The STEEP analysis is typically used by large corporations. I have created a series defining STEEP analysis so that you too can use it in your small business. This tool will set you apart from your competition because you will understand your environment on a much deeper level. STEEP is an acronym for social, technological, economic, environmental, and political. STEEP analysis serves as an eye opener to the external world and the opportunities and threats to your business. Each of the areas will be explained so that you will understand why you want to use this analysis tool in your business.
STEEP analysis is an excellent tool to use in both the planning stages of your business and later when implementing an annual business review. What affects your business is more than just the quality of products or services; it is all the external happenings that you may be unaware of. There are plenty of external factors that play major roles in the success of everything you do. It covers what you need to know so that you can manage projects and overall business more effectively. You the business owner can either take advantage and enhance your business or be prepared and protect your business. But first you have to be in the know. So how can you use STEEP analysis to understand external drivers? We will begin today with S- Social trends are where most businesses place their focus. Awareness of what is popular with certain groups of individuals, especially your target market is vital. Social will be broken down into: demographics, lifestyle, social and cultural values and customer behavior and advertising.
Social demographics – who are the people that patron your business? Is there a change in population in your business? If you are a domestic business and find that the neighbor is changing culturally you will have to make a choice; move your business to a different area or learn to address the needs of the changing culture. An antique store in an urban community that has become low income may not do as well.
Social lifestyles – What is the lifestyle of your customer? Is that changing? There are urban low-income communities that are changing to middle-class communities and the change in population. This change can either put the local businesses out of business or they will have to upscale to meet the need of the changing population. Social lifestyle in population has a direct effect on business.
Social and cultural values – Be aware of the cultural values of your clientele. Businesses can easily offend and lose business when they don’t understand the cultural values of their target market. Beliefs and values are what form your clients, their value system determines how and what they purchase. You want to understand your match to market. A few ideas of bad business matches are:
- A pork store in community that is becoming populated by Muslims
- Gentleman’s club by school district, church or family oriented community
- A Christian bookstore in a community that cherishes metaphysics
- Health club in a community that does not value the importance of health
Consumer behavior and advertising – Knowing the behaviors of customers is also essential. By this I mean, you want to know what are their buying habits, what is important to them, what are their priorities. For instance moms who work long hours and comes home to take the children to soccer, baseball, or football will possibly benefit from having healthy meals come to their door step. A dad who works late at the office would possibly benefit from having someone do chores such as mowing the lawn, landscaping and handyman work; allowing dad to spend time with his family on weekends. Knowing the behavior of your target market will make all of the difference on how you will present your product/service to market. Your advertising efforts will on point. STEEP analysis will allow you to take a closer look at the areas where you may have suspected were important and will give you a crystal clear picture of what you are dealing with. We will examine the technological portion of STEEP analysis next.