Marketing Environment Analysis

Nguyen Hai Ninh. Dr.

Hanoi Foreign Trade University – International Business Department

Cell: (+84) 0915139839

Email: nguyen.haininh@hotmail.com

Corporate’s Internal environment

Economic Environment

Political Environment

Socio – Cultural Environment  

Technological Environment  

Competition Environment  

Marketing Environments

Corporate’s internal SWOT Analysis •  Acronym of Strengths, Weaknesses,

Threats and Opportunities

•  Created by Albert Humphrey – leader of Stanford Uni’s project research in the decade of 1970s

•  Popular used in strategic business and project planning.

•  Analyze corporate's internal and external environment and resources.

Internal v/s External •  Strengths and Weaknesses

o  Are the corporate’s internal factors (HR, Capital, fixed assets, technologies..)

o  Mostly related to current situation

•  Opportunities and threats

o  Are the corporate’s external factors

o  Related to the impacts from the external environments (competitors, government policies, consumers’ behaviors, partners and market)

Strengths •  Things you/your business is good at

•  Provide a clear competitive advantage over rivals (competitors)

•  Distinctive/core competencies and resources

•  Should be protected and built upon.

•  Some possible strengths: Market share, Technology, Economies of scale, Leadership, Brand reputation and loyalty, High quality, Financial resources, R&D..

To identify the strengths, ask…

•  What advantages does your company have?

•  What do you do better than anyone else?

•  What unique or lowest-cost resources do you have access to?

•  What do people in your market see as your strengths?

•  What factors mean that you "get the sale"?

Weaknesses •  Things you/your business lacks or does poorly

•  A source of competitive disadvantage à Places the business at a disadvantage

•  May hinder or constrain the business in achieving proposed objectives

•  Should seek ways to reduce or eliminate weaknesses before exploiting further competition

•  Some possible weaknesses: Low market share, undifferentiated, outdated technology, poor quality, lack of innovation, a weak brand name, High costs…

To identify the weaknesess, ask…

•  What could you improve?

•  What should you avoid?

•  What are people in your market likely to see as weaknesses?

•  What factors lose you sales?

Opportunities •  Things that create the chance to make greater profits or get better

business results.

•  Arises when an organization may take benefits from the external environment.

•  Should be recognize the opportunities to improve the business situation.

•  Opportunities always coming along with the risks

•  Possible opportunities: Technology, higher economic innovation growth, new demand, new market, trade liberalization, market growth/diversification, social or lifestyle change, government spending programs.

To identify the opportunities, ask…

•  Where are the good opportunities facing you?

•  What are the interesting trends you are aware of?

Threats •  Things may harms or trouble you/your business

•  Any external factors that may hinder or prevent you/ your business from achieving proposed objectives or place the business at risks.

•  Threats are not controllable

•  Some possible threats: New market entrants , economic downturn, change in consuming behaviors, the rise of low cost tastes or needs production abroad, higher or unstable input sources/prices, new regulations, competitive pressure

To identify the threats, ask…

•  What obstacles do you face?

•  What are your competitors doing?

•  Are quality standards or specifications for your job, products or services changing?

•  Is changing technology threatening your position?

•  Do you have bad debt or cash-flow problems?

•  Could any of your weaknesses seriously threaten your business?

Why you need SWOT analysis?

•  Help decision maker and strategic planner understand clearly about corporate’s internal/external situation

•  Analyze the issues/problems which may lead to success/failure.

•  Prevent costly mistakes

When you need SWOT analysis

•  Changing business direction/perspective

•  New product launching/new market entering

•  Decision making

•  Competition evaluation

•  New business strategic planning

Carry your findings forward - Make sure that the SWOT analysis is used in subsequent planning. Revisit your findings at suitable time intervals.

Create a workshop environment - Encourage an atmosphere conducive to the free flow of information.

Allocate research & information gathering tasks - Background preparation can be carried out in two stages – Exploratory and Detailed. Information on Strengths & Weaknesses should focus on the internal factors & information on Opportunities & Threats should focus on the external factors.

Select contributors - Expert opinion may be required for SWOT

Establish the objectives - Purpose of conducting a SWOT may be wide / narrow, general / specific.

Evaluate listed ideas against Objectives - With the lists compiled, sort and group facts and ideas in relation to the objectives.

List Strengths, Weaknesses, Opportunities, & threats

How to conduct the SWOT Analysis?

Strengths  •  …  •  …  

Weaknesses  •  …  •  …

Opportuni*es  •  …  •  …

Threats  •  …  •  …  

SWOT Analysis layouts

Mistakes of SWOT

•  An unclear goal

•  Developing long lists.

•  Labeling items "strengths” even if you aren’t any better than the competition.

•  Conducting biased assessments.

•  Confusing strategies and opportunities. A strategy is an action. An opportunity is an event or condition that exists independent of your actions.

•  Ignoring the internal and external environment factors identified when evaluating strategies

Tips

•  Be realistic

•  Be specific and fair in evaluation.

•  Keep your SWOT analysis short and simple. Avoid the complexity

•  Distinguish between where your organization is today and where it could be in the future

SWOT à TWOS

•  By analyzing the external environment (threats and opportunities), and your internal environment (weaknesses and strengths), you can use these techniques to think about the strategy of your whole organization

•  Think about a process, a marketing campaign, or even your own skills and experience •  Use TWOS analysis to answer these following questions:

•  Make the most of your strengths? •  Circumvent your weaknesses •  Capitalize on your opportunities? •  Manage your threats?

Formulate strategies from SWOT

•  SO strategy: Strengths and Opportunities – Use Strengths to take advantages of opportunities

•  WO strategy: Weaknesses and opportunities – Over come weaknesses by taking advantages of opportunities

•  WT strategy: Weaknesses and Threats: Minimize the Weaknesses and avoid Threats

•  ST strategy : Strengths and Threats – Use strengths to avoid

External Opportunities (O) 1. 2. 3.

External Threats (T) 1. 2. 3.

Internal Strengths (S) 1. 2. 3.

SO "Maxi-Maxi" Strategy

Strategies that use strengths to maximize opportunities.

ST "Maxi-Mini" Strategy

Strategies that use strengths to minimize threats.

Internal Weaknesses (W) 1. 2. 3.

WO "Mini-Maxi" Strategy

Strategies that minimize weaknesses by taking advantage

of opportunities

WT "Mini-Mini" Strategy

Strategies that minimize weaknesses and avoid threats.

Self - Awareness Activity •  Work in group (at home)

•  Do the SWOT, TWOS analysis for your product/service and your proposed business.

•  Present your analysis on class (10 min/each)

Pest Analysis Harvard professor Francis Aguilar is the creator of PEST Analysis. He included a scanning tool called ETPS

This helps you understand the "big picture" forces of change that you're exposed to, and, from this, take advantage of the opportunities that they

•  Helps you to spot business or personal opportunities •  Gives you advanced warning of significant threats. •  Helps you to shape what you're doing, so that you work with

change, rather than against it. •  Helps you to avoid starting projects that are likely to fail •  It can help you break free of unconscious assumptions when

you enter a new country, region, or market; because it helps you develop an objective view of this new environment.

PEST Analysis is useful because….

There are variations of PEST Analysis that bring other factors into consideration: •  PESTLE/PESTEL: Political, Economic, Socio-Cultural, Technological, Legal,

Environmental. •  PESTLIED: Political, Economic, Socio-Cultural, Technological, Legal, International,

Environmental, Demographic. •  STEEPLE: Social/Demographic, Technological, Economic, Environmental, Political,

Legal, Ethical. •  SLEPT: Socio-Cultural, Legal, Economic, Political, Technological. •  LONGPESTLE: Local, National, and Global versions of PESTLE. (These are best used

for understanding change in multinational organizations.)

Other versions of PEST

Country analysis •  Work in group (at home)

•  Make the report about your selected country’s pestle analysis

•  Submit next week

Competitor analysis

Always competitors! Purpose:

•  Identify top competitors à Knowing the rules of game •  Obtain information about important competitors à Determine strengths/weaknesses of each

competition •  Using that information to predict competitor behavior à Develop strategies based on analysis to

increase success

•  Companies with a product/service addressing similar needs •  Products/services considered to be close substitutes •  Don’t define too narrowly •  Analyzing broader competitors allows for innovation maximization

Who are competitors?

Substitute Products

Apple - Ipad Mini Samsung - Galaxy Note 2 Microsoft - Surface

Profile of Competitors’: Background, Finances, Products..

Competitive Analysis Framework Michael Porter’s 4 components competitive matrix

•  Competitors’ Objectives •  Competitors’ Assumptions •  Competitors’ Strategies •  Competitors’ Capabilities

Purposes of the matrix: •  What drives the competitors? •  What is the competitor capable of doing?

Competitor’s Objectives •  Growth rate •  Market share/position •  Technology •  Finance •  Organizational Structure •  Social role

Competitor’s Assumptions •  Past experience with a product •  Industry Trends •  Future beliefs about a competitor •  Regional Factors

Competitor’s Strategies •  Number of workers •  Current products and services •  Physical changes in a company’s office •  Location of company •  Type of customers •  Target market and target customer •  Type and name of suppliers •  New construction or remodeling •  Advertising or marketing campaigns

What is the competitor currently doing?

•  What is the competitor capable of? •  What is it not capable of? •  Refer to SWOT analysis

•  Reveals how companies CAN act

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Competitor’s Capabilities & Resources

Boxing Activity •  Work in group (On class)

•  Doing the competitor analysis for your group’s product/service

•  30 minutes allowed/ Present on class

All the effort of your corporation should amplify your marketing message