We started with PEST, moved to SLEPT and have ended up with PESTLE but none of these fully cover the external factors we need to take account of in our situation analysis. Philip Kotler, in his book Marketing Insights from A to Z (Wiley, 2003), suggests we should be less concerned about the internal factors and be looking outwards. In fact, he suggests that our typical SWOT should now be TOWS, putting even greater emphasis on the external factors. So where do we go from here?
To help with this external environmental audit a new model COMPLETED may be useful.
Some of the factors remain unchanged. The PLETED section is the macro environmental forces. The PLETE part is the Political, Legal, Economic, Technological and Environmental factors from PESTLE. The S of Sociological has become the D for Demographic as the emphasis needs to change to look more at the impact of the changes in the make-up of society rather than society itself, although the sociological issues are still important.
This leaves the three new factors which are in the micro environment
Other (indirect) Competitors
It's surprising the number of marketers who fail to take their competitors into account when carrying out their analysis. If one of your competitors suddenly changed their strategy and started to attack your business would you just sit there and take it? So why do you think that they will if you do the same?
At the very least we should be continually monitoring what our competitors are doing (and it's never been easier thanks to the internet). We should also attempt to predict what a competitor's response will be to any moves we make. For instance, if we reduce our prices by 10% to gain market share, it may well be unsuccessful if our competitors do the same!
Other (Indirect) Competitors
Monitoring direct competitors may be difficult but monitoring other competitors may well be impossible but must not be ignored.
We do not just compete with our known competitors but also with those companies which offer similar or substitute offers. Thus GNER compete with coaches and the airlines. Local shops and businesses now compete with international businesses through the internet. A local bookshop wouldn't look on Tesco or ASDA as a direct competitor but they can't ignore the fact that they sell books.
However, it is not just similar products and services we compete with, we also compete for spend of the customer's hard earned money. If an average teenager has £20 to spend on a weekend, New Look are not just competing with Dorothy Perkins and Etam but also with Justin Timberlake and Busted through Woolworths and HMV, and Diageo through the pubs and clubs. In the older market DFS are not just competing with IKEA but also Thomas Cook and Sony.
It's obvious that we need to be aware of the changes in the market. What will the customers want from us in the future, how are their attitudes changing and what do they think of us now?
When was the last time you actually asked your customers what they want and what they think of you and your competitors? Have you asked them why they buy from you in preference to somebody else? The answers may surprise you!
Labels: marketing environment