Do you want to diagnose your business? Have a global vision of your market and its environment? Do you want to put in place a strategy to launch a new line of products? Find out in this article PESTEL analysis , the essential strategic analysis tool for companies.
What does the PESTEL analysis method consist of?
The PESTEL analysis makes it possible to study the influences of the environment. Indeed, it is important before embarking on a project to know and measure all the elements of the market. Depending on your industry, the developments, opportunities and threats are different. Even if your project looks solid, it is only viable if you have knowledge of your surroundings. You absolutely need to know the factors that will positively and negatively influence your project or your company.
The PESTEL method brings together all the questions you need to ask yourself in order to have an overview of your project in its market. What are the habits of my future consumers? What are the purchasing behaviors? What are the future legislations which could intervene later? So many important questions that you must answer imperatively.
Formerly called PEST, the new method has been adapted and improved with a new ecological factor, which is very important to take into account. If you are looking for how to make a PESTEL, discover in the following chapter the 6 elements of the method.
The different areas of analysis of the PESTEL method
This method of analysis is divided into 6 areas. This structure allows you to think about all aspects of the market so as not to forget anything.
The P of P ESTEL, for the elements related to the Policy
These are decisions related to government and institutions. You may not have thought about it, and that’s why the PESTEL method is more than practical, but many laws can affect your decisions. In addition, taxation is also an element that should not be overlooked (especially when setting up a company).
For example, if we take the example of a mental coach in Paris who wishes to extend his range of products via online videos, he will have to take into account all the new legislation related to his profession or even think about which status to choose ( the most profitable depending on the changes to be expected).
The E of P ESTEL, for the economic environment
The growth rate, inflation, unemployment rate, interest rates, in short, economic growth is a sector to analyze very precisely. Without these elements, your business or product line launch plan will not be able to get off to a good start and make a profit.
These factors will have a direct impact on all of your projects.
You need to take stock of what is called “macro-economic” health.
We will continue with the example of the mental coaching business leader. The well-being market is in vogue with an increase in consumption for the “better life”. The French population prefers to focus on their mental health and wish to invest a certain amount dedicated to their well-being.
The S of PESTEL, for socio-cultural factors
Sociological influences include cultural and demographic changes , as well as consumer purchasing habits and changing consumption patterns. For example knowing the age of the population, occupations, mobility, current modes, levels of education, social media figures …
To continue our example, the field of well-being and coaching do not seem to be undergoing a crisis and French feels a clear need to be well at work through recognized coaching methods. This trend tends to evolve, which can represent an opportunity. Executives living in Paris Center, for example, have an income of more than 5,000 euros net per month (source: journaldunet ) much higher than in the Parisian suburbs. The coaching service will therefore be more suitable in certain cities and more accessible.
This step is as important as the others! To go further, I recommend that you combine with an analysis of your target in order to adapt your product / service. You can do market research by having a product directly tested with different types of consumers in order to establish a balance sheet.
The T from PESTEL, for technological influences
It includes the analysis of technological developments. Indeed, you must list all the risks of the type: new manufacturing methods, technological innovations, in short all the novelties that could overshadow your project, or on the contrary, bring you opportunities to seize.
Technology in the field of wellness is also constantly evolving. Consumers want direct coaching techniques without having to travel. E-learning training and live videos are all tools that have continued to grow in recent years. A great opportunity that must all the same be taken with some precautions. Indeed, it is possible that in the future this trend will be reversed in the sense that the consumer seeks more and more human contact and begins to question the technological tools that they can sometimes consider too superficial.
The second E of PESTEL, for the ecological field
It is often forgotten and yet it is one of the most important elements. With ecological circumstances and climatic consequences causing far-reaching changes, you should definitely consider ecological factors. Global warming can, for example, have consequences on consumption patterns or on your business plan.
For example, reducing the time spent in front of the computer to promote well-being and avoid consuming too much could be a brake on the business of the Parisian mental coach.
The L of PESTEL, for the legal field
To complete your analysis, you will need to focus on the legal area that could impact your business. You will have to do an analysis of laws and regulations, case law, employee protection, intellectual property, safety standards. .. You must sweep away all the legal factors so as not to have unpleasant surprises.
Let’s continue with the example of the coaching business executive. The legal area is very important. Many people consider themselves to be professionals, certified coaches but in no way have the title. In the case of our example, we must study the regulations in terms of online training, certifications … It will be necessary to focus on the changes to come on the regulations of the services to the person for example, the legal status to be chosen well …
The expert method to make a PESTEL matrix with ease
Step 1: list your ideas
To make a PESTEL matrix with ease, it is important to start by listing the factors that you think will influence your project. First of all, focus on what is going through your mind, these are important things. We always advise you to help you make an Excel file to structure your thinking.
Step 2: organize your entire listing
Once you have gathered your ideas, take each element of the PESTEL matrix and classify them. You can organize your Excel file by putting each item in a column. Reread the different areas of analysis that we have indicated above so as not to forget anything. Think about each item and add them to your column. This will allow you not to forget anything. Indeed, the PESTEL method is not only a listing as you will have understood. It is an ESSENTIAL structural analysis of the market and the environment.
Step 3: measure the impacts with the PESTEL method
Another element which is not necessarily obligatory for the PESTEL analysis but which is strongly recommended, it is to analyze and measure the impacts in order of importance. Indeed, depending on the business sector, the ecological domain will be more important than the demographic domain. You can totally rank them by adding a rating on a scale of 1 to 10 or add colors if you want a strong visual impact.
PESTEL analysis complementary to SWOT analysis
The PESTEL matrix, as you will have understood, allows you to know all the environmental factors. It must be adapted regularly since each year new regulations and other changes may occur. This analysis is complementary with the SWOT matrix .
Indeed, it brings together strengths, weaknesses, opportunities and threats. It allows you to analyze internally the qualities and defects of your company or your new range of products. With these two matrices, you will be able to draw up a complete assessment and then adapt your strategy. Indeed, without this analysis tool, you will not be able to find the necessary resources to grow your business. Knowing the market, adapting your strategy, finding the resources are the essential steps in carrying out each project.
In addition, to adjust your offer, you can also use the buyer persona: the marketing tool to better sell to your target customers . And, to assess your competitive position in a market, do a BCG matrix .
Go further with the scenario method
A scenario is a collection of situations that can occur in the future. That is to say the way in which your strategy should evolve according to possible changes in the environment. It is based on what are called pivot variables . They are the factors that can impact your project, whether positively or negatively. To build your scenarios, you must rely on the most important elements of your analysis. Therefore, if you prioritize your factors, it will be easier for you to do your scenarios.
For example, you can make 3 types of main scenarios and divide them into several categories. You need to build on your previous analysis and cross-reference the data. Be concise and concise with figures and real facts. Then define the strategy to put in place, the resources, the innovations and all the elements that you think are wise to reach your objective. It is important to have a broad and global vision of the future to consider all the uncertainties linked to factors independent of you. Scenarios are useful for visualizing and implementing guidelines for your projects. It is sometimes difficult to imagine the difficulties of a project when you spend the majority of your time on it. It is quite possible to use the PESTEL method and team scenarios. This allows all employees to express themselves.
Visualize your success: the method of success
Once your analysis is done, your scenarios set up, your action plan updated, you can now go to the next step to go even further: the visualization of the project. In a quiet place, away from the daily hustle and bustle, breathe calmly in a natural way. Then formulate your goal in your head, then analyze all the parameters by visualizing yourself still successfully reaching your goal. Ask yourself the essential questions to have more precision in your images: what is your appearance? Where are you at? Are you surrounded? Be as specific as possible.
The goal is not to imagine success without a hitch, on the contrary. This type of visualization will help to give you energy, a certain motivation to face more easily the difficulties that you will encounter. It can also give you new ideas or help you perceive certain threats that you were not aware of. With the PESTEL analysis, the scenarios and the visualization of your success, your project is already (almost) completed!
PESTEL, the essential tool for your marketing strategy: in conclusion
- It is a complementary tool with the SWOT analysis;
- The PESTEL analysis allows you to better understand the difficulties of the market and your environment;
- A real marketing tool, it will help you list your priorities;
- A strategic tool, it draws up a balance sheet necessary to launch your company.
PESTEL: to sum up in three questions
Quel est l’intérêt de la méthode PESTEL ?
If you are still looking for why the PESTEL method is so effective, know that it is a free, simple and precise tool which allows you, in the blink of an eye, to know the state of the current market and of your environment. It divides environmental influences into 6 areas: political, economic, sociological, technological, ecological and legal.
Qui peut utiliser la matrice PESTEL ?
Are you a business manager looking to launch a new range of products? Do you want to know how to position yourself in relation to your competitors? The PESTEL method will help you better understand your environment. It is therefore open to all those who wish to improve their positioning, develop and anticipate future influences!
Quelle est la différence avec la matrice SWOT ?
The SWOT and PESTEL matrices are complementary tools. The SWOT analysis will bring together an internal / external diagnosis while the PESTEL matrix will focus primarily on the analysis of the influences acting on the company’s macroenvironment.