The PESTEL Method, example with Kiehl's

The PESTEL method makes it possible to highlight the environment of a company in various fields. Thanks to this matrix, companies can know their strengths and advantages as well as the changes that may need to be made in their marketing strategy. It also makes it possible to monitor opportunities to turn them into strengths and to know how to analyze market risks. This analysis takes into account the political, economic, sociological, but also technological, ecological and legal fields.

The PESTEL Method, example with Kiehl's

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It is part of a diagnostic logic external to the company. To illustrate this, we will take the example of Kiehl's, a company that has belonged to the French giant L’Oréal since 2000. Specializing in cosmetics, it has more than 160 boutiques around the world and more than 300 references.

In 2020, the turnover was 12.8 million euros in France, 248 million around the world.

Despite L’Oréal’s very strong influence, Kiehl’s is a group that has retained a certain autonomy in the way it operates. In France, there are around fifty employees. Recently, the group has developed a range of cosmetics for animals, that has had significant success, especially in the United States.

PESTEL analysis

Politics

The political domain concerns all political and/or governmental decisions that impact the group or company at any given time. When a company is present in more than one country, regulations and governments may differ, resulting in a necessary adaptation of the company in question.

In Kiehl’s case, political stability is important as the company has to engage in frequent external exchanges in order to satisfy all of its customers around the world. Through its presence in several countries and its relationship with the world-famous group L’Oréal, Kiehl’s has to ask for ingredients and products abroad in order to satisfy more and more consumers.

In addition, it should be noted that each country has its own rules, which must be followed by Kiehl's with each new store established.

Economic

At the economic level, it is a question of analyzing the growth of the company and, more generally, of a market. Competition is also analyzed, as well as the purchasing power of consumers at any given time. The economic analysis of a company is also defined by its marketing strategy, the economic cycle of a country and the confidence of households in a particular product or sector.

Kiehl’s is a cosmetics company, which means there is a lot of competition across the industry. The world of beauty is one of the most important areas for the country's economy; France being the country of elegance and beauty par excellence and, therefore, attracts a large number of tourists every year.

This competition forces Kiehl’s to develop new strategies to be in tune with the needs and expectations of consumers.
With this in mind, many funds are allocated to research and development, much more than to communication itself.

Consumers are particularly fond of this type of store, even if the health crisis inevitably had negative impacts, as customers had other priorities for a few months.

Sociological

The social side takes into account consumer behavior, trends and current needs. It is also a question of lifestyles, which can be different depending on the country and which takes on its full meaning when the company is present in several territories. Health, consumption, and purchasing patterns are also to be taken into account because since the arrival of digitalization, many sectors have been transformed.

Kiehl’s is a brand that markets products for all targets and that wants to interest as many people as possible.
Today, this type of group meets the expectations and needs of the greatest number, with products in all price ranges.
Consumers are also more interested in their health and the ingredients in the cosmetics they use on a daily basis. Thanks to apps like Yuka, in particular, they no longer hesitate to inform themselves before any purchasing action, hence the need for Kiehl's to be irreproachable about the quality of the products sold.

Technological

The technological field concerns research and development, the use of new marketing methods to attract consumers, new patents and everything that a company uses to effectively differentiate itself from the competition.

It will also be a question of digitization and new methods of communication that contribute to the expansion of satisfaction.
New technologies play an important role in the world of brands like Kiehl's.

The products sold are also more and more personalized and correspond not only to the physical attractions of consumers but also to their way of being.

In addition, Kiehl’s maintains a continuous presence on social media, which allows it to stay in touch with Internet users and, therefore, potential customers. It is also the way to offer various promotions and flash sales.


Ecological

We're talking about a group’s interest in protecting the planet. Companies must be more and more active with the treatment of waste, new modes of greener energy, or anything that contributes to paying more attention to the environment.

Kiehl’s, for its part, is a company very involved in the protection of the environment.

In 2021, more than 80% of products have ultra-simplified packaging, 100% recyclable to help protect the planet.

Consumers are also very interested in protecting the Earth, even more since the start of the pandemic, where priorities have gradually changed as well as consumption habits.

The group also saves energy directly within the sales areas (electricity, paper, etc.)

Legal

The questions dealt with here are those of taxation, but also of the protection of consumers, their rights and respect for companies in the face of competition. Mention is also made of differences in legislation between countries.

Kiehl’s is a group that must protect the consumer. Indeed, as it is customary in all businesses, customers have a right of withdrawal after an order or a purchase is made in-store.

In addition, some ingredients cannot be used in certain countries, so the company must comply with these regulations under penalty of fines and/or store closures.

Consumers today finally expect complete transparency as to the composition of the products they use, so Kiehl's must give this composition on the back of each of their products.