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An Introduction to Situation Analysis in Strategic Marketing
In search of Competitive AdvantageDr. William E. Baker
William Baker ConsultingMarketing StrategyCommunication StrategyBrandingAdvertising
Award Winning Author, Professor and Consultant619-402-3990, wbaker@uakron.edu
Google Scholar Page: https://scholar.google.com/citations?hl=en&user=If0w9hoAAAAJ
Evaluate Current
Performance
Scan External Environment
-PEST-Five Forces-Competition
Scan Internal Environment
-Culture-Resources-Capabilities
Select /Prioritize
-Opportunities-Threats
Select /Prioritize
-Strengths-Weaknesses
Evaluate Strategic Alternativ
es
Select and
Implement Best
Alternative
Situation Analysis
Summary
Generate Strategic Alternativ
es
Where is Your Competitive Advantage Within the Marketing Mix (it is almost always just one of the below)?
Product: Superior Benefit Delivery
Distribution: Superior Availability
Pricing: Lower Cost of Doing Business
T
Competitive Advantage:Where is Your Competitive Advantage in Terms of the Marketing Mix?
Promotion: Superior Ability to Reinforce Behavior
Relationships: Superior ability to customize
Firm StrengthsSources of Competitive Advantage
O What do you do better than anyone else? O What lowest-cost resources do you have access
to? O What intangible factors set you apart?O What combinations of strengths are difficult for
firms to copy?
O You can be competitive without a single strength but you cannot have a competitive advantage
Strengths and Weaknesses Identification What strengths and weaknesses relative to competitors
emerge from an audit of firm’s resources and capabilities?
Rank strengths and weaknesses by looking at scarcity, mobility and scopability as well as overall value/importance to customer.
How, if at all, can individual strengths be bundled to create aggregate strengths?
The Power of BundlingBundling resources and capabilities is key to maximizing scarcity and immobility.
Southwest Airlines:• Single fuel efficient aircraft, the Boeing 737• No reservation service• No food service• Labor contracts stipulate employees can perform multiple tasks• Lease inexpensive gates at airports or use secondary airports
Strength Outcomes: Lower Cost, Superior Scheduling
Firm Weaknesses Sources of Competitive Disadvantage
ASK yourself:O What are sources of disadvantage?O Where do competitors excel? O What intangible factors hurt you (e.g., image)?O What competitive strengths are difficult/impossible to
overcome?
O You May Not Have a Single Major Weakness But Not Enjoy Competitive Advantage
Environmental Threats and Opportunities
Unexploited or Under Exploited Situations
Opportunity-Threat Impact Map
Very Low
Very High
Low Impact
High Impact
Probability of Occurrence
Impact
Common Mistakes in SWOT
Strengths (Weaknesses)We have a good (bad) productWe have been in business a long (short) timeWe have strong (weak) imageWe have strong (weak) brand equity
Opportunities that do not have a basis in some real or anticipated change in the external environment are not opportunities…ask yourself what in the environment is influencing your firm’s ability to do one of the following
We have the opportunity to increase salesWe have the opportunity to advertiseWe have the opportunity to innovate our product lineWe have the opportunity to improve customer satisfaction
Key Situations to Identify and Address
1. A strength matched with an opportunity provides leverage (exploit the strategic window while you can)
2. A strength matched with a threat is a vulnerability (monitor situation carefully)
3. A weakness matched with a threat provides a problem (strengthen weak links competitors may exploit) 4. A weakness matched with an opportunity is a constraint (inhibits your ability to exploit your opportunity)
No Clear Leverage, Problems, Vulnerabilities, Constraints?
1. Address the market in a manner that fits your strengths
2. Address weaknesses by at least achieving acceptable performance
3. Assess threats for their ability to impact your core customers
4. Assess opportunities by their fit with your core competencies
Competitive Intensity:The Most Misused Presumption in SWOT
• If the concept of “intense competition” is to make any sense, it cannot apply equally to all competitive scenarios.
• Truly “intense competition” drives profit margins towards zero.
• Firms with competitive advantages are more able to avoid this fate.
Competitive Intensity:The Herfindahl Index
Porter’s Five Forces:Opportunities/Threats to Firm Profitability
Porter’s ‘Five Forces’ are means to assess the probability that an industry’sprofits will be pressured downward through price competition
1. Intensity of Direct Competition
1. Ease of Entry
1. Presence of Substitutes
1. Supplier Power (ability to negotiate higher price to firm)
1. Customer Power (ability to negotiate lower price from firm)
Porter’s Five Forces:Opportunities/Threats to Firm Profitability
Porter’s ‘Five Forces’ are means to assess the probability that an industry’sprofits will be pressured downward through price competition
High LowProfits Profits
1.Intensity of Direct Competition Less More
1.Ease of Entry Hard Easy
1.Presence of Substitutes Few Many
1.Supplier Power (ability to negotiate higher price to you) Weak Strong
1.Customer Power (ability to negotiate lower price from you) Weak Strong
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