What is SWOT Analysis in marketing?
What is SWOT Analysis in marketing?
Hello there, my name is Martin Henley, this is the what the series and in episode number 17, that’s this episode, we’re answering the important question what is swot analysis in marketing. Is this just more marketing bs or is there some real value in getting this work done properly?
What are we going to cover in this SWOT Analysis definition?
In addressing the question what is swot analysis in marketing there are six things we’ll be sharing with you. We are, of course, going to answer the question What is swot analysis, we’re going to answer the questions why should you be thinking about swot analysis; who should be thinking about swot analysis; the issue with swot analysis; how you do swot analysis and when you do swot analysis.
Let’s get this started Sonny.
Did we manage to find a definition of SWOT Analysis?
As always when we come to define these marketing terms we’re looking for a definition and we found this one right at the top of Google at mindtools.com.What they tell us is that “swot stands for strengths, weaknesses, opportunities and threats and a swot analysis is a technique for assessing these four aspects of your business.”Now,I have absolutely no issue with this definition whatsoever, clearly swat stands for strengths, weaknesses, opportunities and threats and a swot analysis is your opportunity to assess your business in terms of your strengths; the things you are good at, your weaknesses; the things that you might be less good at, the opportunities that you’d like to realise and the threats that you need to mitigate.
Why is SWOT Analysis important?
So why is swot analysis important? Well let me tell you that swot analysis is important if you want to get good at anything in your life and I’m guessing the reason you’re here with us today is because you’d like to be getting better at your business marketing.
If, for example, in my life. I like to play tennis, I really like to play tennis and I’d really like to be better at playing tennis. If I were to employ a tennis coach that person would look at my game in terms of my strengths, my weaknesses, my opportunities and my threats. They would want to understand what it is that I’m good at, identify areas where I’m less good, identify opportunities for me to be winning more points and the threats which might cost me points and games. This will go on forever, so you can imagine right at the top of the game that Federer if he were to meet Nadal in an open final will absolutely understand, to the nth degree, his strengths, his weaknesses, his opportunities and his threats. He will also understand Nadal’s strengths, weaknesses, opportunities, and threats. So if you want to get better at anything in your life a swot analysis is a great place to start.
Who needs a SWOT Analysis?
So now you might be wondering who needs a SWOT Analysis, which brings us to the question, who needs a SWOT Analysis? In my experience, there are three types of people who absolutely should understand what a SWOT Analysis is and how to perform an effective SWOT Analysis. Those people are marketing managers in medium to large size businesses, students aspiring to be marketing managers in medium to large size business, and business owners who want to do better with their business marketing. The issue is that if you are employed as a marketing manager in a medium to large size business and they task you with producing a marketing strategy they are 100 percent going to expect to see a swot analysis included. Similarly, if you are studying marketing you can expect SWOT Analysis to appear on the syllabus and in your exam. If you are a business owner, 100%, if you want your business to get better you need to understand your business in terms of your strengths, your weaknesses, your opportunities and your threats.
What is the issue with SWOT Analysis?
Having established how important a SWOT Analysis is and who needs a SWOT Analysis I have a confession for you. My confession is that I have never produced a SWOT Analysis professionally in my life. There’s a good reason for that, and the reason is that there is an issue with SWOT Analysis.
The big issue with SWOT Analysis is that half of this conversation, where you’re talking about your strengths and your opportunities, is an absolute delight of a conversation to have, the issue is that the other half of the conversation we are talking about weaknesses and threats, that’s not a conversation people enjoy so much. This has two outcomes. The first is that people find it very difficult to talk honestly about these things. One of the suggestions, if you were to research how to do a SWOT Analysis is that you put all of the stakeholders, all of the decision-makers in a room and you have them discuss what the strengths, weaknesses, opportunities and threats are. Now, let me tell you, that will be a monumental waste of an afternoon because a room full of egotistical people will not be able to agree on what the strengths, weaknesses, opportunities, and threats are.
The second outcome is that SWOT Analysis ends up being very negative. When I produce a marketing strategy for a prospective customer it’s typically a standalone piece of work which is designed to get them to invest their marketing time, energy and money in me.I absolutely don’t want to be scaring people into investing their time, energy and money with me,I’d much rather get them excited about their strengths and their opportunities than I would to scare them about their weaknesses and their threats.
These two aspects make a SWOT Analysis quite a difficult thing. What is the point of doing a SWOT Analysis if you can’t honestly arrive at your actual strengths, weaknesses, opportunities and threats. And what is the point in doing a SWOT Analysis if you are going to annoy a prospective customer to the point that they will go and find somebody who’s prepared to flatter them a little bit more than you.
How do you do SWOT Analysis in marketing?
Which brings us then to the question that you should really want to know the answer to which is how do you produce an effective SWOT Analysis. Now we’ve understood the issues with this, firstly people find it very difficult to talk honestly about what their strengths, weaknesses, opportunities and threats are and secondly a SWOT Analysis can all end up being quite negative.
Well, I’ve got good news for you if you’ve been following this course of videos because we have spent the last 13 videos talking about our situational analysis. Because we have done our situational analysis, we’ve done our market research, we’ve assessed our offering, we’ve done some customer analysis, we understand our customer acquisition cost, we understand our customer lifetime value, we’ve looked at our competitors so we know what they’re up to and we’ve done some performance analysis; we know exactly where we are in terms of leads, and sales, and money in the bank.
The important thing about this is that when we did our situational analysis we were looking specifically for the data. Data, as we discussed, is perfectly objective. So rather than fill a room full of egotistical people and hope that they will agree on what your strengths, weaknesses, opportunities and threats are, my advice is that you go away you do the work and you present this data to that room full of people. If you’ve done a good job in collecting that data this becomes an entirely objective process, if you have done a good job you should be able to present something that none of the egos in that room will be able to argue with.
When it comes to presenting your swot analysis all you need is a blank sheet of paper, it doesn’t have to be yellow. What you absolutely have to do is write the words SWOT Analysis at the very top of the page so everybody knows what this is. Then what you do is you draw two lines on that page to effectively divide that page into four quadrants and what we’re going to do is label those four quadrants strengths, weaknesses, opportunities and threats. If you were to research how to do a SWOT Analysis what they will tell you is strengths and weaknesses are typically internal factors, they’re things that you have control over within your business; whereas opportunities and threats are typically described external factors. So you might see a SWOT Analysis where they will list flooding, or tornadoes, or strong winds, or changes in the regulatory environment as threats to your business. I’m not saying that these events aren’t threats to your business but what I am questioning is whether these are things that you can control within your marketing,I would suggest not. Equally if we look at external opportunities then they might tell us that there is the opportunity to be purchasing our competitors and buying their leads, and their customers. This isn’t the kind of marketing that I would typically do. What I’m interested in is understanding the market and making sure that we’re delivering value to that market.
When it comes to me and my SWOT Analysis what i want to do is to focus specifically on the marketing aspects, which are the aspects that we covered in our situational analysis. When it comes to filling in these quadrants I can’t tell you exactly what you’re going to put in those quadrants, because i haven’t done your situational analysis, but i can give you some examples. For example, what you might find as a result of your situational analysis is that you have a really strong brand, that you have really strong offers, and you have no issue in developing the leads you need for your business. Whilst the weakness might be that you’re not so great at converting those into sales, which isn’t giving you the cash you need because your business isn’t as profitable as it needs to be.
Equally, you might find that you are brilliant at sales, but you’re still not finding the customers that you need because you’re not generating the leads to acquire those new customers, which means you’re not making the cash because you don’t have enough profit. This is likely to be any combination of these things. What you need to avoid is the temptation to try and resolve your strengths, weaknesses, opportunities, and threats whilst you’re doing this work. What you really want to do is identify the strengths, weaknesses, opportunities, and threats that you can address over the following 12 months before you come to review this work again.
Having said that there are definitely threats to your business which are marketing aspects. For example, if your cost of customer acquisition is too high, as we discussed when we spoke about cost of customer acquisition, then that is an existential threat to your business. If your customer lifetime value is too low, that is an existential threat to your business which is going to affect your profitability. These are typically always the threats.
Having said that there is always the opportunity to reduce your customer acquisition cost, to increase your customer lifetime value, to be generating more leads, to be improving your offers, to be improving your brand and to be making more sales and more profit in your business.
As I say, I can’t tell you exactly what’s going to appear in your SWOT Analysis but this gives you a good indication. If you are focusing on the important aspects of your marketing, which are the things that we’ve discussed, your market, your offering, your customers, your competitors, your customer lifetime value, and your cost of customer acquisition this will empower you to produce a SWOT Analysis that will convince your business leaders that you can go ahead and look to strengthen your strengths, address your weaknesses, realise your opportunities and mitigate your threats
When should you do SWOT Analysis?
Which brings us to question number five which is the question when should you do your SWOT Analysis?
The good news for you is that this is typically an annual thing. Of course you want to be aware all of the time what your strengths are, your weaknesses, your opportunities and your threats but typically you will do this work once a year. You will come up with a list of actions to make sure that you’re doing better at your strengths, addressing your weaknesses, realising your opportunities and mitigating your threats and you will carry out those actions over the year. You won’t actually do this work again until you come to review your marketing strategy in 12 months time.
How did we do with our SWOT Analysis definition?
If you are still with us well done. You now know exactly what a SWOT Analysis is; you know why you should be thinking about SWOT Analysis; who should be thinking about SWOT Analysis, you know about the issues with SWOT Analysis, you know how to produce an effective SWOT Analysis and you know when to produce a SWOT Analysis.
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We are done here Sonny.
Martin’s original content is based on his very current experience of running effective marketing initiatives for his customers and the feedback from Effective Marketing’s successful and popular marketing workshops.
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