Marketing was once defined by Alderson (1957) as an exchange process between company and consumer (Cited from Brassington and Pettitt, p.5). This definition gives no reference to the aspects of marketing that occur before products or services are even produced or the post exchanged behaviour of both company and consumer or even an elementary aspect of commercial life: competition, Jobber, (2000).
Successful marketing is far from simple. Brassington and Pettitt (2003, p.3) state marketing does, in fact, cover a very wide range of absolutely essential business activities that bring you the products you do want, when you want them, but at prices you can afford, and with all the information you need to make informed and satisfying consumer choices.
In order to analyse the marketing activities of firms within an industry, it is necessary to first define and explain some of the critical marketing concepts and their importance to the organisations.
These concepts are:
Simple Marketing System
The Marketing Mix or 4 P’s
Kotler’s Simple Marketing Concept
In Kotler’s model there is a clear exchange between company and consumer. The model describes the exchange being goods and services one way and money in return (Kotler, 2000). Exchange of communication and information from buyer to seller is also an integral part of successful marketing.
Communication of the product or brand from company to consumer will be the result of a successful advertising campaign whereas information from consumer back to the company will provide the seller with an insight into the success of the product of service.
The Marketing Mix or 5 P’s
McCarthy (1960) introduced the 5 P’s into the marketing mix as an easy to remember acronym. McCarthy penned the thought that the influences that will determine the demand for the product can be placed within four groups. The marketing mix consists of four elements: Product, Price, Place, Promotion and People (Baker, 1999).
Product – This area covers everything to do with the creation, development and management of products (Brassington and Pettitt, 2003, p.25). This also covers non-physical aspects of the product such as after sales service, guarantees etc.
Price – The pricing of a product or service is an important part of the marketing mix. Price represents on a unit base what the company receives for the product or service which is being marketed (Jobber, 2001, p. 12). The price of the product or service may portray it being a quality item or a desirable one (Brassington and Pettitt, 2003, p.26). It may also be used to give a company an edge in a competitive market.
Place – Place is concerned with distribution channels and consumer service levels (Baker, 1999). The objective of companies when dealing with this aspect of the marketing mix is to make sure that products are available in the right quantities, in the right place to the people who want it (Jobber, 2001, p. 15).
Promotion – Promotion is concerned with how the product of service is made available to its target audience (Jobber, 2001, p. 15).
People – The services are being provided with the help of employees and to the customers. There is direct contact for delivery of the services to the customers for the type of people providing the service is crucial from a business point of view. The people are to be selected, trained and motivated to keep the customers satisfied.
A useful tool to analyze a company is a SWOT analysis. Via a SWOT analysis, the strengths, weaknesses, opportunities and threats that affect the performance of an organization (Daft, 2003, p.248) can be identified. SWOT analysis was first introduced by Stanford University’s Albert Humphrey in the 1960’s (GRIN Verlag, 2007, p. 2).SWOT analysis is one of the most popular analytic techniques amongst competitive intelligence professionals (Fehringer, 2007, p. 54), as well as many other disciplines involved with strategic planning (Choi, Lovallo, & Tarasova, 2007). SWOT analysis outlines the strategic strengths, weaknesses, opportunities, and threats to determine an organization’s competencies as well as identify future opportunities (Hunger & Wheelen, 2010).
SWOT analysis is a framework links the firm’s capabilities to its relevant competitive environment through focusing the evaluation of the strategic position of a firm by analyzing its strengths, weaknesses, opportunities and threats (fig ). (Jobber, 2004) It summarizes the key issues from the business environment and the strategic capability of an organization that are most likely to impact on strategy development. (Johnson et al., 2005, p102)
The strengths are those points where a company has a competitive advantage in comparison with their competitors. The weaknesses of a company are those points where the company has a competitive disadvantage in comparison with their competitors. In fact, by the analysis of the internal environment of a company, it should be possible to determine the strengths and weaknesses of that company. The SWOT analysis can be seen as a short summary of the internal environment.
The opportunities and threats of a company consist of external influences. Opportunities are characteristics of the external environment that have the potential to help the organization to achieve its strategic goals. Threats are characteristics of the external environment that may prevent the organization from achieving its strategic goals (Daft, 2003, p. 249). External influences are a part the external environment of a company. By using the dissection of the external environment, it is possible to determine the opportunities and threats. The opportunities and threats are also a summary of the external environment.
A SWOT analysis is quite useful because with it, it is possible to see what a firm is and is not able to do in a quick and clarifying way. The competitive strategy of a company should fit with the SWOT analysis of a company. If a company is for example very cost efficient because they have a huge capacity engine compound, they shouldn’t focus on their quality but on their quantity.
Strengths are the qualities that enable us to accomplish the organization’s mission. These are the basis on which continued success can be made and continued/sustained. Strengths can be either tangible or intangible which are what an individual is well-versed in or have expertise in, the traits and qualities the employees possess (individually and as a team) as well as the distinct features that give the organization its consistency. Strengths are the beneficial aspects of the organization or the capabilities of an organization, which includes human competencies, process capabilities, financial resources, products and services, customer goodwill and brand loyalty.
Weaknesses are the qualities that inhibit the process of accomplishing the mission and achieving full potential. Weaknesses are the factors which do not meet the standards set by the organization which can be factored by issues such as depreciating machinery, insufficient research and development facilities, narrow product range, poor decision-making, etc. Weaknesses are controllable thus must be minimized and eliminated. For instance – to overcome obsolete machinery, new machinery can be purchased. Other examples of organizational weaknesses are huge debts, high employee turnover, complex decision making process, narrow product range, large wastage of raw materials, etc.
Opportunities are presented by the environment within which the organization operates. These arise when an organization can take benefit of conditions in its environment to plan and execute strategies that enable it to become more profitable. Organizations can gain competitive advantage by making use of opportunities. Organization should be careful and recognize the opportunities and grasp them whenever they arise. Selecting the targets that will best serve the clients while getting desired results is a difficult task. Opportunities may arise from market, competition, industry/government and technology. Increasing demand for telecommunications accompanied by deregulation is a great opportunity for new firms to enter telecom sector and compete with existing firms for revenue.
Threats arise when conditions in external environment jeopardize the reliability and profitability of the organization’s business. They compound the vulnerability when they relate to the weaknesses. Threats are uncontrollable as when a threat persists, the stability and survival of the company can be at stake. Examples of threats are – unrest among employees; ever changing technology; increasing competition leading to excess capacity, price wars and reducing industry profits; etc. SWOT analysis is one of the most popular analytic techniques amongst competitive intelligence professionals (Fehringer, 2007, p. 54), as well as many other disciplines involved with strategic planning (Choi, Lovallo, & Tarasova, 2007). SWOT analysis outlines the strategic strengths, weaknesses, opportunities, and threats to determine an organization’s competencies as well as identify future opportunities (Hunger & Wheelen, 2010).
SWOT analysis is used by an organization to define the situation they are currently in, or likely to be in within the near future. As a type of situational analysis, SWOT is the acronym for the analytic technique that assesses the Strengths, Weaknesses, Opportunities, and Threats of a situation. The “basic assumption of a SWOT analysis is that a company must align internal activities (Strengths and Weaknesses) with external realities (Opportunities and Threats)” to successfully produce results that can help create strategy (GRIN Verlag, 2007, p. 4).
SWOT analysis is a framework links the firm’s capabilities to its relevant competitive environment. I.e. the SWOT analysis focuses on evaluating the strategic position of a firm by analyzing its strengths, weaknesses, opportunities and threats (fig ). (Jobber, 2004) It summarizes the key issues from the business environment and the strategic capability of an organization that are most likely to impact on strategy development. (Johnson et al., 2005, p102)
All these parameters have an impact on the outcome of implementation of a certain strategy and its goal. In our case the internal environment is regarded as the marketing information system and the external environment the company, departments and stakeholders. By relating the strengths and weaknesses of a marketing system with the opportunities and possible threats in the environment where it is supposed to be implemented, their impact can be considered and strategy formed by using the internal strengths together with the external opportunities to reinforce the base of the strategy and try to eliminate/reduce weaknesses and threats (Grant 2005).
Internal analysis (Strengths and Weaknesses): The internal analysis should lead to an assessment of internal strengths/weaknesses that could be of competitive advantage/ disadvantage. In this case the intrinsic advantages and disadvantages of marketing information tool.
External analysis (Opportunity and Threats): The external analysis focuses on environmental characteristics that could produce opportunities as well as threats relative to competitive solutions.
After completing the SWOT analysis, the firm should decide how to turn weaknesses into strengths and threats into opportunities (Jobber, 2004, p44), or how to deal with the threats and capitalize on the opportunities through its strengths and weaknesses (Johnson et al., 2005, p102).
SWOT analysis is not always the best technique to utilize in strategic planning; however, it is a versatile technique that can easily be utilized in conjunction with other analytic techniques (Donaldson, 2008). In order to know when it is the best time to utilize SWOT, it is important to understand the general strengths and weaknesses of the technique. Per Mercyhurst College’s research in its 2009 graduate level Advanced Analytic Techniques course, the class “evaluated [SWOT] based on its overall validity, simplicity, flexibility and its ability to effectively use unstructured data.” The strengths and weaknesses highlighted can be seen in Figure 3.6
An important area to examine concerning SWOT analysis is the use of the technique with other types of analysis. As will be discussed, some scholars and practitioners argue that SWOT should be utilized in conjunction with other analytic techniques, and some argue that it should be used by itself. Either way, there has not been an accepted standard in this area. SWOT does have the potential to provide strategic insight on its own when utilized correctly. When “matching the internal factors with external factors, SWOT analysis yields a list of action items as the basis for strategies (Koo & Koo, 2007). However, this is highly dependent on the type of preliminary research conducted before the SWOT analysis begins, the perspectives of those conducting the analysis, and the specificity put into the analysis.
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