4 MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE 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

Major Benefits of SWOT Analysis Simplicity Lower Costs Flexibility Integration and Synthesis Collaboration From Exhibit 4.2

Directives for a Productive SWOT 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

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

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.

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.

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 -Organizational -Intellectual -Informational Legal -Relational Human -Reputational

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: “Know thyself” “Know thy customer” “Know thy competitors” “Know thy environment”

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

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.

Analysis of the 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.

The SWOT Matrix Exhibit 4.6

Quantitative Assessment of Elements Within the SWOT Matrix Exhibit 4.7

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

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

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.

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