When developing a communications strategy, brands commonly consider internal factors that they can control such as brand image, target audience, company goals, key messages, budget, etc. Harder to control, thus often overlooked, are the external factors that impact consumer decision making.
The PESTEL Analysis framework is made up of six macro-environmental factors: political, economic, social, technological, environmental and legal. It serves as a strategic tool used to analyze and assess the macro-environmental factors that can impact an organization. To apply the PESTEL framework to communications, one must examine how external factors can influence a communication strategy, messaging, and overall approach.
Embrace PESTEL Analysis or Face Imminent Communication Failure
The PEST Analysis, originally developed by Harvard scholar, Francis Aguilar in 1967, initially focused on the political, economic, social and technological factors. It was later expanded to include two additional factors, environmental and legal, evolving it into what is now known as PESTEL.
PESTEL Analysis plays a pivotal role in shaping a company’s communication strategies, offering a comprehensive understanding of external influences. This analysis helps companies tailor their communication strategies to be more relevant and proactive in addressing market dynamics, potential risks and opportunities. Effectively using PESTEL in communications not only strengthens brand positioning in a competitive marketplace but also ensures a more resonant and meaningful connection with the target audience, fostering trust and loyalty.
Navigate External Factors to Avert Customer Disconnection and Missed Opportunities
As mentioned above there are six external factors to consider when embarking on a communication strategy. Let’s define each one and consider how it can impact your communication efforts:
Political
Political factors can profoundly influence a company’s communication strategy. Changes in government policies, trade restrictions, and political stability can affect how a business communicates. For instance, a company operating in a politically volatile region may focus on crisis communication and risk mitigation in its messaging. By acknowledging political factors, companies can tailor their communications to be sensitive to current political climates, avoiding potential controversies and aligning with public policies and sentiments.
Economic
Economic conditions such as inflation rates, economic growth, and exchange rates can dictate consumer behavior and spending power. In times of economic downturn, communication strategies might emphasize value and affordability. Understanding economic trends helps companies craft messages that resonate with the financial realities of their target audience, ensuring relevance and effectiveness.
Social
Examine societal and cultural factors, such as demographics, consumer behaviors, and cultural norms to understand how these factors might shape the preferences and attitudes of your target audience. For example, a company targeting a younger demographic might leverage social media platforms and adopt a more informal tone. Incorporating social factors ensures that communication strategies are culturally relevant and resonate with the lifestyles, beliefs, and values of the target audience.
Technological
Consider how emerging technologies can be leveraged in your communication strategy. Technological advancements can influence the channels of communication as well as the tools you employ. The rise of digital media and online platforms has revolutionized how companies interact with their audience and staying abreast of technological trends allows companies to leverage new platforms and tools, ensuring that their communications are innovative and reach a wider audience.
Environmental
Look at environmental concerns and regulations. Determine how your communication can address issues related to sustainability, climate change, or ecological responsibility. It’s good for companies to incorporate green practices and sustainability into their communication strategies to reflect their commitment to social responsibility. This approach not only helps portray the company as socially responsible but also appeals to environmentally conscious consumers, building a positive brand image.
Legal
Legal changes such as data protection laws, employment regulations, intellectual property, industry-specific laws and health and safety standards can dictate the content and format of communication. Be aware of any potential legal constraints or opportunities. This includes advertising standards, data protection laws, consumer rights, and industry-specific regulations. Non-compliance can lead to legal consequences, financial penalties and damage to your reputation.
Overlooking the Six Steps of the PESTEL Framework in Communications Strategies Risks Appearing Tone Deaf and Unrelatable
Applying the PESTEL framework to communications involves a systematic assessment of external factors that can influence your communication strategy. By understanding these factors and their impact, you can develop more effective and responsive communication plans that resonate with your target audience and the broader socio-economic and regulatory environment. Here’s a step-by-step guide on how to apply the PESTEL framework to communications:
Identify Factors
The first step in applying the PESTEL Analysis framework is clearly identifying the six factors applicable to your brand, industry and marketplace as described above.
Gather Data
Research and collect data related to each of the PESTEL factors. This may involve market research, surveys, industry reports, government publications, and expert opinions. Ensure that your data is current and reliable.
Analyze Factors
For each factor, analyze the potential opportunities and threats it presents to your communication strategy. Ask questions like:
- How might political changes impact our messaging or regulatory compliance?
- What economic trends could affect our target audience’s purchasing power?
- How do social and cultural factors influence consumer preferences and behaviors?
- Are there technological advancements that we can leverage in our communication?
- How can we address environmental concerns in our messaging and actions?
- What legal regulations must we adhere to in our communication?
Identify Stakeholders
Determine which stakeholders may be affected by each PESTEL factor. This could include customers, competitors, government agencies, industry associations, and advocacy groups. Consider their perspectives and interests in relation to each factor.
Modify Communications Strategy
Based on the analysis you’ve done, make any necessary adjustments to your communications strategy. For example, tailor your messaging to address the opportunities and challenges presented by each factor. Consider different channels, timing and approaches that align with external conditions and ensure that your communication aligns with relevant laws and regulations.
Monitor and Adapt
PESTEL analysis is not a one-time exercise. External factors can change over time. Continuously monitor developments and adapt your communication strategy as needed to stay aligned with the evolving external environment.
PESTEL in Action: Unveil the Hidden Impact on Your Communications Strategy
Now let’s put it into practice. Let’s say a technology company is planning to launch a new product, a high-end smartphone, and the communications team is responsible for creating a new campaign. They decide to perform a PESTEL analysis to better understand the external factors that might affect their communication strategy.
Political Factors
Analysis: The government has recently introduced new regulations regarding the import and sale of electronic devices, including smartphones.
Communication Strategy: The communication team should monitor and adapt their messaging to comply with these regulations. They might also emphasize how their product aligns with government policies, such as environmental sustainability.
Economic Factors
Analysis: The country is experiencing an economic downturn, and consumer spending on luxury items like high-end smartphones has decreased.
Communication Strategy: In response, the communications team may need to adjust their pricing strategy and marketing messages to highlight the cost-effectiveness or long-term value of their product.
Social Factors
Analysis: Consumer preferences have shifted towards more eco-friendly and sustainable products.
Communication Strategy: The team should incorporate sustainability messaging into their communication strategy, highlighting the smartphone’s eco-friendly features and ethical sourcing of materials.
Technological Factors
Analysis: A new, innovative technology is emerging, which could render the current product obsolete.
Communication Strategy: The communication team needs to emphasize the unique features and technological advancements of their product, differentiating it from emerging competitors.
Environmental Factors
Analysis: Environmental concerns have led to stricter regulations on electronic waste disposal.
Communication Strategy: The company can communicate its commitment to environmental responsibility, such as offering recycling programs for old devices or using sustainable materials in production.
Legal Factors
Analysis: Intellectual property disputes are on the rise in the tech industry.
Communication Strategy: The team should emphasize the legal protections in place for their technology and assure customers of the product’s authenticity.
Brands Gamble with Diminished Relevance, Legal Perils and Ineffective Messaging by Neglecting PESTEL Analysis
Employing PESTEL Analysis is a strategic approach for businesses to stay attuned to changing external factors, enabling them to navigate new market trends and identify emerging opportunities. By analyzing the six external factors: political, economic, social, technological, environmental and legal, companies can proactively identify potential risks or challenges, reducing their impact and staying ahead of competitors. This foresight not only gives businesses a competitive edge but is also instrumental in informing long-term strategic planning. Moreover, PESTEL Analysis keeps companies on top of technological advancements, ensuring they leverage the latest innovations to enhance their operations and offerings. It also provides insights into evolving customer preferences, allowing businesses to adapt their products, services, and communication strategies accordingly. In essence, PESTEL Analysis serves as a comprehensive tool for companies to remain dynamic, responsive, and ahead in a rapidly changing business landscape.