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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Is Anyone Aware?

One of the items I mentioned last week was Brand Awareness.  What is Brand Awareness?  It is the measure of a consumer's knowledge of your very existence.  The "aggregate" level is the proportion of consumers that "know" your brand.  Why is this "level" even important?  It's important, because the creation of brand awareness is the PRIMARY goal of advertising, and it influences the behavior of the buyers of your product.  However, remember that all of your measurements of brand awareness are, at best, approximations.  They are not exact. The more measures used, the more complete your understanding of brand awareness will be.

Brand awareness is measured "simply" by showing a consumer the "brand and asking whether or not they knew of it beforehand.  Many textbooks have conceptualized brand awareness simply as the knowledge that the brand is a member of a particular product category, such as fast-food.  However, common practice says there is more than one recognition and recall measure, all of which test the brand name's association to a product category cue.

However, "knowledge" doesn't give us much data to do anything with.  So, we use three common metrics that can be measured:

• Brand Recall - Either the brand name or both the brand name and category name are presented to survey participants.
• Brand Recognition - The product category name is given to participants, and are then asked to recall as many brands as possible that are members of the category.
• Top of Mind Awareness - Brand Recognition, but more specifically only the first brand recalled is recorded (called "spontaneous brand recall" by some).

These measurements can be used for creating an understanding of Brand Equity.  Brand Equity is the positive effect of the brand on the difference between the prices that the consumer is willing to pay compared to the perceived value of the benefit received by your product.  The more value, the more a consumer will pay for your product.  Brand Equity is built by brand awareness activities such as advertising, PR, and promotion.  Simply put, the more Brand Equity, the more you might be able to charge for your product.  Higher prices can lead to higher profits.  You're in the business to make money right?

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Brand Assessment

Last week I discussed the details of Brand Architecture.  Before I talk about further evaluating a Brand Architecture, I wanted to explore the Brand Assessment.  The data gained from researching and evaluating your brand in an assessment is a key requirement before considering any future change in your Brand Architecture.  If you don't know anything about your brand in the marketplace, you cannot make any intelligent decisions about it's direction in the future.

There are two key parts to a Brand Assessment: the Brand Essence and the Brand Communication.  

When reviewing your Brand Essence it is important to determine:

• Awareness: Are you known in the marketplace?
• Favorability: How do people feel about you?
• Function: What benefits do you provide your customers?
• Key Driver: What prompts consumers to engage with you?
• Support: What "backs up" your key function in the marketplace?
• Differentiation: What distinguishes you in the marketplace from everyone else?
• Personality: What compelling attributes define you?
• Quality: What is the quality of your brand in the marketplace?

When reviewing your Brand Communication, you should review:

• Messaging: What messages are the most compelling to your current and potential customers?
• Name: How effective is your current name in the marketplace?
• Logo: How effective is your current logo in the marketplace?

The amount of detailed, reliable data you can collect on each of these areas will help you determine the direction your brand should go in the future.

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