PESTLE Analysis for Product Managers
As a Product Manager, you make product decisions so that your customers and company both are happy and satisfied.
While making product decisions, you analyze customer behaviour and identify their needs and problems.
You also analyze competitors, understand their differentiation and then create a differentiation for your product so that customers choose your products over the competition. So, you have some sort of control over analyzing these two factors – Customer and competition.
However, other macroeconomic external factors impact your product and business. As a product manager, you have no control over any decision-making of external macroeconomic factors. These factors are analyzed using a framework called PESTLE Analysis.
As a product manager, you must do a PESTLE analysis to understand the external factors that impact your product and business.
Why PESTLE Analysis?
The outcome of this analysis is to identify any potential threats or risks to the product and mitigate them in advance so that there is nil to minimal impact on the business. The outcome of PESTLE is also to identify any opportunities that are thrown by the external environment.
For E.g: Zoom got an opportunity to grow during COVID and it anticipated the opportunity and capitalized on it. The design of the product was suitable to be able to scale from 30 mn to 300 mn users from Dec 2019 till March 2020. It was able to manage the load of 10 x in just three months.
Similarly, As a product manager for Make My Trip, you would have to create situational features like Covid Insurance, State Guidelines to be published on the portal, and web-check-in mandatory during COVID times.
What is PESTLE Analysis?
The following are the factors in PESTLE analysis:
- Political -> What is the political situation of a country and what is its effect on the markets, Are policies in favour of your business or against the business? E.g, In India, it is a very favourable government and supports startup India, Digital India, loans and subsidies for MSMEs, and easy access for Amazon, Twitter, Google, Apple, and Microsoft.
- Economic – What are the prevalent economic factors like the disposable income of target users, and the GDP growth, inflation rate, interest rates, etc?
- Social – How is culture affecting the markets and what are its determinants? E.g: In India, Genz and Millenials are very used to adopting tech products and are heavy smartphone users. Culture is very educated and tech-centric. All of these factors work in favour of the product.
- Technological – What are the technological inventions that are trending and what are other future possibilities in this field? In India, UPI is a tech marvel that has transformed the way we carry Cash and it is replaced by Mobiles.
- Ecological – What are the environmental concerns for the industry?For e.g: Amazon had a negative perception in terms of not being Environment conscious in the way they are packing goods. So, they have adopted sustainable and recyclable materials for packing goods and also minimize the packaging material.
- Legal – What are the current legislations that regulate the industry and if they need to be changed? SEBI is a regulatory body if you are a product manager for Zerodha or upstox. Zerodha must comply with the regulations and guidelines defined by SEBI.
Summary:
- A successful product manager is a Business strategist first and Technologist next.
- The product manager must be vigilant about the external factors that impact the business and anticipate the risks, and threats or capitalize on any opportunities thrown by the external environment.
Do you want to learn How to conduct PESTLE Analysis? Join our online Product management course now.
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