - This relates to factors such as the political system, the strength of the government and the
opposition, the government's outlook and how it influences the economy.

Economic - This relates to factors that affect the economic prosperity and well-being of all constituents,
including a nation, its citizens and its corporates.

Social - This relates to factors that affect the social fabric of all constituents, including a nation, its
citizens and its corporate entities. It includes factors such as demographics, cultural norms, attitudes
among others.

Technological - This relates to attributes that affect the adoption of technology to drive nation-building,
corporate environments as well as people's lives.

Environmental - This relates to ecological, environmental and sustainability aspects such as weather,
climate, and local topology that can deeply impact businesses, customers and citizens.

Legal - This relates to the aspects of legality that can impact greatly how businesses can operate, the
costs of operation, the ease of access to these offerings and the demand for products.

A PESTEL analysis is used to identify threats and weaknesses which are used in a SWOT analysis

The internal factors are factors that you have complete control over.
They include ‘strengths’ and ‘weaknesses’ such as your resources. The external factors include
‘opportunities’ and ‘threats’ such as the market, competition, and more.

Porter's Five Forces framework

Porter’s Five Forces model too has some drawbacks:

It relies heavily on the industry structure instead of the company’s core competencies.

It does not take into account a change in government policies and regulations, which, as a matter of
fact, has affected many industries.

It is one of the most critical approaches or tools for problem-solving.

Porter's five forces are used to identify and analyze an industry's competitive forces.

Porter’s Five Forces has five dimensions, which are as follows:

Industry rivalry - Almost every business has rivals. An intense rivalry takes place when the market
becomes too crowded. When this happens, the cumulative market share of the top players gets
relatively low. Moreover, having too many competitors in the market generally means high-cost
pressure which automatically translates to low profitability.

The threat of new entrants - The new players who are looking to enter the market are referred to as
new entrants. These entrants bring a substantial threat along with them. If the industry you operate in is
not well regulated by the government or the capital requirement to start a new business is low, then
anyone can enter the market anytime and disrupt your business, thus posing a significant threat.

The threat of substitutes - Substitutes are the products and services that can be an alternative to the
existing products or services in the market. Substitutes pose a grave threat to the existing products and
services in the market as users can easily switch to them. Moreover, substitutes are generally cheaper
than original products or services.

The threat of suppliers - The threat of suppliers is high if there are only a few suppliers existing in the
market. This threat becomes higher if the top 2–5 players enjoy a monopoly in the market. The threat
multiplies even further if there is only a single supplier of a commodity or service. If a supplier has the
ability to forward integrate, which means to enter into the same line of business as you are, then it also
has the ability to push you out of business.

The threat of buyers - This refers to the ability of customers to sink the prices lower. If your total sale is
driven by a small number of customers who purchase from you, then the threat is higher as they have
the power to negotiate with you. Therefore, a business must look to expand its customer base to reduce
this threat. A good and considerable customer base often ensures that you do not have to compromise
on the profitability of your business.

Discover the power of Google Analytics through its five basic reports: Realtime, Audience, Acquisition,
Behavior, and Conversions.

Major types of segmentation:-

Geographic segmentation: This consists of dividing the market along geographical variables such as
nations, states, regions, cities or neighbourhoods.

Demographic segmentation: This consists of dividing the market along demographic variables such as
age, income, gender, occupation, family size, education, religion, ethnicity, race, nationality.

Psychographic segmentation: Psychographic segmentation is a type of segmentation that focuses on

Behavioural segmentation: This consists of dividing the market along behavioural variables such as
usage rate, benefit desired, loyalty status, user status. For example, what type of clothes do they
purchase regularly? Do they buy new products? How much do they usually spend? What are the brands
they are loyal to?
Targeting strategies:-

Undifferentiated or mass strategy

Differentiated strategy

Concentrated or niche strategy

What does market positioning mean?

Market positioning is a strategic exercise we use to establish the image of a brand or product in a
consumer’s mind.

This is achieved through the four Ps: promotion, price, place, and product.

POSITIONING:-
 Perceptual mapping or market mapping is a
diagrammatic technique used by asset marketers that attempts to visually display the perceptions of
customers or potential customers. The positioning of a brand is influenced by customer perceptions
rather than by those of businesses.

You also learned the important factors to consider when deciding your pricing strategy, namely:
Customer's perceived value of the product

Competitive pricing

Revenue generation cost

Rational Branding

The rational model talks about branding on the basis of product attributes/functions.

5 Main Elements of Brand Equity

the four main components of digital marketing are:

Digital content

Digital device

Digital platform

Digital analytics

CONSUMER FUNNEL:-
Customer Acquisition Cost (CAC) CAC = Total marketing cost for a particular time period /
Number of customers you acquire during that period

Customer Lifetime Value (CLV) CLV = (Annual profit contribution per customer * Average
lifetime of a customer) - Initial cost of customer acquisition (CAC)

Average lifetime of a customer in years = 1 / customer churn rate

Customer Retention Rate = [ (Total Customers at the end of a time period - New Customers
added within that time period) / Number of existing customers at the start of the time
period ] *100%

Customer churn rate = 1 - Customer retention rate

https://b2bconnect.wbresearch.com/blog/b2b-top-10-digital-transformation-trends-strategy

https://www.cloudways.com/blog/important-digital-marketing-metrics/
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