MARKETING STRATEGY
O.C. FERRELL • MICHAEL D. HARTLINE
4
SWOT Analysis
A Framework for Developing
Marketing Strategy
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
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Simplicity
Lower Costs
Flexibility
Integration and Synthesis
Collaboration
From Exhibit 4.2
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Directives for a Productive
SWOT Analysis
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•
•
•
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:
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•
•
•
Brand competitors
Product competitors
Generic competitors
Total budget competitors
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Collaborate with Other
Functional 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 from
the 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 firm’s
and competitors’ resources.
• Major types of resources:
-Financial
-Intellectual
-Legal
-Human
-Organizational
-Informational
-Relational
-Reputational
4-8
Separate Internal from
External 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:
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“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 of
Elements 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 Sources
of 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 Marketing
Goals and Objectives
• Developing Marketing Goals
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Attainability
Consistency
Comprehensiveness
Intangibility
• Developing Marketing Objectives
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Attainability
Continuity
Time Frame
Assignment of Responsibility
• Moving Beyond Goals and Objectives
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