How to Run a PESTEL Analysis

PESTEL maps the macro environment — the external forces that shape the world a brand operates in, but cannot control. Political decisions, economic conditions, social shifts, technological change, environmental pressures and legal frameworks all affect marketing strategy. Understanding them is how you move from reactive to proactive planning.

What is PESTEL?

PESTEL is a framework for auditing the macro environment — the external conditions that influence all businesses operating in a given market. The letters stand for Political, Economic, Social, Technological, Environmental and Legal. Each represents a category of external force that a brand must navigate but cannot control.

In a marketing audit, PESTEL forms the macro layer of analysis — sitting above the micro environment (competitors, suppliers, customers) and the internal analysis (7Ps). Together these three layers give a complete picture of a brand's marketing position.

You can't control the sea. But you can study it, predict the weather, and sail smarter for knowing what's coming.

The six factors in depth

Political

Government policies, political stability, trade regulations, public health policy, tax regimes and government campaigns that affect business activity.

e.g. Government sugar reduction targets, Scotland-specific licensing laws, post-Brexit trade changes

Economic

Inflation, interest rates, consumer disposable income, unemployment levels, exchange rates and general economic conditions affecting purchasing power.

e.g. Cost of living squeeze reducing non-essential spend, inflation increasing production costs

Social

Cultural trends, demographic shifts, changing consumer attitudes, lifestyle changes, social movements and public opinion that shape demand and expectations.

e.g. Growing health consciousness reducing soft drink consumption, nostalgia trend among 25–40s

Technological

Emerging technologies, digital disruption, shifts in consumer media behaviour, e-commerce growth, automation and innovation in production or distribution.

e.g. Growth of short-form video changing advertising formats, rise of DTC e-commerce

Environmental

Climate change, sustainability expectations, environmental regulations, packaging legislation, carbon targets and consumer green behaviour.

e.g. Pressure to reduce plastic packaging, consumer preference for sustainable brands

Legal

Advertising standards, data protection (GDPR), consumer rights law, employment law, industry-specific regulation and food/drink labelling requirements.

e.g. Soft Drinks Industry Levy (sugar tax), ASA advertising codes, GDPR data requirements

Rating the macro environment

In the Marketing Audits tool, each PESTEL factor is rated on how well the brand is navigating it — not just whether the factor exists. A sugar tax is a fact of the market; whether the brand has adapted well to it is what the rating reflects.

Strong

Brand is well-positioned and actively benefiting from this factor

Good

Brand is managing this factor adequately with minor vulnerabilities

Fair

Some exposure or under-adaptation — this factor poses risk

Weak

Brand is poorly positioned — this factor is a significant threat

Worked example — Irn Bru

Political — Fair. UK government sugar reduction targets and Scotland-specific public health initiatives create political pressure on sugary drink brands. The brand has responded with low-sugar variants but political risk remains elevated.
Economic — Fair. Cost of living pressures are reducing consumer spend on non-essential grocery items. Irn Bru's accessible price point helps, but sustained economic pressure could affect sales volume.
Social — Fair. The long-term trend toward health consciousness is a headwind for high-sugar soft drinks. Counter-trend: nostalgia for heritage Scottish brands is growing among 25–40 year olds.
Technological — Good. The brand has adapted well to digital and social media marketing. Short-form video formats (Reels, TikTok) suit its humour-led creative approach. E-commerce presence remains underdeveloped.
Environmental — Fair. Increasing pressure on plastic packaging and sustainability credentials. Irn Bru has made some progress but faces growing consumer scrutiny versus more visibly sustainable competitors.
Legal — Weak. The UK Soft Drinks Industry Levy directly increases production costs. Advertising restrictions on HFSS products affecting under-16s limit promotional reach. The most direct legal pressure of any PESTEL factor for this brand.

Using PESTEL findings strategically

PESTEL findings don't sit in isolation — they feed into your SWOT analysis as Opportunities and Threats. A favourable PESTEL factor (nostalgia trend) becomes a SWOT Opportunity. An unfavourable one (sugar tax) becomes a SWOT Threat. Together they help build a picture of the strategic environment the campaign must respond to.

In an audit, weak PESTEL ratings should generate specific recommendations — don't just note the factor, identify what the brand should do in response. "The sugar tax (Legal — Weak) requires investment in the sugar-free product line and a clearer pricing strategy to maintain volume despite increased retail price."

Apply PESTEL in a full marketing audit

Rate all six PESTEL factors alongside the 7Ps and micro environment and generate a complete audit report.

Open the tool →