Park Avenue PESTLE Analysis
Detailed PESTLE analysis of Park Avenue examining political, economic, social, technological, legal & environmental factors.
Political Factors:
Park Avenue is part of Raymond Group’s company, JK Helene Curtis. The brand produces men’s grooming products like deodorant, perfumes, soaps, shampoo, etc. and is subject to cosmetic regulations like the Drug and Cosmetics Act, 1940. This Act specifies law in the areas of import, production, distribution and sales of drugs and cosmetics in India. Hence, the company needs to ensure compliance to the aforementioned areas and any violation in this regard may invite regulatory action. In recent years, there has been growing concern over use of cosmetics being harmful to the skin. This may further invite regulatory actions. In the area of taxation too, the company is subject to corporate tax rates. Any increase in this regard may reduce the profitability of the company or force it to increase prices, thereby reducing demand. Also, in India, indirect tax framework is governed by the Goods and Services tax. Any changes in the tax laws, particularly more stringent regulations may increase cost of compliance for the company.
Image: company website
This concludes the political factors in the Park Avenue PESTLE Analysis.
Economic Factors:
Below are the economic factors in the PESTLE Analysis of Park Avenue:
Park Avenue targets consumers from urban areas and does competitive pricing. If economic situation turns unfavourable, say, very high inflation or recession, this could impact the discretionary spending of the consumers.
Another factor to consider here is that the deodorant market is price sensitive in India. For example, any increase in the raw materials cost could reduce profit margins on the product. Alternatively, the company may have to increase the price of the various grooming products such as deodorants, perfumes, shampoos, etc. This may again reduce the demand for the products. Also, during the period of national lockdown due to Covid-19, the sales of deodorants fell in India by more than 80% during the first quarter months of April and May.
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Social Factors:
Following are the social factors impacting Park Avenue PESTLE Analysis:
There is a change in the lifestyles and consumption patterns of people in India, as they prefer more of grooming products. For instance, the deodorant market in India is valued at Rs. 2500 crores, and is growing at an annual rate of 15-18%. Another important factor to consider here is the rising disposable income of consumers. In deodorant category, however, too many brands have focused on a common theme – men attracting women in ads. Park Avenue, however, took a different approach. The brand is positioned as celebrating the man, and making sure he looks fine. Also, Park Avenue has the second-highest market share in the deodorant space after Fogg. It has achieved this with less advertising spend compared to its competitors. To stay relevant to its consumers, the brand also renews its packaging every 2-3 years. It also produces at least one variant annually. The brand adapts to the change and preferences of the consumers every year. It has now positioned itself as ‘livelier, younger’ brand. This adjustment in positioning is also to attract the first-time job seekers who have graduated from college.
Technological Factors:
The technological factors in the PESTLE Analysis of Park Avenue are mentioned below:
The brand has made few changes in its website with improved user interface, better navigation and more user-friendliness. The website has been designed to cater primarily to male audience in the age group 18-35 years. For example, the website comes with the feature called Product Finder. The website enlists various Park Avenue grooming products for men. It is a common solution platform for grooming information and finding related suitable product based on user needs. Other features included are video banner, informative content and unique placement of products. Video banner section gives the website a contemporary look. Apart from this, the brand has also tied-up with the sales-technology start-up, Applicate. The start-up helped make cloud-based solutions for the company’s sales team and channel partners. The collaboration has scaled up as well, with 1000s of retailers in the country.
These steps will certainly help the better improve customer satisfaction and grow more in the market.
Legal Factors:
Following are the legal factors in the Park Avenue PESTLE Analysis:
Park Avenue is subject to laws related to intellectual property rights. Yet, there may not be adequate protection by law always in this matter. It has several trademarks and copyrights registered in its name. In case, any other entity imitates the brand, this may lead to loss of sales for the brand. Also, it may have to incur legal costs to protect its intellectual property rights. The parent company is also going through a family feud in the court. The case may reduce brand equity of the parent company, leading to negative customer perception. Hence, it is imperative that the company ensures its follows all policies & compliances for a stable business.
Environmental Factors:
In the Park Avenue PESTLE Analysis, the environmental elements affecting its business are as below:
Park Avenue still faces risks due to unforeseen events such as natural disasters like cyclones, floods, earthquakes, lightning, infectious diseases, etc. The prime example right now is the global spread of the pandemic, Covid-19. The lockdown caused all stores to be shut down, leading to poor financial performance. The Raymond group even reported net loss in 2020. At the same time, the company realizes importance of sustainability. The Group has also tied-up with Reliance to produce eco-friendly textile fabrics. This is done in the form of recycling polyester fiber for Sustainouva.
The textile produces unique apparel products such as organic wool, Tencel, modal, burnt bamboo, recycled polyester, recycled nylon, etc. All these measures would help create a positive perception of the brand for its consumers, particularly the environmentally-conscious ones. This would lead to increase in sales and profits for Park Avenue.
To conclude, the above Park Avenue 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.
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