How to conduct a DESTEP analysis

A fundamental element of the marketing plan is the analysis of the macro-environment. Together with the meso-environment they form the external environment, which again is part of the wider marketing environment (Armstrong & Kotler, 2013). I personally use the DESTEP analysis, which is a great framework to conduct the macro-environment analysis because it provides the necessary depth that will be relevant for subsequent elements of a comprehensive marketing plan, such as for the SWOT analysis. DESTEP is a mnemonic that stands for the following six factors: 1. Demographic 2. Economic 3. Socio-cultural 4. Technological 5. Ecological and 6. Political-legal. Other frameworks such as the PEST or PESTEL analysis are valid variants, however, the following section focuses on the DESTEP analysis. Skills in analytical, divergent, critical and creative thinking are a prerequisite to create a reasonable DESTEP analysis.

1. Demographic

During this section one examines the human population in terms of size, density, location, age, gender, race, occupation, and other statistics such as the disposable income, the income distribution and educational level. Everything that could be relevant to the company should be mentioned.

2. Economic

When focusing on this section, one needs to research economic factors that affect consumer purchasing power and spending patterns. Important factors are the level of current interest rate, inflation, unemployment rate, trends of the business cycle and GDP (Johnson & Scholes & Whittington, 2008).

3. Socio-cultural

When researching the socio-cultural factors of consumers, the AIO dimensions is recommended. Armstrong & Kotler (2013), the world’s foremost experts on the strategic practice of marketing, present the AIO dimension to measure psychographics. There are three areas: 1. Activities: hobbies, work shopping preferences, social events, sports, etc. 2. Interests: food preference, fashion interests, family importance, recreational interests, etc. 3. Opinions: perceived reputation of businesses, self, social issues, etc.

4. Technological

Here, one researches whether there are new opportunities in the market, new products or new technologies. Through using a Technology Life Cycle illustration, one can visualize current phases of an innovation. There are four phases in the Technology Life Cycle: 1. Research and Development 2. Ascent 3. Maturity 4. Decline. Depending where its current innovation is located, one can make a decision.

5. Ecological

During this section, one focuses on researching energy consumption, environmental protection laws, waste disposal procedures and natural resources that are affected by marketing activities.

6. Political-legal

During this part one generally examines laws. For example, areas to research are competition laws, employment laws and important government agencies relevant to the given industry. Additionally, one needs to ascertain the stability of the government. Furthermore, it is important to ascertain who the influential individuals and pressure groups are that influence and limit business operation in the given society.

The goal of marketing management is to build customer relationships by creating customer value and satisfaction. A DESTEP analysis takes a minor but important part in reaching that ambitious goal. It depends partly on intuition and partly on retrieved data to decide what is relevant and what is not relevant for the macro-environment analysis. Generally, one needs to highlight the trends that might affect the micro-environment of a company, thus the internal environment. Industry trends are crucially important for an in-depth DESTEP, therefore one needs to establish contact with industry experts who might be able to add important information. Once the macro-environment analysis is completed, it is necessary to focus on the meso-environment and finally on the micro-environment of a company. Following this methodology is important when striving to create a comprehensive marketing plan.

References

Armstrong, G., & Kotler, P. (2013). Marketing: An introduction. Boston: Prentice Hall.

Johnson, G., Scholes, K., & Whittington, R. (2008). Exploring corporate strategy. Harlow: Prentice Hall.

Advertisements

1 Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

w

Connecting to %s