Strategic Marketing 101: The SWOT Analysis

My next post discussing the basics of marketing is the SWOT analysis.  A SWOT analysis is an essential part of any Marketing Plan.  It's best to include it early on in your situational analysis.  It may seem like a simple summation, but it's a great 30,000 foot view of the state of your business and the outside environment.

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats.

Strengths
Strengths are any characteristic of the business that may give it an advantage over it's competition.  Strengths can include internal capabilities, resources, and other positive factors that can help the business serve its customers and achieve it's goals.

Weaknesses
Weaknesses are characteristics that may place the team at a disadvantage relative to it's competition.  Weaknesses include internal limitations and negative factors that may interfere with the performance of the business.

Opportunities
Opportunities are external chances to improve profits in the environment.  They can be favorable factors or trends that the business may be able to exploit.

Threats
Threats are external elements in the environment that might cause problems for the business or project.  They are unfavorable factors that can challenge the performance and profitability of the business.

The goal of a SWOT analysis is to match a company's strengths to attractive profitable opportunities in the market, while eliminating or overcoming any weaknesses and minimizing any threats.  The identification of SWOT's is extremely important, because subsequent steps in the process of the trategic marketing of a selected objective may be derived from the SWOT.  Users of a SWOT analysis need to ask and answer objective questions that will manufacture data for each category (strengths, opportunities, weaknesses, and threats) and maximize the benefits to find a competitive advantage.

If you are a smaller business, and you have never done a SWOT analysis, I would really suggest that you go through this exercise.  Have multiple members of your team contribute to the lists in each part of the table.  Then example the list with your core management team or executive team and talk about each item as objectively as possible.

A SWOT analysis is an essential exercise when constructing a marketing plan for your business.  Doing it will probably open your eyes to factors internal and external that are influencing the long-term performance of your business.

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Marketing Strategies: An Overview

In my relatively short career I've met a lot of people and worked with a lot of organizations.  There are a lot of people who truly know what marketing is, and how to conduct it.  There are also a great number of people who believe that marketing is sending a flyer, an email, or is "just too expensive to do right now".  Many people think they know what marketing and branding are, but in reality, they don't have a clue.

There is a science to it, and more often than not, you need data to determine your strategy.  I'd like to spend the next few months continuing to discuss the basics of marketing.  Today I'd like to start to discuss Marketing Strategy.

Marketing Strategy.  Strategic Marketing.  What is it?  Marketing with a strategy?  Using strategy when you market?  I mean, it seems to define itself.  It seems so logical.  It's a bit more complicated than that.

Marketing strategy is a process that allows an organization to focus it's resources on the best opportunities to grow sales and maintain a competitive advantage.  Let's attempt to break this definition into digestible pieces.

It's a Process.
Marketing, and developing the strategies you are going to use, are part of a process.  It's not quick.  It's not fast.  If it's going to be effective, it takes time and data.  Don't rush.  Strategies are a fundamental part of marketing plans.  You can't even develop your strategy properly until your environmental scan is complete.  

It's centered on an Organization.
Marketing strategies are meant to help the organization meet it's goals.  They don't exist to meet your personal or departmental goals.  A key component of marketing strategy is to keep marketing in-line with a company's mission statement.  

It's all about Focus.
Marketing strategies are focused.  Focus comes from data.  Data helps you construct your multi-year plans.  That's how you achieve your goals.  When you stray from your focus, your strategies fall apart, and you start to bleed dollars from your marketing budget. 

Marketing requires Resources.
Marketing doesn't just involve the VP of Marketing & Communications.  It involves resources from all over your organization.  It's not just dollars (though you really do need the proper amount of them).  It's people.  It's staff.  It's ideas.  It's a team effort.  

It's about the Best Opportunities.
Creating marketing strategies allows you to focus on the best opportunities to grow.  Notice that I didn't say all opportunities, or some opportunities, or the easiest ones.  I said the BEST ones.  Just because you can do something, or spend your budget towards a certain media buy, doesn't mean you should.  It if doesn't directly fit the focus of your marketing strategy and your multi-year plan, then you shouldn't do it.

Marketing is supposed to help Grow Sales.
Marketing is worthless if it doesn't lead to sales.  Some of us don't want to admit that sales drive your business. Sales feed the company bank account.  Sales create cash flow.  Sales allow you to keep your job.  Never ever forget this.  If your marketing strategies aren't growing sales over a defined time frame, then it's time to change.  Remember, marketing strategies are supposed to have the ability to be dynamic and interactive.

Marketing should give you an Advantage.
Effective marketing gives you a competitive advantage.  You should always be differentiating yourself from your competitors.  You should always be selling your competitive advantage.  If you're not, then you're just blending in with the rest of your market segment.

Are your marketing efforts focused?  Are sales growing?  Are you working with your team?  Are you chasing after every opportunity and wasting precious marketing budget dollars?

Maybe it's time to reconsider your strategy.

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The Department Store Finally Evolves

Well maybe it already did, through Kohls.  But I digress...back on topic.

Yesterday JC Penney CEO Ron Johnson announced sweeping changes in an effort to refresh the brand, and the department store "way" of selling product. 

It's about time. 

During Mr. Johnson's tenure at Apple, his team, "always parked at the department stores...because there 'weren't any cars.'.  You know you have a problem when people are using your parking lots to visit other retail locations other than your own.  Mr. Johnson, while noting that JC Penney was in it's 110th year, said, "I believe the department store is the No. 1 opportunity in American retail. And this isn't something I decided last June when I took the job. This is something I decided 10, 15 years ago."

So what does this new opportunity look like? 

First, it starts with a dramatically more realistic product pricing structure.  Consumers rarely purchase products at full price.  In any economy, up or down, consumers are more willing to part with their dollars when products cost less, ie: when they are on sale.  Mr. Johnson, acknowledging this, is leading JC Penney to adopt a "fair and square" pricing model.  It's this simple: If a T-shirt that usually is priced at $14 but typically sold for closer to $6, will be priced at $7. This puts it right in line with what a consumer was actually paying for that shirt.  If it's a featured product, it will be priced at $6. Clearance time: $4. This change alone should help to drive sales.  Why?  It allows JC Penney to sell product at prices consumers are willing to pay, instead of constantly holding onto inventory, and hoping to clear it out every quarter. 

The second thing Mr. Johnson is doing is completely revamping JC Penney's promotional calendar and spending.  Currently, JC Penney's sales year has 590 promotional events.  Mr. Johnson wants to reduce that to 12.  The reason: noise.  When you are constantly promoting promotion after promotion, it creates "noise" for the consumer, and eventually it all blends together and the consumer doesn't know what to focus on.  As a retailer, you become less relevant and harder to keep track of. 

To illustrate his point, Mr. Johnson had presentation attendees walk down a hall covered with old ads and circulars, calling it the "Hall of Hell." Promotional spending will also change; instead of $2 million per promotion, JC Penney will now devote $80 million a month towards entire product line promotion.

This is so refreshing.  To finally see a department store (or any big-box retailer other than Walmart) understand that their pricing structure and promotional model is so out of touch with consumer buying habits is amazing.  For that brand to make realistic ... frankly common sense changes ... is fantastic.  I sincerely believe that, if successful, JC Penney will force their competitors to re-brand and re-price.

Consumers will be the beneficiaries of these changes.  Products will sell for lower, more realistic prices.  Sales will increase, and retailers may begin to see the growth that they have been hoping for. 

I hope JC Penney succeeds.

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Brand Audit

Have you ever audited your brand?  Audit?  Isn't that for taxes?  Yes it is.  And it can be unpleasant.  However, audits often weed out the things that need to change in your finances.  Brand audits can show you what may need to change in your branding.

Any good branding audit should:

- Identify branding elements that are out of alignment

- Explain why those elements are out of alignment

- Suggest how to bring them into alignment

Two key elements to proper alignments are clearly defined brand architectures, and properly integrated brand identities. 

In the next few weeks, we will look at brand architecture and brand identities.  Until my next post, sit back, and consider the following questions:

1) Is my brand clearly defined?

2) Is my brand clearly understood in the marketplace?

3) Is my brand achieving the goals it it supposed to be?

4) Does my perception of my brand image match my customer's perception of my brand?

5) Am I willing to take a hard look at what may need to change? 

Going through a brand audit helps you understand the answers to questions 1-4.  Question 5 is simply there to humble yourself to begin this process.

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