SWOTS (Strengths, weaknesses, opportunities and threats) Analysis
A SWOT analysis involved the identification and analyses of the internal strengths and weaknesses of the business and the opportunities in and threats from the external environment.
• What are our strengths?
• What is the business good at?
• Is our product popular?
• Are our customers loyal?
• Do we have skilled and motivated workforce?
• Do we function efficiently?
• Are we in a sold financial position?
• Is our equipment state of the art?
• What are our weaknesses?
• Do we cave competent managers and staff?
• Is our computer system obsolete?
• Have we experience past failures?
• Have we been upgrading our facilities to keep pace with others?
• What are our opportunities?
• What will new technology bring for us?
• Is the national economy strong?
• Are our interest rates low?
• What are our possible new markets?
• What other businesses can we acquire to expand our organisation?
• What are our threats?
• What trends have been evident in our markets?
• Are there new laws regulating what we do?
• Are there new competitors?
• Are current competitors taking over our new market?
Product Life Cycle
The product life cycle consists of the stages a product passes through: introduction growth, maturity and decline.
The business tries to increase consumer awareness and build a market share for the new product:
• Product brand and reliability is established
• Price is noticeably lower then competitors price in order to gain a market foothold.
• Promotion directed at earl buyers and users occurs and communications seek to educate potential customers about the merits of the new product.
• Distribution is selective which enable customers to gradually form acceptance of the product.
The producers of the product actively pursue brand acceptance and market share:
• Product quality is maintained and improved and support services may be added.
• Price per unit of the production is maintained as the firm enjoys increased consumer demand and a growing market share.
• Promotion now seeks a wider audience
• Distribution demands are increased as the product becomes more popular.
Sales plateau as the market becomes saturated:
• Product features and packaging try to differentiate the product from those of competitors.
• Price may need to be adjusted downwards to hold off competitors and maintain market share.
• Promotion continues to suggest the product is tried and true – it is still the best.
• Distribution incentives may be need to the offered to encourage preferences over rival products.
Sales begin to decline as the business fees several options:
• Product maintained with some improvements or rejuvenation. Cut the losses by selling it to another business.
• Price is reduced to sell the remaining stock
• Promotion is discontinued
• Distribution channels reduced and product offered to a loyal segment of the market only.
The three steps of market research
There are three steps of market research these are:
• Determining information needs
• Collecting data from primary and secondary sources
• Analysing an interpreting data
Determining information needs
The best method to determine the relevance of data is to constantly ask questions concerning its ultimate use. Information is useful if it:
• Results in marketing strategies that meet the needs of the business target market.
• Assists the business to achieve its marketing objectives.
• May be used to increase sales and profits.
Data collection – Primary and secondary sources
Marketing data refers to the information relevant to the defined marketing problem.
Primary data are the fact and figures collected from the original sources for the purpose of a specific research problem. There are three main methods used to gain primary data:
• The survey method
• The observation method
• The experiment method
Secondary data comprises of information that has already been collected by another person or organisation. There are two main types of secondary data, these are:
• Internal data
• External data
Data analysis and interpretation
Once the data has been gathered, conclusions need to be drawn. Raw data is of little value until it has been analysed. Statistical interpretation analysis is the process of focusing on the data that represents average, typical or deviations from typical patterns
Establishing market objectives
Marketing objectives are realistic and measurable goals to be achieved through the marketing plan. The three most common marketing objectives include:
• Increasing market share
• Expanding the product range
• Maximising customer service
Increasing Market Share
Market share refers to the businesses snare of the total industry sales for a particular product.
Expanding the product mix
The total range of products offered by a business is referred to as the businesses product mix. Businesses are usually keen to expand their product mix, as this will increase profits in the long term.
Maximising customer service
Customer service means responding to the needs and problems of the customer. The strategies a business can use to maximise customer service include:
• Asking customers what they want
• Training employees and awarding them for excellent customer service
• Anticipating market trends by conducting research
• Finding out what competitors are offering and then reviewing the product mix
• Establishing and maintain long term relationships with customers
• Encouraging employees to focus their attention on the customers needs.
Identifying Target Markets
A target market is a group of present and potential customers to whom a business intends to sell its product. A primary target market is the market segment at which most of the marketing resources are directed. A secondary target market is usually a smaller and less important market segment.
Why identify and select a target market?
This is because the business needs to:
• Use its marketing resources more efficiently which is likely to result in the marketing campaigns being more cost effective and time efficient.
• Promotion material is more relevant to the customers needs and it more likely to be noticed.
• Better understand the consumer buying behaviour of the target market over time
• Refine the marketing strategies used to influence customer choice
Mass marketing approach
A mass marketing approach seeks a large range of customers. The mass marketing approach assumes that individual customers in the target market have similar needs. The business therefore develops a single marketing mix and directs it at the entire market.
Market Segmentation Approach
Market segmentation occurs when the total market is subdivided into groups of people who share one or more common characteristics. Once the market has been segmented the business selects one of these segments to become the target market.
The niche Marketing approach
An extension of the market segmentation approach is that of the niche market, which is a narrowly selected target market segment. The needs of the customers in these markets are often neglected by a large business because it is rarely profitable for them to alter their marketing mix to cater for small groups.
Developing Marketing strategies
Marketing strategies are actions undertaken to achieve the businesses marketing objectives through the marketing mix.
Marketing mix – the four Ps
The marketing mix refers to the four Ps – product, price, promotions and place/distribution. Once the four Ps have been established the business can then determine the emphasis it will place on each of the variables.
Product (goods and/or Services)
The business needs to determine the features of the product such as the packaging/labeling, design, brand name and guarantee.
Selecting the amount of money a customer is prepared to offer in exchange for a product. A major decision is to decide whether to place the price above or below or even with a competitor’s price.
A promotion strategy details the methods to be used by a business to inform, persuade and remind customers about its products.
This process involves a number of intermediaries such as the wholesaler or retailer. Apart from the retailer the other intermediaries are invisible – the customers know little about their role. The number of intermediaries chosen will determine how widely the product will be distributed.
Implementing the marketing plan
Implementation is the process of putting the marketing strategies into operation.
Monitoring and controlling the marketing plan
Monitoring means checking and observing the actual progress of the marketing plan. This requires the employees to gather information and report on any important changes, problems or opportunities that arise during the life of the marketing plan.
Developing a financial forecast
By measuring the sale potential and revenue forecast for each strategy, and comparing these with the anticipated expenditures a business is in the best position to decide how to allocate its marketing resources. Developing a financial forecast requires two steps:
• Cost estimate
• Revenue estimate
Comparing actual and planned results
Three key performance indicators used to measure the success of the marketing plan are:
• Sales analysis
• Market share analysis
• Marketing profitability analysis
A sales analysis uses sales data to evaluate a businesses current performance and the effectiveness of a marketing strategy.
Market share analysis
By undertaking a market share analysis, a business is able to evaluate its marketing strategies as compared with that of its competitors. This evaluation can reveal whether changes in total sales either increases or decreases.
Marketing profitability analysis
The business breaks down the total marketing costs into specific marketing activities such as advertising, transport, administration and order processing. By comparing the costs of specific marketing activities with the results achieved the marketing manager can assess the effectiveness of each activity.
Revising the marketing strategy
Once the result of the sales, market share and profitability analysis have been calculated, the business is in a position to assess which objectives are being met and which are not.
Changes in the marketing mix
Changes that could be introduced include:
• Production modifications
• Promotion modifications
• Price modifications
• Place modifications
New product development
If a business wants to achieve long term growth is must continually introduce new products.
Outdated products may create an unfavourable image and negativity may rub off on other products sold by the business. When a product is in the decline stage the business needs to delete it.