Simple marketing models to help you develop winning strategies – Part 1: PESTLIED
How the PESTLIED marketing model works.
Strategic marketing models, such as the PESTLIED, can help you develop more effective marketing strategies and campaign plans. You’ll have most of the answers and information you need already. These models facilitate filling the gaps and provide a framework for sharing your plans and the thinking behind them.
How to use strategic marketing models
Firstly, it is important to understand that strategic marketing models – or any models and frameworks – are not there to do your thinking for you or provide you with a right or wrong answer. They are effective tools to help you develop your thinking, guide your research and present information to your stakeholders. The GIGO principle applies – feed them with garbage in, and garbage out is what you’ll get.
When using strategic marketing models, don’t use them in isolation, because they won’t give you a complete picture. For example, when used together, the three models covered in this three-article series – PESTLIED, SWOT and Ansoff’s Matrix – will help you understand your external environment, some of your organisation’s internal capabilities and then consider how you can develop your proposition strategy to exploit market opportunities.
In this first article, we’ll cover the PESTLIED. The name is an abbreviation of: Political, Economic, Social, Technology, Legal, International, Environmental, Demographic. You may also encounter a shortened version called PEST.
Where to find the right information to feed your PESTLIED
The PESTLIED framework is an external analysis tool. It helps you to understand the factors and forces at work outside your organisation. Generally, you would complete this analysis using desk and Delphi research, but you could conduct or commission specific quantitative and qualitative research.
When completing your desk research, remember to use credible online sources. Delphi research, named after the all-knowing oracle of the Temple of Apollo at Delphi, basically means talking to industry experts and gurus. Internally, your salespeople, experienced product managers and senior leaders are a good and often untapped source of industry information.
Externally, customers and suppliers are also excellent sources and should be on your list of people to speak to. Or to buy lunch for. You can also pay to speak to industry experts and consultants. If your business is a member of a trade association or industry body, it is likely to have experts and information as part of its membership services that will be invaluable.
How does PESTLIED work?
Remember, using a strategic marketing framework is not a test of your knowledge, it is a tool to help you. While you need to consider wider trends and the impact they might have within the eight categories, the real benefit to your marketing strategy will be understanding how the trends may impact on your markets, proposition, supply chain, organisation and other stakeholders.
The kind of information you could include, and why, is as follows:
This means investigating and understanding the political and policy landscape where you operate and where your proposition is marketed. The politics of your country or region’s current government can impact hugely on your markets and supply chains. Think beyond the colour of the government to the policies they are proposing and how they impact on your plans. Depending on the size of your organisation and where you operate, you have the option of lobbying directly or via a trade association if the policies are perceived to be damaging, or to influence positive policies.
If you provide complex solutions, plant and capital goods and equipment, develop property, operate in energy, natural resources and the like, you’ll be thinking and planning in terms of decades, not months and years. Despite the fact that a week is a long time in politics, you can make provision for short-term politically-driven market shocks.
Consider both the macro-economic and micro-economic context of your target markets. A country or region going into recession may not be an attractive market if your proposition is fitting out high-end retail. In contrast, if you are an industrial sugars producer supplying everyday biscuit and confectionary brands – traditionally high performing segments during economic downturns – then a recession-bound economy may be an attractive option and deserve extra marketing resource.
Most, but not all, B2B demand is ultimately driven by consumer demand. This means you need to understand your target business personas and environment intimately, but also be aware of the step beyond, which is the wider society in which you operate and where the consumers of your B2B customer’s proposition can be found.
For example, if you are a tier two or three supplier in the automotive sector and the parts you supply are for internal combustion engines (ICEs), you’ll know that electrification of the global fleet will erode your market because consumers want electric cars. But ICEs are likely to dominate some segments for decades to come, such as off-highway and defence. You have a choice: diversify or market development (you would use Ansoff’s Matrix to work out your strategy) or do nothing and eventually go out of business.
Not all B2B is influenced directly and purely by consumer demand. For example, defence spending and some other nationalised activities are driven by other factors, or oil and gas and nuclear decommissioning of historic assets, and so on. And in some supply chains, you may be a long way from the consumer demand. So, while strategically consumers and society are important, in the medium term your immediate value chain is most important.
This is another factor that can impact on your marketing options at many levels. Holistically, digitalisation is a technology trend that will impact on your organisation. Specifically, will the proliferation of 5G networks impact on your business? If you produce antennas, or if you’re an app developer or even a construction materials distributor, 5G offers market opportunities (and threats).
Beware of backing the wrong horse, however. Although 5G offers many market opportunities, 4G is fine for a great many industrial applications and that won’t change any time soon. You could invest heavily in developing 5G solutions because that’s what everyone else is doing, then find there are no benefits to your customers to switching over, so they will choose your competition who chose to boost their 4G offerings.
Finally, superior technology is not always the enduring technology. Google ‘Betamax vs VHS’ or ‘token ring vs ethernet’ for lessons on how the best technology is not always the winning one.
Legislation affects most market strategy in some way. Consider the high fat and high sugar debate in food, which not only impacts on product and markets but also on the way we package and market products. Legislation can be an opportunity as well as a threat if your brand is the first to develop a compliant solution.
If we continue the electric car example from above, changing legislation is driving electric and hybrid vehicle demand, because it is impacting on automotive OEMs and consumers. In the UK, for example, at one level is the government’s commitment to ban the sale of new diesel and petrol HGVs from 2040. At another, London’s congestion and pollution charges make bringing ICE-powered vehicles into the city expensive.
If you trade globally across national boundaries, then of course you need to be aware of what is happening in the markets you target, for all the headings in the PESTLIED. But even if your market is only national, international events and competitors will impact on your business. Your supply chains as well as your customers will be impacted by international factors, which in turn affects pricing and availability. Many well-known national brands have become victims of international marketing by competitors because they have no international marketing strategy.
Generally, this applies to issues relating to the natural environment and sustainability, covering issues such as climate change. Not to be confused with your ‘business environment’. There are cross-cutting themes here. For example, are vehicle emissions regulations that affect the entire on and off-highway sectors a political, legislative or environmental factor? Hence the importance of thinking holistically when developing your marketing strategy.
Other specific examples include being sensitive to the natural environment where you operate or where your markets are located. This can mean adapting products, services and solutions. Supporting sustainability through building resource optimisation into your strategy is another key factor. You might be a premium drinks brand and your customers could have certain expectations, but you can still display luxury brand values through reducing the glass in your bottles and using sustainable packaging. Many of your customers will choose you for that reason (although beware, many won’t, but that’s a strategic decision for your brand’s leadership).
Fundamentally, many brands consider that an environmental, or responsibility, element to their organisational as well as marketing strategy is the right thing to do. This makes good business sense, too, as if we all don’t take action and make changes, many if not most potential customers won’t be in a position to buy our proposition.
This is a factor that is just as important for B2B as for B2C – understanding the demographics of your target market and personas. For example, most trade and engineering disciplines have an ageing workforce. Can you develop a proposition that is better suited to an older operator, or perhaps keeps that operator in the workforce for longer? B2B brands will invest in solutions that can do this, or in solutions that can replace the workforce or part of what they do with automation.
Demographics is not just age. When considering strategy and developing your personas, you’ll need to consider a whole range of socio-economic factors that include sex, gender, ethnicity, race, religion, language(s), employment, education and location. That’s just to start with. The list could include marital status, number of children, political affiliation and social class, if relevant to the target country/culture and nationality.
You might ask: ‘I make industrial gauges, why do I need to know about the marital status of my target buyer?’ That’s a good question and highlights how you can become bogged down with irrelevant data. But if you are profiling the personas who are specifying and buying your gauges, you might want to understand their children’s ages, because that may influence their working style, which in turn will influence the channels you use to communicate why your gauges are better than your competition’s.
In the next article in this series, we will explain how to use a tool that helps you understand both internal and external factors impacting on your organisation, the SWOT.
Hiring contractors and freelancers is a great way to access specialist skills and increase capacity.