Marketing

The following are some of the methods we use to improve a business

 

SWOT analysis.

A complete strength weakness opportunity and  threats analysis of your business and the course of action that is required to save or improve the business.

 Strength and weakness of a business are internal factors.

A strength could be:

  • Your specialist marketing expertise.
  • A new, innovative product or service.
  • Location of your business.
  • Quality processes and procedures.
  • Any other aspect of your business that adds value to your product or service.

A weakness could be:

  • Lack of marketing expertise.
  • Undifferentiated products or services (i.e. in relation to your competitors).
  • Location of your business.
  • Poor quality goods or services.
  • Damaged reputation.

Opportunities and threats are external factors

An opportunity could be:

  • A developing market such as the Internet.
  • Mergers, joint ventures or strategic alliances.
  • Moving into new market segments that offer improved profits.
  • A new international market.
  • A market vacated by an ineffective competitor.

A threat could be:

  • A new competitor in your home market.
  • Price wars with competitors.
  • A competitor has a new, innovative product or service.
  • Competitors have superior access to channels of distribution.
  • Taxation is introduced on your product or service.

Once key issues have been identified with your SWOT analysis, they feed into marketing objectives. SWOT can be used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis

 

 

Five Forces Analysis

Five Forces Analysis helps us to contrast a competitive environment. It has similarities with other tools for environmental audit, such as PEST analysis, but tends to focus on the single, stand alone, business or SBU (Strategic Business Unit) rather than a single product or range of products. Five forces analysis looks at five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.

The threat of entry.

  • Economies of scale e.g. the benefits associated with bulk purchasing.

  • The high or low cost of entry e.g. how much will it cost for the latest technology?

  • Ease of access to distribution channels e.g. Do our competitors have the distribution channels sewn up?

  • Cost advantages not related to the size of the company e.g. personal contacts or knowledge that larger companies do not own or learning curve effects.

  • Will competitors retaliate?

  • Government action e.g. will new laws be introduced that will weaken our competitive position?

  • How important is differentiation? e.g. The Champagne brand cannot be copied. This desensitises the influence of the environment.

  • Are there a few, large players in a market e.g. the large grocery chains.

  • If there are a large number of undifferentiated, small suppliers e.g. small farming businesses supplying the large grocery chains.

  • The cost of switching between suppliers is low e.g. from one fleet supplier of trucks to another.

The power of suppliers.

The power of suppliers tends to be a reversal of the power of buyers.

  • Where the switching costs are high e.g. Switching from one software supplier to another.
  • Power is high where the brand is powerful e.g. Cadillac, Pizza Hut, Microsoft.
  • There is a possibility of the supplier integrating forward e.g. Brewers buying bars.
  • Customers are fragmented (not in clusters) so that they have little bargaining power e.g. Gas/Petrol stations in remote places.

The threat of substitutes

  • Where there is product-for-product substitution e.g. email for fax Where there is substitution of need e.g. better toothpaste reduces the need for dentists.
  • Where there is generic substitution (competing for the currency in your pocket) e.g. Video suppliers compete with travel companies.
  • We could always do without e.g. cigarettes.

Competitive Rivalry

  • This is most likely to be high where entry is likely; there is the threat of substitute products, and suppliers and buyers in the market attempt to control. This is why it is always seen in the centre of the diagram.

 

PEST Analysis

It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning.

The organization's marketing environment is made up of:

1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc.

2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc.

3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological forces. These are known as PEST factors.

Political Factors.

The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers and other businesses. You must consider issues such as:

1.How stable is the political environment?

2.Will government policy influence laws that regulate or tax your business?

3.What is the government's position on marketing ethics?

4. What is the government's policy on the economy?

5. Does the government have a view on culture and religion?

6. Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others?

Economic Factors.

We need to consider the state of a trading economy in the short and long-terms. This is especially true when planning for international marketing. You need to look at:

1. Interest rates.

2. The level of inflation Employment level per capita.

3. Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on.

Sociocultural Factors.

The social and cultural influences on business vary from country to country. It is very important that such factors are considered. Factors include:

1.What is the dominant religion?

2.What are attitudes to foreign products and services?

3.Does language impact upon the diffusion of products onto markets?

4.How much time do consumers have for leisure?

5.What are the roles of men and women within society?

6.How long are the population living? Are the older generations wealthy?

7.Do the population have a strong/weak opinion on green issues?

Technological Factors.

Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points:

1. Does technology allow for products and services to be made more cheaply and to a better standard of quality?

2.Do the technologies offer consumers and businesses more innovative products and services such as Internet banking, new generation mobile telephones, etc?

3.How is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc?

4.Does technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship Management (CRM), etc?

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