SWOT ANALYSIS
The overall evaluation of a company’s strengths, weaknesses, opportunities, and threats is called SWOT Analysis.
External environmental analysis (opportunity and threat analysis)
In general, a business unit has to monitor key macro environment forces (demographic-economic, technological, political-legal, and socio-cultural) and significant microenvironment actors (customers, competitors, distributors, suppliers) that affect its ability to earn profits. The business unit should set up a marketing intelligence system to track trends and important developments. For each trend or development, management needs to identify the associated opportunities and threats.
A major purpose of environmental scanning is to discern new marketing opportunities. A marketing opportunity is an area of buyer need or potential interest in which a company can perform profitably. Opportunities can take many forms and marketers have to be good at spotting them:
i. A company may make a buying process more convenient or efficient e.g. consumers can now use the Internet to find more books than ever and search for the lowest price with a few clicks.
ii. A company can meet the need for more information and advice e.g. guru.com facilitates finding professional experts in a wide range of fields
iii. A company can customize a product or service that was formerly offered only in a standard form e.g. P& G’s Reflect.com website is capable of producing a customized skin care or hair care product to meet a customer’s need.
iv. A company can introduce a new capability e.g. consumers can now create and edit digital “Movies” with the new iMac and upload them to an Apple Web server to share with friends around the world
v. A company may be able to deliver a product or service faster e.g. FedEx discovered a way to deliver mail and packages much more quickly than the U.S. Post Office.
vi. A company may be able to offer a product at a much lower price e.g. pharmaceutical firms have created generic versions of brand-name drugs.
The company now applies Market Opportunity Analysis (MOA) to determine the attractiveness and success probability of any opportunity. Five questions are asked:
1. Can the benefits involved in the opportunity be articulated convincingly to a defined target market(s)?
2. Can the target market(s) be located and reached with cost-effective media and trade channels?
3. Does the company possess or have access to the critical capabilities and resources needed to deliver the customer benefits?
4. Can the company deliver the benefits better than any actual or potential competitors?
5. Will the financial rate of return meet or exceed the company’s required threshold for investment?
Kavungya answered the question on
April 27, 2021 at 11:49