You’ve probably heard lecturers and tutors talk about the importance of the Pest factors in strategic planning. The acronym provides an easy means of remembering the components of the external environment - political/legal, economic, sociological and technological. I sometimes wonder if my students think that their impact on strategic planning is merely theoretical, but an organisation that ignores the external environment, and the opportunities and threats that it presents, won’t be in business for very long.

Technology is an increasingly important factor. It is developing at a phenomenal pace. There have been numerous articles in SM about the significance of e-commerce for purchasers, and it is also important for consumers. Although many of the latter are concerned about credit-card security and dubious about delivery, there is no doubt that the trend for business-to-consumer e-commerce is growing. According to the Wall Street Journal, online sales worth more than £2 billion were made by US consumers between 26 November and 16 December 1999.

Politically, there is much debate about the UK’s entry into European monetary union and the economic influence that it will have on both businesses and consumers. Exchange rates are constantly in the news and the current strength of the pound seems to be posing problems for exporters, although attempts to adjust this could threaten consumer confidence.

From a legal point of view, the Human Rights Act 1998, which comes into force in October, will impact on everyone. Employers have already started to train their staff in preparation for the new legislation.

Social awareness

One area that is often ignored in relation to the external environment is the impact that social factors have on an organisation. These include people’s ages, jobs, lifestyles and class, and are important considerations when marketing goods or services, especially as social trends develop and change over time.

You’ve probably heard about our ageing population. It is estimated that within the UK there will be more than 40,000 people aged 100 and over by 2036, compared with 5,500 in 1996 and 300 in 1951. Many businesses already market to the older consumer, such as insurance firms that offer policies specifically for older people and Saga Holidays, which sells holidays to the over-50s. Women can now expect to live until they are 80 years old, men until they are 75. The demand for products and services targeted at the mature age group is surely on the increase.

Another important social factor is the time we spend in the workplace. In the UK, we work longer hours than our European counterparts. On average, staff put in around 43 hours a week, with men generally working longer hours than women. Add to this the facts that we are earning more and have more disposable income than ever before, and it is easy to see why all these statistics are vital to address when marketing something.

New trends

With longer working hours and 72 per cent of women earning, spending on home help has almost doubled in the past decade. Around 8 per cent of the UK’s working population is in domestic service - a larger proportion than is in accountancy. Home help is a growth area and more and more people are beginning to regard it, not as the exclusive preserve of the privileged, but as a necessity for any couple in full-time employment.

Besides child minding and cleaning, domestic services now in demand include dog walking and house sitting. These “new” markets may present opportunities to businesses. The success of Unilever’s new venture into cleaning, for example, is likely to depend on this trend.

Let’s take a look at men. More men in their twenties are living with their parents than ever before. More than half of men between the ages of 20 and 24 still live at home, compared with about one-third of women in the same age group.

While it is easy to state from these facts that lifestyles are changing, it is less straightforward to conclude if women in this age group have more of a bearing on marketing and purchasing decisions than their male counterparts, or whether they have less disposable income as a result of their having moved out.

Social trends are important to any business. Industry relies on a derived demand; the consumer drives the economy. From a marketing perspective, we must monitor and analyse these trends, as they present many opportunities. However, be warned that they can also pose threats - just ask those in the music industry.

Jacqui Bishop is CIPS chief examiner for marketing

Ten social statistics you may not be aware of

• Forty-three per cent of men die of cancer;

• The average house price in the UK is £80,893;

• Almost 2 per cent of the UK’s population is over 85;

• There are more births and marriages in July than in any other month;

• Around 40 per cent of births are outside marriage;

• Forty per cent of marriages are remarriages;

• We watch an average of three hours’ television a day;

• Traffic on the roads has increased by 800 per cent over the past 50 years;

• The number of cyclists has fallen by 80 per cent in the past 50 years;

• Around a third of UK households have no savings.