In running a business, business logic is very important to apply. One way to understand business logic is to use the PEST and STP analysis methods. In this article, we will discuss more deeply about these two analytical methods and how to apply them in business.
PEST Analysis method
PEST analysis is a business analysis method used to understand environmental factors that affect a business. PEST itself is an acronym for Political, Economic, Social, and Technological. These four factors are external factors that can affect the business.
- Political: Political factors include government policies, laws, and regulations that may affect business. For example, the existence of environmental regulations can affect the way a business operates and affect operating costs.
- Economic: Economic factors include global, national and regional economic conditions. This factor also includes inflation, interest rates, and fluctuations in currency exchange rates.
- Social: Social factors include demographic trends, lifestyle changes, and social values that influence the way consumers buy and use products or services.
- Technological: Technological factors include technological innovations and developments that can affect the way a business operates and provide a competitive advantage. For example, new technology can help improve business efficiency and effectiveness.
STP Analysis method
STP analysis is a business analysis method used to understand the market segment, target market, and market position of a business. STP itself stands for Segmentation, Targeting, and Positioning.
- Segmentation: Market segmentation is the process of dividing the market into groups of consumers who have similar characteristics and needs. By understanding these consumer groups, businesses can design more effective marketing strategies.
- Targeting (Targeting): Targeting is the process of selecting market segments that will be used as business targets. In this process, businesses must consider factors such as market size, profits, and competition.
- Positioning: Market positioning is how a business positions itself in the market. This position must be in accordance with the needs and desires of consumers in the intended market segment.
How to Apply the PEST and STP Analysis Methods
To apply the PEST and STP analysis methods in business, the steps are as follows:
1. Identify PEST factors: The first step is to identify the political, economic, social, and technological factors that affect the business.
2. Analysis of PEST factors: Next, the business should analyze each identified PEST factor. This analysis can be done by collecting relevant data and information and then interpreting the data.
3. Identify market segments: The next step is to identify the market segments the business wants to target. This can be done by understanding the characteristics and needs of consumers in the previously divided market segments.
4. Targeting market segments: Once the market segments have been identified, the business must choose which market segments it wants to target. This should be considered based on market size, profitability, and competition.
5. Positioning of the business: The last step is determining the positioning of the business in the market. This position must be considered based on the needs and desires of consumers in the intended market segment.
Example of the Application of the PEST and STP Analysis Methods
An example of the application of the PEST and STP analysis methods is in the e-commerce business. The following are the steps for implementing this method in e-commerce businesses:
1. Identification of PEST factors: Political factors in the e-commerce business are regulations regarding electronic commerce, economic factors include economic growth and inflation, social factors include changes in consumer behavior in shopping, and technological factors include innovations in online payment technology.
2. Analysis of PEST factors: E-commerce businesses should analyze the impact of each identified PEST factor on their business. For example, regulations regarding electronic commerce can affect the operational costs of an e-commerce business.
3. Identify market segments: Market segments for e-commerce businesses can be divided based on the characteristics and needs of consumers, such as consumers who want to shop online for daily needs or consumers who want to buy products at lower prices.
4. Targeting market segments: E-commerce businesses must choose which market segments they want to target, such as consumers who want to buy products at a lower price.
5. Business position: E-commerce business must determine the position of the business in the market, such as offering lower prices than a competitor or offer fast delivery.
Conclusion
The PEST and STP analysis methods are two business analysis methods that are important to understand and apply in business. By understanding environmental factors and market segments, businesses can design more effective strategies and optimize market opportunities. In applying these two methods, businesses must conduct an in-depth analysis and consider factors that are relevant to their business.
