What is PESTLE Analysis in Marketing?
The letters of PESTLE represent the broad categories of a macro-environmental scan for marketing purposes. The letters stand for:
- P = Political factors
- E = Economic factors
- S = Social factors
- T = Technology factors
- L = Legal factors
- E= Environment factors
List of Possible Economic Factors to Use in PESTLE Analysis
Here is a list of ideas and thought-starters to help you build out a list of suitable economic factors for your PESTLE analysis. Scan through the list and choose the ones that are more relevant for your firm or industry.
- Strong economic growth
- Weak economic growth
- High inflation rate
- Low inflation rate
- High interest rates
- Low interest rates
- Favorable exchange rates
- Unfavorable exchange rates
- Easy to borrow money
- Tight lending conditions
- High levels of disposable income
- Limited amount of disposable income
- Economic wealth is distributed across the population
- Economic wealth is concentrated among the very wealthy
- Consumers are confident and willing to spend
- Consumers are nervous and are reducing their spending
- Businesses are borrowing for investment
- Businesses are paying down debt
- Stable stock market conditions
- Fluctuating stock market conditions
- Banks are expanding their lending availability
- Banks are tightening their lending
- Households have high levels of debt
- High unemployment rates
- Low unemployment rates
- Certain regions have high unemployment
- Economy is in recession
- A recession is likely
- High purchasing power parity
- Low purchasing power parity
- Relatively equitable GDP per capita
- Inequitable/concentrated GDP per capita
- Stable input costs to business
- Rising input costs for business
- Rising average wage levels
- Stagnant average wage levels
- High level of government spending is supporting the economy
- Rising commodity and oil prices
- Falling commodity and oil prices
- Some large businesses have gone bankrupt
- A predominantly service-based economy
- A predominantly manufacturing-based economy
- A predominantly agriculture-based economy
- Business is reliant on international investments
- Easy access to ‘start-up’ funding
- Hard to attract ‘start-up’ funds
- Is a developed economy
- Is a developing economy
- Has a potential stock market bubble
- Has a potential housing market bubble
- Home ownership is affordable
- Home ownership is challenging
- Tightening tax is reducing spending
- Lower taxes are increasing spending
- Skill shortages in key industries
- Economy operates as part of a trading block
- Is a closed economy operating relatively independently
- Most industry sectors are growing
- Economic growth is industry-specific
- The economy is subject to trade embargoes
FAQs for PESTLE Economic Factors in Marketing
What is the impact of strong economic growth on marketing?
Strong economic growth typically results in increased disposable income, leading to increased consumer spending. This presents opportunities for marketing, as it broadens the customer base and the potential for higher sales.
How might high inflation rates affect marketing strategies?
High inflation can lead to increased costs, both for the company and for consumers. This could reduce consumers’ purchasing power and necessitate adjustments to pricing and promotion strategies.
How does high unemployment rates influence marketing efforts?
High unemployment rates can decrease disposable income and consumer spending, potentially leading to a need for more targeted marketing strategies and perhaps a focus on cost-efficient or value-for-money products.
How could a recession impact my marketing strategies?
A recession often results in reduced consumer spending. Marketers might need to focus on value proposition, invest in customer retention strategies, and ensure messaging resonates with consumers’ economic concerns.
How do rising input costs for business impact marketing?
Rising input costs can lead to increased product prices, which can affect consumer demand. Marketing strategies might need to pivot towards justifying the price increase or highlighting the product’s unique value proposition.
What effect do falling commodity and oil prices have on marketing?
Falling prices can lead to lower production costs and potentially lower product prices, possibly increasing demand. This could allow for marketing strategies that focus on price competitiveness or offer more generous promotions.
How might the marketing approach differ in a predominantly service-based economy compared to a manufacturing-based one?
In a service-based economy, marketing efforts often focus on intangible product benefits and personal selling, whereas in a manufacturing-based economy, the emphasis is more on product features, quality, and availability.
How does a high level of disposable income influence marketing strategies?
High levels of disposable income generally mean consumers are willing to spend more. This can lead to opportunities for marketing higher-priced items, luxury goods, or non-essential services.
How can tightening tax policies reduce consumer spending and affect marketing?
Tightening tax policies can decrease disposable income, thereby reducing consumer spending. This may require more focused and value-driven marketing strategies.
How does a potential housing market bubble impact marketing strategies?
A potential housing market bubble can lead to increased consumer spending due to perceived wealth, but can also result in a severe downturn if the bubble bursts.