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  1. 1. MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE 4 SWOT Analysis A Framework for Developing Marketing Strategy
  2. 2. SWOT Analysis <ul><li>“ A widely used framework for organizing and utilizing the pieces of data and information gained from the situation analysis…” </li></ul><ul><li>Encompasses both internal and external environments </li></ul><ul><li>One of the most effective tools in the analysis of environmental data and information </li></ul>
  3. 3. Effectiveness of Analysis Tools Exhibit 4.1
  4. 4. Major Benefits of SWOT Analysis <ul><li>Simplicity </li></ul><ul><li>Lower Costs </li></ul><ul><li>Flexibility </li></ul><ul><li>Integration and Synthesis </li></ul><ul><li>Collaboration </li></ul>From Exhibit 4.2
  5. 5. Directives for a Productive SWOT Analysis <ul><li>Stay Focused </li></ul><ul><li>Search Extensively for Competitors </li></ul><ul><li>Collaborate with other Functional Areas </li></ul><ul><li>Examine Issues from the Customers’ Perspective </li></ul><ul><li>Look for Causes, Not Characteristics </li></ul><ul><li>Separate Internal Issues from External Issues </li></ul>From Exhibit 4.3
  6. 6. Stay Focused <ul><li>It is a mistake to complete one generic SWOT analysis for the entire organization or business unit. </li></ul><ul><li>When we say SWOT analysis, we mean SWOT analyses . </li></ul>
  7. 7. Search Extensively for Competitors <ul><li>Information on competitors is an important aspect of a SWOT analysis. </li></ul><ul><li>Look for all four types of competition: </li></ul><ul><ul><li>Brand competitors </li></ul></ul><ul><ul><li>Product competitors </li></ul></ul><ul><ul><li>Generic competitors </li></ul></ul><ul><ul><li>Total budget competitors </li></ul></ul>
  8. 8. <ul><li>This 2002 ad for Fruitopia, a fruit drink by the makers of Coke, shows that even the soft drink giants have had to respond to other sources of competition than traditional brand competitors. </li></ul><ul><li>Can you think of other products that illustrate the effects of competition other than the effects of brand competitors? </li></ul>Marketing Strategy in Action
  9. 9. Collaborate with Other Functional Areas <ul><li>Information generated from the SWOT analysis can be shared across functional areas. </li></ul><ul><li>SWOT analysis can generate communication between managers that ordinarily would not communicate. </li></ul><ul><ul><li>Creates and environment for creativity and innovation. </li></ul></ul>
  10. 10. Examine Issues from the Customers’ Perspective <ul><li>To do this, the analyst should ask: </li></ul><ul><ul><li>What do customers (and non-customers) believe about us as a company? </li></ul></ul><ul><ul><li>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? </li></ul></ul><ul><ul><li>What is the relative importance of these issues as customers see them? </li></ul></ul><ul><li>Taking the customers’ perspective is the cornerstone of a well done SWOT analysis. </li></ul>
  11. 11. Look for Causes, Not Characteristics <ul><li>Causes for each issue in a SWOT analysis can often be found in the firm’s and competitors’ resources. </li></ul><ul><li>Major types of resources: </li></ul>-Reputational <ul><li>Human </li></ul>-Relational <ul><li>Legal </li></ul>-Informational -Intellectual -Organizational <ul><li>Financial </li></ul>
  12. 12. Separate Internal from External Issues <ul><li>Failure to understand the difference between internal and external issues is one of the major reasons for a poorly conducted SWOT analysis. </li></ul><ul><li>Socratic Advice: </li></ul><ul><ul><li>“ Know thyself” </li></ul></ul><ul><ul><li>“ Know thy customer” </li></ul></ul><ul><ul><li>“ Know thy competitors” </li></ul></ul><ul><ul><li>“ Know thy environment” </li></ul></ul>
  13. 13. <ul><li>Why are industries and firms often so reluctant to adapt to changes in their external environments? Other than the music recording industry, what other industries or firms seem to be slow to change? Why? </li></ul>Discussion Question
  14. 14. The Elements of a SWOT Analysis <ul><li>Strengths and Weaknesses </li></ul><ul><ul><li>Scale and Cost Economies </li></ul></ul><ul><ul><li>Size and Financial Resources </li></ul></ul><ul><ul><li>Intellectual, Legal, and Reputational Resources </li></ul></ul><ul><li>Opportunities and Threats </li></ul><ul><ul><li>Trends in the Competitive Environment </li></ul></ul><ul><ul><li>Trends in the Technological Environment </li></ul></ul><ul><ul><li>Trends in the Sociocultural Environment </li></ul></ul>
  15. 15. The Starbucks Experience
  16. 16. SWOT-Driven Strategic Planning <ul><li>Four issues the marketing manager must recognize: </li></ul><ul><ul><li>(1) The assessment of strengths and weakness should look beyond </li></ul></ul><ul><ul><li> products and resources to examine processes that meet customer </li></ul></ul><ul><ul><li> needs. Offer solutions to customer problems instead of specific </li></ul></ul><ul><ul><li> products. </li></ul></ul><ul><ul><li>(2) Achieving goals and objectives depends on transforming </li></ul></ul><ul><ul><li> strengths into capabilities by matching them with opportunities. </li></ul></ul><ul><ul><li>(3) Weaknesses can be converted into strengths with strategic </li></ul></ul><ul><ul><li> investment. Threats can be converted into opportunities with </li></ul></ul><ul><ul><li> the right resources. </li></ul></ul><ul><ul><li>(4) Weaknesses that cannot be converted become limitations which </li></ul></ul><ul><ul><li> must be minimized if obvious or meaningful to customers. </li></ul></ul>
  17. 17. <ul><li>SWOT Matrix: </li></ul><ul><ul><li>A four-cell array used to categorize information at the conclusion of a SWOT analysis. </li></ul></ul><ul><li>Should be based on customer perceptions, not the perceptions of the analyst. </li></ul><ul><li>Elements with the highest total ratings should have the greatest influence in marketing strategy. </li></ul><ul><li>Focus on competitive advantages by matching strengths with opportunities. </li></ul>Analysis of the SWOT Matrix
  18. 18. The SWOT Matrix Exhibit 4.6
  19. 19. Quantitative Assessment of Elements Within the SWOT Matrix Exhibit 4.7
  20. 20. <ul><li>Strengths, weaknesses, opportunities, and threats: Which is the most important? Why? How might your response change if you were the CEO of a corporation? What if you were a customer of the firm? An employee? A supplier? </li></ul>Discussion Question
  21. 21. <ul><li>Competitive advantages can arise from many external or internal sources. </li></ul><ul><li>Competitive advantages refer to real differences between competing firms. </li></ul><ul><li>Three basic strategies for competitive advantage: </li></ul><ul><ul><li>(1) Operational Excellence </li></ul></ul><ul><ul><li>(2) Product Leadership </li></ul></ul><ul><ul><li>(3) Customer Intimacy </li></ul></ul>Leveraging Competitive Advantages
  22. 22. Common Sources of Competitive Advantage From Exhibit 4.8 · Distribution Advantages · Human Resources Advantages · Promotion Advantages · Organizational Advantages · Pricing Advantages · Legal Advantages · Product Advantages · Relational Advantages
  23. 23. <ul><li>Support or contradict this statement: “Given the realities of the new economy and the rapid changes occurring in business technology, all competitive advantages are short lived. There is no such thing as a sustainable competitive advantage that lasts over the long term.” Defend your position. </li></ul>Discussion Question
  24. 24. <ul><li>Four major directions for strategic efforts: </li></ul><ul><ul><li>Aggressive (many internal strengths / many external opportunities) </li></ul></ul><ul><ul><li>Diversification (many internal strengths / many external threats) </li></ul></ul><ul><ul><li>Turnaround (many internal weaknesses / many external opportunities) </li></ul></ul><ul><ul><li>Defensive (many internal weaknesses / many external threats) </li></ul></ul><ul><li>These are the most common, but other combinations of strengths and weaknesses are possible. </li></ul>Establishing a Strategic Focus
  25. 25. Strategic Turnaround at Chrysler
  26. 26. <ul><li>Developing Marketing Goals </li></ul><ul><ul><li>Attainability </li></ul></ul><ul><ul><li>Consistency </li></ul></ul><ul><ul><li>Comprehensiveness </li></ul></ul><ul><ul><li>Intangibility </li></ul></ul><ul><li>Developing Marketing Objectives </li></ul><ul><ul><li>Attainability </li></ul></ul><ul><ul><li>Continuity </li></ul></ul><ul><ul><li>Time Frame </li></ul></ul><ul><ul><li>Assignment of Responsibility </li></ul></ul><ul><li>Moving Beyond Goals and Objectives </li></ul>Developing Marketing Goals and Objectives
  27. 27. 2003 Baldrige Award Criteria for Performance Excellence Exhibit 4.10