Conducting a Situation Analysis
Analysis Alone Is Not a Solution. Situation analysis is a necessary, but insufficient, prerequisite for effective strategic planning. The purpose of taking things apart is to understand why people, products, or organizations perform the way they do. Data Are Not the Same As Information. Data-a collection of number of facts that have the potential to provide information. Data, however, do not become informative until a person or process transforms or combines them with other data in a manner that makes them useful to decision makers. The Benefits of Analysis Must Outweigh the Costs. Conducting a Situation Analysis Is a Challenging Exercise. The Internal Environment Review of Current Objectives, Strategy, and Performance. The marketing manager must assess the firm’s current marketing objectives, strategy, and performance. The marketing manager should also evaluate the performance of the current marketing strategy with respect to sales volume, market share, profitability, and other relevant measures.
Poor or declining performance may be the result of:
(1) Holding on to marketing goals or objectives inconsistent with the current realties of the customer or external environments
(2) A flawed marketing strategy
(3) Poor implementation
(4) Changes in the customer or external environments beyond the control of the firm
Availability of Resources: Marketing manager must review the current and anticipated levels of organizational resources that can be used for marketing purposes
Organizational Culture and Structure
The marketing manager should review current and anticipated cultural and structural issues that could affect marketing activities. One of the most important issues in this review involves the internal culture of the firm. Internal cultures also include any anticipated changes in key executive positions within the firm. For most firms, culture and structure are relatively stable issues that do not change dramatically from one year to the next.
The Customer Environment
During this analysis, information should be collected that identifies:
(1) The firm’s current and potential customers
(2) The prevailing needs of current and potential customers
(3) The basic features of the firm’s and competitors’ products perceived by customers as meeting their needs, and
(4) Anticipated changes in customers’ needs
Who Are Our Current and Potential Customers
Demographic characteristics-gender, age, income
Geographic characteristics-where customers live, density of the target market
Psychographic characteristics-attitudes, opinions, interests, etc.
What do Customers Do with Our Products?
Identifying the rate of product consumption (or usage rate), differences between heavy and light users of products, whether customers use complimentary products during consumption, and what customers do with the firm’s products after consumption
Derived Demand-where the demand for one product depends on the demand of another product-the marketer must also examine the consumption and usage of the complimentary product.
Where do customers purchase our products?
The fastest growing form of distribution today is nonstore retailing-which includes vending machines; direct marketing through catalogs, home sales, or infomercials; and electronic merchandising-throught the Internet, interactive television, and video kiosks.
When Do Customers Purchase our products?
The “when” question refers to any situational influences that may cause customer purchasing activity to vary over time
The “when” question also includes more subtle influences that can affect purchasing behavior, such as physical and social surroundings, time perceptions, and the purchase task.
Why (and How) Do Customers Select Our Products?
The “why” question involves identifying the basic need-satisfying benefits provided by the firm’s products. This question is important because customers may purchase the firm’s products to fulfill needs that the firm never considered. Barter involves the exchange of goods and services for other goods/services; no money changes hands.
Why Do Potential Customers Not Purchase Our Products?
Noncustomers have a basic need that the firm’s product does not fulfill. Noncustomers perceive that they have better or lower-priced alternatives, such as competing substitute products. Competing products actually have better features or benefits than the firm’s product. The firm’s product does not match noncustomers’ budgets or lifestyles. Noncustomers have high switching costs. Noncustomers do not know that the firm’s product exists. Noncustomers have misconceptions about the the firm’s product (weak or poor image). Poor distribution makes the firm’s product difficult to find.
Solution to get benefit. Economies of scale and scope. Movie Rental Business for change in demand shift. Firm’s resource based view
Resource of the firm should be:
3. Imperfectly immit
4. Difficult to transfer to others
To have sustainable competitive advantage: resource seeking and development and adjustable capabilities
Tangible v intangible
AMA (2007) definition of marketing: “Marketing is the activity, set of institutions, and process for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large.”
Out of four P’s: which is the most significant change: place
Everything used to be a physical place. There is no boundary now. Where: everywhere. Marketspace: computer networks—online. Where buyers and sellers meet online. Open 24 hours
Miles and Snow (1980)
1. Prospector-looking for the opportunity, new product launches
2. Defender-cheaper ways to produce product and make technology better, know how to penetrate market, cheap me 2 product, vision
3. Analyzer-combination of two above, Samsung
4. Reactor-similar to defender, fail to penetrate market
Marketing implementation. Strategy-getting the different jobs done, similar job at different
Best buy and fryes have time utility because you can buy it there and now. retailers are not cheaper than the internet. online have price and place utility they bring the stuff to your door. competitors have sustainable competitive advantage. pepsi and coke are brand competitors. product competitors phones and cars, brand competitors are out interest because we see them on a day to day basis
Most common criticisms leveled against SWOT analysis are that 1) it allows firms to create lists without serious consideration of the issues 2) often becomes a sterile academic exercise of classifying data and information.
Major benefits of SWOT analysis
Requires no extensive traiing or technical skills to be used successfully. The analyst needs only a comprehensive understanding of the nature of the company and the industry in which it competes.
2. Lower Costs
Reduce the costs associated with strategic planning. Many opt ot downsize or eliminate their strategic planning departmens.
SWOT analysis can enhance the qulaiyt of an organization’s strategic plannin even without extensive marekting inofrmation systems. Presence of a comprehensive information system can make repated WWOT analyses run more smoothly and efficiently.
Integration and Synthesis
SWOT analysis gives the anaylys the ability to integrate and synthesize diverse information, both of a qualitative and a quantitative nature. Can deal with a wide diversity of information sources. Helps transform information diversity from a weakness of the planning process into one of its major strenghts.
Fosters collaboration and open information exchange between different funcitona areas By learning what their counterparts do, what they know, what they think, and how they feel, the marketing anaylyst can solvd problesms, fill voids in the analysis, and eliminate potential disaagreemetns before finalization of marketing plan.
Directives for a productive SWOT analysis
Stay focused-separte analysis for each product-market combination is recommended.
Search extensively for Competitors
Product, generic, and total budget competitors. Potential future competitors also. Collaborate with Other Functional Areas. SWOT promotes the shahring of inormation and perspective across deparmtnets. Allows for more creative and innovative solutoins to marketing problems. Examine Issues from the Customer’s Perspecitve. Customer’s beliefs about the firm, its products, and marketing activites are important considerations in Swot. Views of employess and other key stakeholdrs. Look for Causes, Not Characteristics. Rather than simply list cahracteristics of the firm’s internal and external environments, the analyst must also explore the resources possessed by the firm and/or its competitors that are true causes for the firm’s SWOT. Separate Internal Issues from External Issues Marketing options, strategies, or tactics are not a part of the SWOT analysis. Separate product/market analyses can be combined to examine the issues relevant for the entire strategic business unit, and business unit analyses can be comnbine to create a complete SWOT analysis for the entire organization. Only time a single SWOT analysis would be appropriate is when an organization has only one product/market combination. Search extensively for competitors. The firm must watch for any current or potentiaal direct substitues for its products. Porduct, generic, and total budge competitors are important as well. Collaborate with other Functional Areas. Generates information and perspectives that can be shared across a variety of functional areas in the firm.Look for causes, Not characteristics