International Marketing Environment

MARKETING THEORIES – PESTEL ANALYSIS

Globalization, the vague and highly debated term, usually indicates that businesses can extend their operation to the entire globe through launching their product in a new geographical region (Porter, 1986).

The more culturally sensitive term of glocalisation indicates that internationalisation of business can succeed when a company’s management takes into account the various elements that are unique to a region the firm is aiming to conquer (Robertson, 2012). As such, this paper will take into account the environmental factors that influence the international marketing strategy of a multinational company (MNC), aiming to demonstrate the value of glocalisation and the importance of effectively employing an environmental analysis model.

PESTEL stands for:

·         P – Political

·         E – Economic

·         S – Social

·         T – Technological

·         E – Environmental

·         L – Legal

All the external environmental factors (PESTEL factors)

Political Factors

These are all about how and to what degree a government intervenes in the economy. This can include – government policy, political stability or instability in overseas markets, foreign trade policy, tax policy, labour law, environmental law, trade restrictions and so on.

It is clear from the list above that political factors often have an impact on organizations and how they do International business. Organizations need to be able to respond to the current and anticipated future legislation, and adjust their marketing policy accordingly.

Economic Factors

Economic factors have a significant impact on how an organization does business and also how profitable they are. Factors include – economic growth, interest rates, exchange rates, inflation, disposable income of consumers and businesses and so on.

These factors can be further broken down into macro-economical and micro-economical factors. Macro-economical factors deal with the management of demand in any given economy. Governments use interest rate control, taxation policy and government expenditure as their main mechanisms they use for this.

Micro-economic factors are all about the way people spend their incomes. This has a large impact on B2C organizations in particular.

Social Factors

Also known as socio-cultural factors are the areas that involve the shared belief and attitudes of the population. These factors include – population growth, age distribution, health consciousness, and career attitudes and so on. These factors are of particular interest as they have a direct effect on how marketers understand customers and what drives them.

Technological Factors

We all know how fast the technological landscape changes and how this impacts the way we market our products. Technological factors affect marketing and the management thereof in three distinct ways:

·         New ways of producing goods and services

·         New ways of distributing goods and services

·         New ways of communicating with target markets

Environmental Factors

These factors have only really come to the forefront in the last fifteen years or so. They have become important due to the increasing scarcity of raw materials, pollution targets, doing business as an ethical and sustainable company, carbon footprint targets set by governments (this is a good example were one factor could be classes as political and environmental at the same time). These are just some of the issues marketers are facing within this factor. More and more consumers are demanding that the products they buy are sourced ethically and if possible from a sustainable source.

Legal Factors

Legal factors include - health and safety, equal opportunities, advertising standards, consumer rights and laws, product labeling and product safety. It is clear that companies need to know what is and what is not legal in order to trade successfully. If an organization trades globally this becomes a very tricky area to get right as each country has its own set of rules and regulations.