SWOT stands for Strengths, Weaknesses, Opportunities and Threats and is critical to your marketing plan. As mentioned before, your marketing plan builds upon itself, and one of the anchoring steps is the identification of SWOT. By completing the review of your business and your market, you should be armed with the information necessary to identify your SWOTs and PESTs.
Your strengths and weaknesses are determined by internal elements, while opportunities and threats (OT) are dictated by external forces. Sometimes it is recommended to identify your opportunities and threats first in order to more quickly bring to light the product strengths or weaknesses that should be considered first. For example, if you discover that your competitor is losing an exclusive distribution contract in the next two months, you could use this information to quickly fill that gap in the market. However, many of your threats will be based on weaknesses you've discovered.
Regardless of which you cover first, you need to understand what to look for. To come up with your OT, ask yourself these questions. Were any problems or opportunities identified in your:
- company's philosophy or mission?
- product features, benefits or quality?
- product's competitive advantage? (Is there a competitive advantage?)
- distribution methods or distributor satisfaction?
- pricing structures? Is it priced much higher or lower than the competition?
- target market's awareness of your product?
- target market's attitudes toward the product (or its category)?
- target market's brand loyalty?
- competition's activities? (new product launches, price changes, new companies, etc.)
- overall market? (shifts in needs, trends, behaviors, etc.)
When coming up with your opportunities list, think specifically in terms of these processes:
- Problem solving - What problems do customers currently have with the product that aren't necessarily bad enough to warrant not using it or even complaining, but could benefit from improvement? For example, interviewing a customer might bring to light a statement like, "My potato chips always get crushed in the grocery bags on the way home from the store." Enter Pringles brand potato chips. New packaging might just give your product or service an advantage in the market.
- Product use cycle - What steps does the buyer go through to purchase, use, and dispose of the product? This method might bring to light new product ideas (or just enhancements or packaging ideas), services, or other value options.
- Ideal scenarios - Sometimes customers' "I wish..." statements can lead to whole new spin on a product. For example, someone at some point probably said "I wish I could check my e-mail from anywhere!" Enter the wireless communications addition to the PDA line.
Other areas may also need to be addressed depending on your company, product or market.
Now identify strengths and weaknesses. Strengths can be defined as any available company resource that you can use to improve your market share or financial performance. Weaknesses are any company resource that may cause you to lose a competitive advantage, position or financial state. Rate your product (or company) strengths in these categories on a scale of one to five. You can also rate each by importance. Remember, many of your weaknesses will be based on the threats you identified above.
External - Market-oriented
- Company/product reputation
- Market share
- Company's/product's ability to meet the needs and trends of the market
- Value your company brings to the market
- Quality of your product
- Quality of your customer service and support (or other area of service)
- Quality/effectiveness of past promotions and other marketing efforts
- Geographical advantages
- Operational leadership
- Financial strength
- Manufacturing capabilities
- Responsiveness of workforce
Expand on these categories as needed for your product or company.
Also keep in mind that, often, a threat can also be an opportunity, and a strength can also be viewed as a weakness, all depending upon the viewer's perspective. For example, you may see your large selection of products as a strength, while your customers may consider it confusing and see it as making it difficult to find what they need. Put yourself in the consumer's shoes and be objective when making your determinations.
Be sure to check out the SWOT Worksheet found on the Marketing Tools page.