Published by MBA Skool Team, Last Updated: November 10, 2019
PESTLE Analysis of Sephora analyses the brand on its business tactics. Sephora PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Sephora, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the Sephora PESTLE Analysis can be explained as follows:
Sephora is a leading beauty and cosmetic brand in the world. One of the major political factors affecting Sephora is a country’s law on Animal Testing. The European Union in 2013 issued a ban on any on sale of any animal tested product. So, Sephora can only sell those products in Europe which do not carry any animal testing. Also, while entering in a new market, Sephora has to do a proper analysis in order to know which brands to launch in that market. For launching any new product, Sephora needs to follow the FDA standards failing which will lead to disapproval of the product from FDA. Sephora has its presence in 27 countries. All these countries have a high Political Stability Index. The company has no presence in African nations because of the political instability dwelling there.
Below are the economic factors in the PESTLE Analysis of Sephora:
For all the brands and products, the market price is decided on majorly two factors.
First being the Cost of Production. And the other being Supply and Demand interactions. The ideal situation is when demand and supply become the same. So, the price at which demand and supply become the same is called “Price Point”. So, Sephora must know the price point for a given economy to maximize its profits. Also, the world is witnessing a slowdown in the economic growth. It will be beneficial for Sephora to invest in countries with high unemployment as the people will get ready to work at low wages, thereby reducing Sephora’s costs.
Following are the social factors impacting Sephora PESTLE Analysis:
Customer Perceived Value is one of the factors which can be a deciding factor in your company’s success in a XYZ country. Sephora needs to market itself in such a way that its customers feel that Sephora is the Epitome of Cosmetics. Today, more than 80% of the populations who use cosmetics are female. So, the focus should be on females. . Also, countries with high levels of education and therefore more levels of income will like to spend more in Cosmetics. So, it will be more beneficial for Sephora to invest in U.S.A than investing in countries like Zambia, Uganda etc. There is also a need of proper market segmentation i.e. Sephora can’t sell its premium range cosmetics in a nation with majority of its people belonging from lower middle class society.
The technological factors in the PESTLE Analysis of Sephora are mentioned below:
All of the major competitors of Sephora like ULTA, Nordstrom, and Lush have an online presence on different social media sites and so does Sephora. Therefore it needs to devise innovative marketing strategies so that it can have a cutting edge over its competitors. Sephora has a mobile application through which people can browse all its products and can order successfully. Not all its near competitors have presence in the mobile application.
Timely technological advancements are required in order to minimize the costs.
Following are the legal factors in the Sephora PESTLE Analysis:
Protection of Intellectual Property Rights plays an important role in deciding which country to invest into. It is a bit riskier for Sephora to operate in countries like India as it ranks very lowly on Intellectual Property Index of 45 nations compiled by the U.S. Chamber of Commerce. Also, the company needs to have a detailed analysis of the Business Laws, Employment laws of the country it wants to invest into; whether the laws match with its business model or not.
In the Sephora PESTLE Analysis, the environmental elements affecting its business are as below:
Sephora is among the top 20 retailers in the US that procure renewable energy. For 5 years Sephora has also been an EPA Green Power Partner.
People like to associate themselves with the companies which do well for the environment. So, having such Eco-friendly practices help Sephora in creating a neat brand image. Also, after the Paris Agreement 2016, governments have laid down strict rules and guidelines failing which the companies would have to pay hefty fines.
To conclude, the above Sephora PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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