In an attempt to not only stay abreast with, but to also try and get ahead of all the hangers, marketing managers utilize PESTLE analysis. PESTLE analysis is an environmental scan exploring political, economic, social, technological, environmental, and legal factors. The goal of PESTLE is to provide marketing managers with relevant information to improve the quality of marketing decisions, including choices about new opportunities nested in the strategic alternatives of market penetration, market development, and product (Finch, 2012).
PESTLE analysis is beneficial to all industries; however, this paper will only explore the benefit and usage to the auto industry.
There are numerous external factors that impact the auto industry and whether or not product marketing will be successful. Luckily, businesses can take action to make sure they are as pro-active as possible to ensure success. Unfortunately, despite planning, research, and the pro-active measures some things will also be out of one’s control and require adaptability if nothing else. With that being said, perhaps the biggest hindrances to the automobile industry are the political factors.
Trade restrictions, tax policies, employment regulations, and consumer protection legislation, fair and safe markets, political influences on equines infrastructure can all vary substantially from one country to the next (Finch, 2012). This is significant because the automobile industry is a global one, having global sales, production, and operations. What impacts the industry in one country will affect the industry in another. Consider recent regulations in China imposing a 25% charge on imported automobile parts used in the manufacture of vehicles made in China (Waters & Evenhandedness, 2010).
Changes such as this occur all the time via large organizations such as NONFAT or domestic or local organizations such as in this case the Chinese government. Political factors such as tariffs, taxes, laws, regulations, etc. Are all out of the industries control. The only means of defense is adaptability and coherence. Adaptability isn’t only essential to political factors but is also essential to all other factors in PESTLE. The economy, whether it is the U. S. Or any other country, is not a constant unchanging state, it evolves and fluctuates.
Economic variables affecting product and market level decisions and consumer purchasing ability include gross domestic product (GAP), discretionary income, consumer confidence, unemployment, inflation, interest rates, and currency exchange rates (Finch, 2012). Over the past decade in the U. S. Jobs have been scarce. Most companies have or are downsizing with the mentality “do more with less”, required a government bailout to stay afloat, or are shutting their doors permanently. There has been little to no improvement on the unemployment rate.
Wages have either decreased or stayed the same in most industries and professions, all the while, food, gas, and other goods prices continue to The current U. S. Economic situation has presented a challenge to the rise. Auto industry. A challenge indeed, but not entirely negative, a challenge to e overcome and yet a challenge to be better. Economic factors encourage improvement, enhancement, and innovation. The task and challenge now becomes making a quality product that consumers want and can afford that can also create a profit for the company.
Determining what a consumer wants and can afford seems like an easy task but it isn’t. Consumer wants and needs vary both locally and globally. Culture and demographics play a big part of social factors. Culture dictates the shared beliefs, attitudes, and values of a society, while demographics describe the statistical characteristics of a population expressed by variables such as location, age, and employment (Finch, 2012). The U. S. Is a country built on service. We are about being service, getting things done fast, and are a growing population in both quantity and physical size.
In order to appeal to the U. S. Consumer the automobile industry has tailored vehicles to meet our culture norms, wants, and needs. U. S. Consumers wanted large vehicles, whether for recreational reasons, status, family size, or body. The auto industry responded by giving us the Hummer, an array of extended cab and bed trucks, mini-vans, and large passenger capacity Subs. We wanted larger vehicles for recreational reasons or likes, family size, or due to body size. Then the consumer wanted safer vehicles, and we got airbags: front, side, and curtain.
As stated previously the U. S. Is a service industry country and reasonably the U. S. Consumer seeks a vehicle that offers convenience. Today we have vehicles with doors that can be opened with a push of a button, push button start, can start the car and warm it up with a remote, have heated and cooled seats, hatches that can open with your foot, integrated GAPS and cellular functions, rear cameras ND backup sensors, blind spot signals, and can park themselves, to name a few.
Acknowledging and catering to social factors has allowed the auto industry to survive through one of the worst economic and financial times in history, for both the consumer and the industry. Marketers’ ability to recognize social factors has aided in not only the sustainability of the industry but also to the innovation and success of it as well. Marketers’ keen recognition and adaptability to social factors has allowed for extensive modernization and cutting edge capabilities.
Combine social factors with technological factors and we will have cars that drive themselves and do our grocery shopping and dry cleaning in no time. In fact it is a combination of social factors, technological factors, and environmental factors that have really led to the current state of the automobile industry. If it weren’t for the technological advances the conveniences sought by the U. S. Society would be unfulfilled. In addition, if it weren’t for recent environmental concerns and regulations technology and product advances in that regard would not have been made.
Technology plays a role in the industry as not only a means of production or product improvement but also as a means for consumer purchase, review, and research. Companies at the leading edge of technological advances can establish competitive advantages and create effective barriers to market entry (Finch, 2012). Technological advances will continue and thus so will the integration of technology and machine. Environmental factors include everything from water shortages, flooding, fires, waste disposal, pollution mitigation, and energy efficiency (Finch, 2012).
Environmental factors have, until recently, played a very small role in the industry. Today concerns for emissions, our carbon footprint, and growing concerns over global warming have changed that. The need to produce a more fuel efficient car to meet demands of economic factors and environmental factors has led to the hybrid and electric vehicles. Hopefully, with technological advance the industry will soon be able to produce an affordable “green” vehicle. Auto makers are urged, challenged, and are finally taking strides to be more environmentally aware and conscious.
The environment has finally made its way to the list of priorities for auto makers. Honda of America President Take Fuji urged automakers to take the environmental challenge and commit to developing technology to create recyclable, energy-efficient and emissions-friendly vehicles; stating: “For the future of our company, we must change, and for the future of our industry, we must change. The purest expression we can make to our customers is for the preservation of our planet” (Propeller, 1997). No business or industry is free from legal factors.
So it only makes sense that they too would be analyzed. Legal factors include antitrust laws, Occupational Safety and Health Administration (OSHA) regulations, consumer protection statutes, and product safety and health laws, and sometimes governance over pricing of consumer necessities and natural monopolies (Finch, 2012). The auto industry has had its’ fair share of legal troubles. Legal troubles primarily involved in consumer safety. Too often in the history of the automobile industry are there incidents of cutting corners, half fast work, and turning the cheek.
Perhaps the most notorious incident regarding nonuser safety, turning the other cheek to make a profit is the 1971-1977 Ford Pinto. Ford had done numerous tests on the vehicle, almost all of which concluded that when rear ended the gas tank would explode or ignite on fire. Instead of fixing the car Ford put it into production. After several incidents and accidents involving drivers getting burned severely or even killed, Ford continued to produce the vehicle. After crunching numbers Ford had decided it would cost less to pay for the personal damages than it would to recall and remake or improve the gas tank.
Thankfully, laws and regulations have become stricter. Laws and regulations are being more enforced to prevent such incidents like the Ford Pinto from happening again. Punishment or consequences to those who fail to comply with laws and regulations are becoming more prevalent and sometimes more harsh. Not everyone is thrilled with the growing regulations and laws surrounding the auto industry some find the laws and regulations stifle their profits, competitive edge, and overall ability to do what they do. As you can see PESTLE analysis is vital to marketers and business success.
However, one cannot simply consider only one factor. All factors must be reviewed and analyzed, because as illustrated in the text of this paper, often time’s one development is contingent on another. What is popular today may not be tomorrow; what is affordable today may not be tomorrow; what is promised today may not be tomorrow; what is doable or legal today may not be tomorrow; and what is cutting edge today may not be tomorrow.
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