When you carry out market research, there is one thing that you need to study very carefully : what are the factors influencing the market that you have no influence upon.
Those factors are of different nature and it’s very important to identify them to avoid falling in a trap, and turning a business idea into a disaster.
Across the years we’ve been faced with different stories of entrepreneurs who didn’t include this analysis in their market research. Sometimes it was possible to fix the problems; sometimes not. And when it’s not possible, the result is usually called bankruptcy.
In our quest to help entrepreneurs and would-be entrepreneurs better understand their markets, we thought it might be interesting to propose you a series of very simple questions you should ask when studying the market and drafting your business plan.
The good news is that there are only 5 categories of factors that you can’t control and that need to be included when you study the market :
- Political and legal factors
Can the survival or profitability of your business be influenced by political decisions and legal changes in the country(ies) where you operate? - Economical factors
Is the economical context likely to sustain my business, or will it impede it ? - Sociological factors
Are my products / services aligned with customers behaviors en market trends ? - Technological factors
Does your product / service take advantage of technological market trends or is technology evolution rather likely to impede your development ? - Ecological factors
Is my product/service like to fit within the general growing ecologic consciousness, or will it have negative impact on the environment ?
Studying external factors of influence is called a PESTE analysis. As you can see the name comes from the first letter of the 5 categories of factors : P, E, S, T, E.
Sometimes it’s also called a PESTEL analysis because some market researchers prefer to split the first category in two Political on the one side, Legal on the other side.
If you need help on this, or more generally on studying your market conditions, we have two solutions for you. You can of course contact us, but you can also have a look at our speakerdeck. It ranked in 2014 among the TOP 1% of the most visited sites on Slideshare (more than 100000 views). You’ll find there a presentation entirely dedicated to the PESTE(L) analysis.
Posted in Marketing.
