Situational Analysis
The situational analysis is designed to take a snapshot of where things stand at the time the plan is presented.
This part of the Marketing Plan is extremely important and quite time consuming. For many, finding the numbers may be difficult, especially for those entering new markets. The situational analysis covers six key areas: product, target market, distribution, competitors, financial and other issues.
1. Current Product Analysis
Provide detailed analysis of the company’s product(s). Describe the company’s current product(s) offerings in terms of:
- Product Attributes
Describe the main product features, major benefits received by those using the product, current
branding strategies, etc. - Pricing
Describe pricing used at all distribution levels such as pricing to final users and to distributors,
incentives offered, discounts, etc. - Distribution
Chapter objectives:
By the end of this chapter, the learners should demonstrate the following;
- Describe the components of a situation analysis/marketing audit
- Conduct a SWOT analysis for a company or product
- Understand the critical components of a target market analysis, profitability analysis, product analysis etc.
Describe how the product is made accessible to final users including channels used, major benefits received by distributors, how product is shipped, process for handling orders, etc.
Promotion
Describe promotional programs and strategies in terms of advertising, sales promotion, personal selling and public relations, how product is currently positioned in the market, etc.
Services Offered
Describe support services provided to final users and distributors before, during and after the sale
Describe the Current Target Market(s)
Examine in detail the company’s current target market(s). Obviously to do this section correctly takes a great deal of customer-focused research. (Length: 2-3 pages).
Describe the target market approach:
What general strategy is used to reach targeted customers? Generally approaches include:
- Mass market – aim to sell to a large broad market
- Segmentation approach – aim to selectively target one (niche) or more markets
Describe demographic/psychographic profile of the market:
Profile criteria may include: gender, income, age, occupation, education, family life cycle, geographic region, lifestyle, attitudes, purchasing characteristics, etc.
Describe the following characteristics of targeted customers:
- Needs/benefits sought by market
- Product usage
Consider answers to these questions related to customers using the product such as:
- Who is using the product?
- Why do they use the product?
- When do they use the product?
- How is the product used?
Product positioning
Evaluate how customers perceive the product in relation to competitor’s products or to other solutions they use to solve their problems
Attitudes
What is the target market’s attitude regarding the company’s product? What is the target market’s attitude regarding the general product category? i.e., exam the general attitude regarding how products from all companies serve the target market’s needs
Describe the purchasing process:
o How does the target market make their purchase?
- What does the decision-making process involve?
- What sources of information are sought?
- What is a timeline for a purchase (e.g., impulse vs. extended decision making)?
o Who makes the purchase?
- Does user purchase or is other party responsible (e.g., parent purchasing for children)?
o Who or what may influence the purchase?
- Provide market size estimates:
- Keep in mind these are estimates for the market not for a specific product. Provide size estimates for the potential market. What is the largest
possible market if all buy? - Provide estimates of size for the current target market. What percent of the potential market actually purchased?
- Provide estimates of future growth rates. At least through the timeframe for the plan (e.g., 1 year) but most likely longer (e.g., 3-5 year projections
Describe Current Distributor Network (if appropriate)
Evaluate how the company’s product(s) is distributed. Clearly marketing plans for a service company may not have much detail here but this section will most likely have some relevance even for service firms (e.g., package delivery services, online legal service, etc,). (Length: 2 pages).
Describe the channels/supply chain employed to sell and deliver the product: (Note: internal sales force discussion should appear under company promotion in Current Product Analysis above.)
o Options may include:
direct to customer
indirect via a distributor
combination of both
What are the needs/benefits sought by distributors?
Describe the product’s role within the distributor network:
o How is this product used within the distributor’s business?
o How important is product within the distributor’s strategy?
o How is product positioned? e.g., how does distributor view product in relation to competition
o Attitudes and perceptions about company’s product(s)
Purchase process
o How does distributor network make their purchase?
o Who or what influence distributor’s purchases?
Demographics
Who makes up the distributor network? Types, size, geographic region,
markets served etc.
Competitive Analysis
Examine the main competitors serving the same target market.. This section may also benefit from the use of comparison tables.
Describe direct competitors in terms of:
o Target markets served
o Product attributes
o Pricing
o Promotion
o Distribution including the distributor network
o Services offered
Discuss competitor’s strengths and weaknesses:
o May need to consider much more than just marketing issues such as:
financial standing
target market perception
R & D capabilities
Discuss competitive trends:
o May need to include discussion of future competitive threats
Financial Analysis for Product or Product Line
Much of this information can be handled within a graphical format, such as tables and graphs, though a paragraph explanation of each is generally required. Make sure to include total dollar (or other currency) amounts as well as percentage market share. For more detailed marketing plans or for plans for seasonal products, providing monthly or even weekly sales figures may be required. Provide a spreadsheet-style layout showing detailed breakdown of marketing revenues and expenses.
Current Sales Analysis
o Overall industry sales and market share (for at least the last year)
total market sales
total for company’s product(s)
total for competition
o By segments/product categories
total for segments/product categories
total for company’s product(s)
total for competition
o By Channels of Distribution
total for each channel
total for company’s product(s) by channel
total for competition by channel
o By Geographic Region
total for each region
total for company’s product(s) by region
total for competition by region
Profitability Analysis
o Revenues
For highly detailed plans break out into categories as shown above in the Current Sales Analysis section.
o Marketing Expenses
Types:
Direct – those expenses that can be tied to the product
Indirect or Proportional – generally administrative or broad marketing expenses that may be assigned to a product based on some
established criteria (e.g., a product’s percentage of overall company sales)
Note: not all companies follow this approach
For highly detailed plans break out into categories as shown above in the Current Sales Analysis section.
2. Environmental Problems and Opportunities
Describe trends, events, conditions that are external (usually uncontrolled by the company) that may impact the company’s product(s) or the market. (Length: 1-2 pages)
Areas of consideration:
o social and cultural
o demographic
o economic
o technological
o political
o legal, regulatory, ethical
Product/Market Analysis Tools
In an effort to provide an easy to visualize summary of the product(s) consider using one or more of the following commonly used product/market analysis tools.
Product Life Cycle Analysis
Boston Consulting Group Growth/Share Matrix
General Electric Market Attractiveness Matrix
Summary of Current Situation
Summarize all information in the Situational Analysis. (Length: 1 page)
Provide a SWOT analysis for the company’s product(s) that includes:
o strengths
o weaknesses
o opportunities
o threats
SWOT ANALYSIS
A tool used by organizations to help the firm establish its Strengths, Weaknesses, Opportunities and Threats (SWOT). A SWOT analysis is used as a framework to help the firm develop its overall corporate, marketing, or product strategies.
Note: Strengths and Weaknesses are internal factors which are controllable by the organisation. Opportunities & threats are external factors which are uncontrollable by the organisation.
Strength examples could include:
A strong brand name.
Market share.
Good reputation.
Expertise and skill.
Weaknesses could include:
Low or no market share.
No brand loyalty.
Lack of experience.
Opportunities could include:
A growing market.
Increased consumer spending.
Selling internationally.
Changes in society beneficial to your company.
Threats could include:
Competitors
Government policy e.g. taxation, laws.
Changes in society not beneficial to your company.
A SWOT analysis is an excellent tool to use if the organization wants to take a step back and assess the situation they are in. Issues raised from the analysis are then used to assist the organization in developing their marketing mix strategy. A SWOT analysis must form the part of any prudent marketing strategy.
