Developing Marketing

Strategy
What is SWOT analysis

• A technique that enables organisations or individual to move from

everyday problems and traditional strategies to a fresh prospective.

• SWOT analysis looks at your strengths and weaknesses, and the

opportunities and threats your business faces.

• SWOT can help your company face its greatest challenges and find its
most promising new markets.

• The SWOT Analysis framework is a very important and useful tool to use
in marketing Management and other business applications A clear
understanding of SWOT is required for business majors.
EXTERNAL ENVIRONMENT (OPPORTUNITY AND
THREAT) ANALYSIS

• A business unit must monitor key macroenvironment forces and

significant microenvironment factors that affect its ability to earn
profits.

• It should set up a marketing intelligence system to track trends and

important developments and any related opportunities and threats.

• Good marketing is the art of finding, developing, and profiting from

these opportunities.
• A marketing opportunity is an area of buyer need and interest that a
company has a high probability of profitably satisfying.

• There are three main sources of market opportunities.

• The first is to offer something that is in short supply. This requires little
marketing talent, as the need is fairly obvious.

• The second is to supply an existing product or service in a new or

superior way.

• How? The problem detection method asks consumers for their

suggestions, the ideal method has them imagine an ideal version of the
product or service, and the consumption chain method asks them to
chart their steps in acquiring, using, and disposing of a product. This last
method often leads to a totally new product or service.
• Marketers need to be good at spotting opportunities. Consider the following:

• A company may benefit from converging industry trends and introduce hybrid products
or services that are new to the market. Major cell manufacturers have released phones with
digital photo and video capabilities, and Global Positioning Systems (GPS).

• • A company may make a buying process more convenient or efficient. Consumers can use
the Internet to find more books than ever and search for the lowest price with a few clicks.

• • A company can meet the need for more information and advice. Angie’s List connects
individuals with local home improvement contractors and doctors that have been reviewed by
others.

• • A company can customize a product or service. Timberland allows customers to choose

colors for different sections of their boots, add initials or numbers to their boots, and choose
different stitching and embroidery.
• • A company can introduce a new capability. Consumers can create and
edit digital “iMovies” with the iMac and upload them to an Apple Web
server or Web site such as YouTube to share with friends around the
world.

• • A company may be able to deliver a product or service faster. FedEx

discovered a way to deliver mail and packages much more quickly than
the U.S. Post Office.

• • A company may be able to offer a product at a much lower price.

Pharmaceutical firms have created generic versions of brand-name
drugs, and mail-order drug companies often sell for less.
• To evaluate opportunities, companies can use market opportunity analysis (MOA) to ask questions

like:

• 1. Can we articulate the benefits convincingly to a defined target market(s)?

• 2. Can we locate the target market(s) and reach them with cost-effective media and trade

channels?

• 3. Does our company possess or have access to the critical capabilities and resources we need to

deliver the customer benefits?

• 4. Can we deliver the benefits better than any actual or potential competitors?

• 5. Will the financial rate of return meet or exceed our required threshold for investment?

• In the opportunity matrix in Figure 2.4 (a), the best marketing opportunities facing the TV-lighting-

equipment company appear in the upper-left cell (#1). The opportunities in the lower-right cell (#4)

are too minor to consider. The opportunities in the upper-right cell (#2) and the lower-left cell (#3)

are worth monitoring in the event that any improve in attractiveness and potential.
• An environmental threat is a challenge posed by an unfavorable trend or
development that, in the absence of defensive marketing action, would lead to
lower sales or profit. Figure 2.4 (b) illustrates the threat matrix facing the TV-
lighting-equipment company. The threats in the upper-left cell are major,
because they have a high probability of occurrence and can seriously hurt the
company.

• To deal with them, the company needs contingency plans. The threats in the
lower-right cell are minor and can be ignored. The firm will want to carefully
monitor threats in the upper-right and lower-left cells in the event they grow
more serious.
INTERNAL ENVIRONMENT (STRENGTHS AND
WEAKNESSES) ANALYSIS

• It’s one thing to find attractive opportunities, and another to be

able to take advantage of them. Each business needs to evaluate
its internal strengths and weaknesses.
• Businesses can evaluate their own strengths and weaknesses by using a
form like the one shown in “Marketing Memo: Checklist for Performing
Strengths/Weaknesses Analysis.”

• Clearly, the business doesn’t have to correct all its weaknesses, nor
should it gloat about all its strengths.

• The big question is whether it should limit itself to those opportunities

for which it possesses the required strengths, or consider those that
might require it to find or develop new strengths.
Strengths (internal, positive factors)

• Characteristics of the business or individual that give it an advantage over others in

the industry.

• Positive tangible and intangible attributes, internal to an organization or individual.

• Beneficial aspects of the organization or the capabilities of an organization, process

capabilities, financial resources, products and services, customer goodwill and
brand loyalty.

• Examples - Abundant financial resources, Well-known brand name, Lower costs [raw
materials or processes], Superior management talent, Better marketing skills, Good
distribution skills, Committed employees.
Weaknesses (internal, negative factors)

• Characteristics that place the firm or individual at a disadvantage relative to

others.

• Detract the organization from its ability to attain the core goal and influence its
growth.

• Weaknesses are the factors which do not meet the standards we feel they should
meet.

• However, weaknesses are controllable. They must be minimized and eliminated.

• Examples - Limited financial resources, Very narrow product line, Limited

distribution, Higher costs, Weak market image, Poor marketing skills, Limited
management skills, Under-trained employees
Opportunities

• Are external attractive factors that represent reasons your business is likely to prosper.

• Chances to make greater profits in the environment - External attractive factors that
represent the reason for an organization to exist & develop.

• Arise when an organization can take benefit of conditions in its environment to plan and
execute strategies that enable it to become more profitable.

• Organization should be careful and recognize the opportunities and grasp them whenever they
arise.

• Examples - Rapid market growth, Rival firms are complacent, Changing customer
needs/tastes, New uses for product discovered, Economic boom, Government deregulation,
Sales decline for a substitute product .
Threats (external, negative factors)

• External elements in the environment that could cause trouble for

the business - External factors, beyond an organization’s control.

• Arise when conditions in external environment jeopardize the

reliability and profitability of the organization’s business.

• Examples - Entry of foreign competitors, Introduction of new

substitute products, Product life cycle in decline, Changing
customer needs/tastes, Rival firms adopt new strategies,
Increased government regulation, Economic downturn.
Aim of SWOT Analysis

• To help decision makers share and compare ideas.

• To bring a clearer common purpose and understanding of factors for

success.

• To organize the important factors linked to success and failure in the

business world.

• To help individual or organization to understand their strengths and

weaknesses.

• It promotes strategic thinking

Advantages of SWOT Analysis
SWOT Analysis helps in strategic planning in following manner-

• It is a source of information for strategic planning.

• Builds organization’s strengths.

• Reverse its weaknesses.

• Maximize its response to opportunities.

• Overcome organization’s threats.

• It helps in identifying core competencies of the firm.

• It helps in setting of objectives for strategic planning.

• It helps in knowing past, present and future so that by using past and current data, future
plans can be chalked out.
Limitations of SWOT Analysis

• SWOT Analysis is not free from its limitations. It may cause organizations
to view circumstances as very simple because of which the organizations
might overlook certain key strategic contact which may occur. Moreover,
categorizing aspects as strengths, weaknesses, opportunities and threats
might be very subjective as there is great degree of uncertainty in
market. SWOT Analysis does stress upon the significance of these four
aspects, but it does not tell how an organization can identify these
aspects for itself.
There are certain limitations of SWOT Analysis which are not in control of management. These
include-

• Price increase;

• Inputs/raw materials;

• Government legislation;

• Economic environment;

• Searching a new market for the product which is not having overseas market due to import
restrictions; etc.
Internal limitations may include-Insufficient research and
development facilities;
• Faulty products due to poor quality control;
• Poor industrial relations;
• Lack of skilled and efficient labour; etc