1. 4 MARKETING STRATEGY O.C. FERRELL • MICHAEL D. HARTLINE SWOT Analysis
A Framework for Developing
Marketing Strategy

2. 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

3. Effectiveness of Analysis Tools
Exhibit 4.1

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

5. 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

6. 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.

7. 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

8. Marketing Strategy in Action
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.
Can you think of other products that illustrate the effects of competition other than the effects of brand competitors?

9. 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.

10. 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.

11. 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

12. 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”

13. Discussion Question
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?

14. 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

15. The Starbucks Experience

16. 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.

17. 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.

18. The SWOT Matrix
Exhibit 4.6

19. Quantitative Assessment of Elements Within the SWOT Matrix
Exhibit 4.7

20. Discussion Question
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?

21. 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

22. 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

23. Discussion Question
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.

24. 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.

25. Strategic Turnaround at Chrysler

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

27. 2003 Baldrige Award Criteria for Performance Excellence
Exhibit 4.10