Before making any marketing strategy, whether advertising or public relations, you need to learn how to make situation analysis. Your analysis will become the very foundation of the strategies and tactics you will implement. This will show you exactly what problems you need to address and what situations you need to take advantage on.
The process of making a situation analysis includes the following:
Product and Position
Determine where your business is now and how you positioned it in the market. To do this, you must divide your business into your core products (the primary products you provide in the market) and the support products (those that enhance your core products). Other aspects you may want to look at include brand identity, pricing, distribution, and store location, among others.
Doing these should help you understand the objectives you need to achieve in and maintain for your business , as well as measure its performance.
Compile a list of your competitors and break them down according to level. Your primary competitors must consist of businesses that you feel share the same goals, strategies, and resources of your company, while secondary competitors are those that indirectly affect your sales. Also come up with businesses that may pose as a potential threat to your company in the future.
Once you’ve compiled your competitor list, come up with the advantages and disadvantages for each by figuring out where they are in the market, how the market perceives them, and how they compare to your business.
Define your target market according to primary and secondary levels. Your market can be categorized according to their purchasing trends, power, and behavior. You also have to consider how your products and services measure up to their expectations and satisfy consumer needs. Furthermore, figure out how your market perceives not only your product in terms of what it has to offer, but also your business as a brand in relation to your competitors.
Environmental and Natural Factors
This is composed of two aspects – external and internal.
External could be natural phenomenon, economic situation, politics, culture and diversities that will or might affect your performance in the market.
Internal refers to company politics, your work force, production rate, manufacturing processes, business partnerships, tie-ups, administration and management expertise.
After listing down the following and answering the specified questions, the next step is to cross examine each point and analyze how they are interrelated. By carefully studying each point and raw data, you will be able to derive the S-W-O-T of your business – this stand for Strengths, Weaknesses, Opportunities, and Threats.
• Strengths – These are the positive attributes, material and conceptual, internal to your brand. Such features are within your capacity to control. You could break this down into product/service, organization and administration, assets and valuable materials, and other features that may give you a competitive advantage in the market.
• Weaknesses – These are factors within your control that diminish your ability to gain or maintain a competitive advantage in the market. You can also categorize these into tangible and intangible. Under tangible, these could be poor packaging, inferior location, limited resources etc. Intangible weaknesses could be lack of expertise, lack of access to special skills and trainings, inferiors ambiance created by your store etc. These are all internal factors that render your business at a disadvantage in comparison to your competitor.
• Opportunities – These are external factors that may give you an edge in the market – these can also be current situations that you may find yourself attracted to take advantage on. Opportunities show the potential you can realize by the execution of your marketing strategies. Examples of these are economic situation advantageous for your business, lifestyle and trend change, positive perception of the market with regard to your brand and a more.
• Threats – These are external factors that are outside your realm of control that may negatively affect your business – threats are the reasons why contingency plans are usually developed. These can be situations such as decline of economic value of your stocks, inevitable price increase from suppliers, governmental regulations, a change in consumer behavior that reduces profit, etc.
After listing down and cross-examining all of these elements and factors, just before you made your SWOT analysis, you can now proceed to determine the implications of your analysis. Having defined your internal strengths and weaknesses and figuring out external opportunities and threats, how are you going to take advantage of your strengths to overshadow or improve on your weaknesses and wield it to seize opportunities in order to deflect threats in the case that they do materialize?
Here is an example of a SWOT Analysis of the print industry in the US. If you plan on starting a business on printing services, here’s a SWOT made ready for you. All you need to do is to fill in the necessary information.
If you have additional information, reaction, insight or you just want to share an experience in making a Situational Analysis, please do so by writing a comment below.