SWOT Analysis

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MARKETING STRATEGYO.C. FERRELL MICHAEL D.
HARTLINE
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SWOT Analysis A Framework for Developing Marketing
Strategy
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SWOT Analysis

• A widely used framework for organizing and
  utilizing the pieces of data and information
  gained from the situation analysis
• Encompasses both internal and external
  environments
• One of the most effective tools in the analysis
  of environmental data and information

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Major Benefits of SWOT Analysis

• Simplicity
• Lower Costs
• Flexibility
• Integration and Synthesis
• Collaboration

From Exhibit 4.2
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Directives for a ProductiveSWOT Analysis

• Stay Focused
• Search Extensively for Competitors
• Collaborate with other Functional Areas
• Examine Issues from the Customers Perspective
• Look for Causes, Not Characteristics
• Separate Internal Issues from External Issues

From Exhibit 4.3
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Directives

• Stay Focused
• It is a mistake to complete one generic SWOT
  analysis for the entire organization or business
  unit.
• When we say SWOT analysis, we mean SWOT analyses.
• Search Extensively for Competitors
• Information on competitors is an important aspect
  of a SWOT analysis.
• Look for all four types of competition
• Brand competitors
• Product competitors
• Generic competitors
• Total budget competitors

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Collaborate with OtherFunctional Areas

• Information generated from the SWOT analysis can
  be shared across functional areas.
• SWOT analysis can generate communication between
  managers that ordinarily would not communicate.
• Creates and environment for creativity and
  innovation.

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Examine Issues fromthe Customers Perspective

• To do this, the analyst should ask
• What do customers (and non-customers) believe
  about us as a company?
• What do customers (and non-customers) think of
  our product quality, customer service, price,
  overall value, convenience, and promotional
  messages in comparison to our competitors?
• What is the relative importance of these issues
  as customers see them?
• Taking the customers perspective is the
  cornerstone of a well done SWOT analysis.

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Look for Causes, Not Characteristics

• Causes for each issue in a SWOT analysis can
  often be found in the firms and competitors
  resources.
• Major types of resources

Financial -Organizational
-Intellectual -Informational
Legal -Relational
Human -Reputational
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Separate Internal fromExternal Issues

• Failure to understand the difference between
  internal and external issues is one of the major
  reasons for a poorly conducted SWOT analysis.
• Socratic Advice
• Know thyself
• Know thy customer
• Know thy competitors
• Know thy environment

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The Elements of a SWOT Analysis

• Strengths and Weaknesses
• Scale and Cost Economies
• Size and Financial Resources
• Intellectual, Legal, and Reputational Resources
• Opportunities and Threats
• Trends in the Competitive Environment
• Trends in the Technological Environment
• Trends in the Sociocultural Environment

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SWOT-Driven Strategic Planning

• Four issues the marketing manager must recognize
• (1) The assessment of strengths and weakness
  should look beyond
• products and resources to examine processes
  that meet customer
• needs. Offer solutions to customer problems
  instead of specific
• products.
• (2) Achieving goals and objectives depends on
  transforming
• strengths into capabilities by matching them
  with opportunities.
• (3) Weaknesses can be converted into strengths
  with strategic
• investment. Threats can be converted into
  opportunities with
• the right resources.
• (4) Weaknesses that cannot be converted become
  limitations which
• must be minimized if obvious or meaningful
  to customers.

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Analysis of the SWOT Matrix

• SWOT Matrix
• A four-cell array used to categorize information
  at the conclusion of a SWOT analysis.
• Should be based on customer perceptions, not the
  perceptions of the analyst.
• Elements with the highest total ratings should
  have the greatest influence in marketing
  strategy.
• Focus on competitive advantages by matching
  strengths with opportunities.

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The SWOT Matrix
Exhibit 4.6
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Quantitative Assessment ofElements Within the
SWOT Matrix
Exhibit 4.7
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Leveraging Competitive Advantages

• Competitive advantages can arise from many
  external or internal sources.
• Competitive advantages refer to real differences
  between competing firms.
• Three basic strategies for competitive advantage
• (1) Operational Excellence
• (2) Product Leadership
• (3) Customer Intimacy

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Common Sourcesof Competitive Advantage
Relational Advantages Product Advantages
Legal Advantages Pricing Advantages
Organizational Advantages Promotion Advantages
Human Resources Advantages Distribution Advantages
From Exhibit 4.8
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Establishing a Strategic Focus

• Four major directions for strategic efforts
• Aggressive (many internal strengths / many
  external opportunities)
• Diversification (many internal strengths / many
  external threats)
• Turnaround (many internal weaknesses / many
  external opportunities)
• Defensive (many internal weaknesses / many
  external threats)
• These are the most common, but other combinations
  of strengths and weaknesses are possible.

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Developing MarketingGoals and Objectives

• Developing Marketing Goals
• Attainability
• Consistency
• Comprehensiveness
• Intangibility
• Developing Marketing Objectives
• Attainability
• Continuity
• Time Frame
• Assignment of Responsibility
• Moving Beyond Goals and Objectives