Question

What is the PESTEL analysis for Payless Shoe Source?

Answer 1

PESTEL stands for:

• P – Political
• E – Economic
• S – Social
• T – Technological
• E – Environmental
• L – Legal

Political Factors

These are all about how and to what degree a government intervenes in the economy. This can include – government policy, political stability or instability in overseas markets, foreign trade policy, tax policy, labour law, environmental law, trade restrictions and so on.

It is clear from the list above that political factors often have an impact on organisations and how they do business. Organisations need to be able to respond to the current and anticipated future legislation, and adjust their marketing policy accordingly.

Economic Factors

Economic factors have a significant impact on how an organisation does business and also how profitable they are. Factors include – economic growth, interest rates, exchange rates, inflation, disposable income of consumers and businesses and so on.

These factors can be further broken down into macro-economical and micro-economical factors. Macro-economical factors deal with the management of demand in any given economy. Governments use interest rate control, taxation policy and government expenditure as their main mechanisms they use for this.

Micro-economic factors are all about the way people spend their incomes. This has a large impact on B2C organisations in particular.

Social Factors

Also known as socio-cultural factors, are the areas that involve the shared belief and attitudes of the population. These factors include – population growth, age distribution, health consciousness, career attitudes and so on. These factors are of particular interest as they have a direct effect on how marketers understand customers and what drives them.

Technological Factors

We all know how fast the technological landscape changes and how this impacts the way we market our products. Technological factors affect marketing and the management thereof in three distinct ways:

• New ways of producing goods and services
• New ways of distributing goods and services
• New ways of communicating with target markets

Environmental Factors

These factors have only really come to the forefront in the last fifteen years or so. They have become important due to the increasing scarcity of raw materials, polution targets, doing business as an ethical and sustainable company, carbon footprint targets set by governments (this is a good example were one factor could be classes as political and environmental at the same time). These are just some of the issues marketers are facing within this factor. More and more consumers are demanding that the products they buy are sourced ethically, and if possible from a sustainable source.

Legal Factors

Legal factors include - health and safety, equal opportunities, advertising standards, consumer rights and laws, product labelling and product safety. It is clear that companies need to know what is and what is not legal in order to trade successfully. If an organisation trades globally this becomes a very tricky area to get right as each country has its own set of rules and regulations.

After you have completed a PESTEL analysis you should be able to use this to help you identify the strengths and weaknesses for a SWOT analysis.

Founded in 1956 Payless shoes was founded and later on sold to Matt Rubel in year 2005 to make changes within the company to regain its marketing leadership due to its loss of market shares from previous years. The company took a turn in establishing a new image of luxury meets low-end prices. Although Payless wants to continue to maintain its image of maintain low prices the change mainly within the company is to create fashion goods by colliding with fashion designers to hit that niche that was missing for all those years. The following examines the company analysis and marketing mix of year 2005.

ABOUT PAYLESS SHOES

Payless shoes have grown in becoming one of the largest shoe retailers in North America, with over 4500 stores. Payless shoes have been operating one of the lowest priced retailers in the market in producing inexpensive shoes to mass market. Founded in 1956, Payless was first established in Topeka, Kansas, it was based on being low cost provider of shoes for families, however, once it hit year 2005, Payless hired a new CEO to establish a new image for Payless. Business was slowing beginning to drop and stores were closing, therefore, new CEO, Matt Rubel needed to make changes to regain its market leadership . The changes within the company needed to be done to achieve fashionable footwear although still maintaining an affordable retail price. Payless evolved in the change of customer demand and increased retail competition by producing on-trend fashion cost conscience market.

In 2009, Payless reported $2.576 billion in sales and capture a large percentage for the cost-leader footwear market.Payless is represented in all 50 states. Internationally, Payless has multiple locations in Central and South America, Canada, and the Caribbean. In 2009, Payless opened stores in the Middle East and has signed agreements to franchise into Russia, the Philippines, Israel, Malaysia, Singapore, Mexico and Indonesia.

When Payless was founded, it was based on being a low cost provider of shoes for families in a self-service format. During the 50 years since, Payless has evolved from a low cost distributor to a low cost producer to an on-trend fashion, cost conscience producer and provider while retaining the self service format. This evolution was a result of changing customer demands and increased retail competition. Payless retooled their strategy when other low-cost shoe providers such as Wal-Mart and Target entered the shoe market. This increase in competition on the cost-leader strategy forced Payless to examine their core competencies and their position in the marketplace. As a result, the emphasis on fashion and design became a priority which is reflected in both their shoe and retail store design.