Analyzing the internal environment

Marketing managers seldom start with limitless resources and a blank sheet of paper. They will have existing
products, existing retailers or distributors, existing location and a legacy of brand attitudes and previous marketing
communications. They will also have only finite resources with which to exploit opportunities. This means that a
manager must carefully review internal factors against the external environment and competitor activity.
This review of an organizations strengths and weaknesses should lead to an identification of opportunities and
threats. It is often referred to as a SWOT analysis. This is an acronym of the headings used:

Strengths identified within the company;

Weaknesses identified within the company;

Opportunities identified when strengths are related to the external environment;

Threats identified when weaknesses are related to the external environment.

Understanding an organizations strengths and weaknesses

A manager needs to review all of the organizations activities and make a judgment about their merits relative to the
competition and taking into account the external environment. Where the judgment of any aspect of the
organization is positive, they would be said to be strength; where it is negative, this would be a weakness.
Although many large organizations will support decisions with sophisticated market and internal data, this is really
a creative exercise involving judgment. Insight into new competitive advantages may come from attempting to
review aspects of the organizations operations in new ways. The main areas than might be considered are:

sales volume;

sales growth;

market share;

customer base and loyalty (number of active/repeat customers)

customer attitudes to the brand;

customers' uses for the brand;

the organizations physical resources;

the organizations intellectual resources (staff knowledge and copyrights and patents);

Relationships with suppliers, distributors and retailers.

Understanding an organizations opportunities and threats

Opportunities and threats follow directed from the assessment of internal strengths and weaknesses against the
external environment including competitor activity. Opportunities are identified from an assessment that suggests
that an organization is in a very strong position relative to competitors in an area with a very favorable external
environment.
Threats are identified from an assessment that suggests that some aspect of the organizations activity is very weak
compared to competitors and /or were that activity faces a problematic external environment.
The more insightful, detailed and imaginative the analysis of strengths and weaknesses, the more likely that this will
produce meaningful and exploitable opportunities and the more likely a organization is to be able to respond to
threats before they become serious.
From these assessments priorities can be identified. Opportunities and threats can be ordered according to which are
likely to have the biggest impact on the organization in terms of:

profit or loss;

market growth or decline.

Opportunities and threats may also be considered to be short term (less than a year) or longer term.
Niche markets
Niche markets are sub groups within segments. Niches are narrowly defined segments that are usually identified as a
result of dividing a segment into sub-segments. For example the short-stay holiday market can be further divided into
18-30s, couples, young families or over 50s niche markets. Opting for this type of segmentation could allow a smaller
market player to concentrate its limited resources on a smaller, yet clearly defined segment that could be overlooked by
larger competitors. Some players in the market like Bournemouth International airport want to explore niche markets in
the future.