1. Session on PEST Analysis
Presenter: Prof. K. T. Rengamani
VIT Business School

2. What is PEST Analysis?
• This analysis is essential for an organization
before beginning its marketing process
• Consists of internal environment and
external environment

3. Break up of PEST
• Political Factors
• Economic Factors
• Socio Cultural Factors
• Technological Factors

4. 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

5. 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.

6. 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

7. Economic Factors
• Government outlook towards
– Bank Financing
– Interest Rates
– Exchange Rate Mechanism
– Incentives for Exports
– Restrictions for Imports
– Inflation
– Labour Policies

8. 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

9. Economic Factors - Contd.
• Business Cycles
• Monsoon
• Energy Availability
• Cost of Energy

10. Socio-Cultural Factors
• Demographics
• Distribution of Income
• Social Mobility
• Life Style Changes
• Consumerism
• Educational Levels

11. 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

12. 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

13. Technological Factors
• Advantage of Technology
– In terms of Economies of Scale
• New Discoveries & Innovations
• Speed & Cost of Technology Transfer
• Rate of Obsolescence

14. Other Factors
• Judicial System
• Insurance System
• Banking System
• Regulatory System
• Infra Structure
– Communication
– Transportation

15. 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.