Why SWOT Analysis In Marketing Is More Important Than You Think
Are you stuck under the burden of increasing competition levels & don’t know what to do?
Are you also a victim in the marketplace flooded with barely differentiated products?
You’re not alone. A monopolistic set up is what characterises majority of market niches today.
We’re far from the world where there were actually unique products to fulfil needs.
There is very less difference to stand out at this day.
In this situation, there is a massive burden on marketers to carve an identity to ensure smooth regular business.
How do you make your customers come to you instead of your competitor for a product that is barely different?
The answer begins with SWOT Analysis.
I know you will think I’m preaching boring B-school knowledge.
In a scenario of fighting for market share, a simple SWOT analysis can be handy in laying out a planned path for the future. It’s way more useful than you think.
It is vital to engage in the same, before implementing the indispensable marketing funnel approach to have a better design for the funnel itself.
What is SWOT Analysis?
SWOT is the acronym for Strengths Weaknesses Opportunities Threats.
It is essentially a tool to audit an organisation and its external environment.
SWOT covers internal factors such as strengths and weaknesses. It also factors for the external environment in terms of opportunities and threats.
While weaknesses and threats are negative factors, strengths and opportunities harp on the positive.
Here are examples of the elements of SWOT :
Postive Brand Value
Huge Market Capitalisation
Edge in Technology/Design
Opening up of new potential market
Any disrupting innovation
Powerful new entrant
International Scenario Change
Let’s move on to the Role and Importance of Swot Analysis in Marketing.
Benefit of Conducting SWOT Analysis in Marketing
The whole idea of SWOT analysis is to keep a close watch on the negatives and try to turn them into positives as much and as fast as possible. It is done by linking weaknesses to threats and altering the course of action to counter that. This is the concept of ‘conversion’.
Another important concept is called ‘matching‘. It refers to regularly keep mapping the positives to the opportunities available externally.
SWOT takes into consideration where we are today & where we can be. An understanding of this is necessary to actually get there.
The whole guiding principle of the exercise should be to increase ‘value’ for customers which in turn will lead to new customers, retention of old.
A great way to implement the value quotient for the customer is engaging in content marketing, but that is another subject altogether.
I’m sure you will agree that marketing as a function is extremely important today. Before laying down the bricks for marketing, it is really important to have a very clear picture of the situation at hand. Only then can you have a result-oriented policy.
An initial audit in the form of SWOT helps in gathering clarity before laying down a strategic plan of action.
Key Points To Remember
- It is important to note that this is a subjective audit. Two people might have a different SWOT Analysis for the same company. Something that person A can perceive as a strength might be perceived as a weakness for person B. Here the role of discretion of the marketing manager becomes very important. So it is a good idea to internally discuss the S-W-O-T for proceeding with any version to incorporate different angles
An example – For a print book publisher, the increasing spread of technology can be a threat. But, it may also be perceived as an opportunity where the cost per unit of every book falls and the market size multiplies rapidly.
- It should contain realistic pointers. They should be indicative of where you are today & where you can get in the future. Painting an over-optimistic or extra grim picture doesn’t help.
- Points should incorporate a relative perspective to that of your competitors.
Case Example To Demonstrate Importance of SWOT Analysis In Marketing Plan
I’ll take the example of Kodak, a case of classic marketing myopia.
In its glory, Kodak was a great brand in reel print cameras with a good market share and high brand loyalty.
Suddenly, there was an introduction of digital cameras in the camera marketplace.
However, they focussed on their strength of producing reel cameras more & lost the chance to continue their market capitalisation.
Let us quickly audit their then situation.
Quick SWOT of Kodak Before Deep Penetration of Digital Cameras
I have listed below a very basic SWOT Analysis for Kodak prior to a penetration of digital cameras in the market.
- Best in class Reel Cameras
- Loyal Customers Base
- Great Brand Value
- Huge Market Capitalisation
- Not technically up to date
- New segment to expand product portfolio
- Consumer’s increased demand for clicking photographs due to no cost of printing photographs
- Technology bringing in digital cameras
- Loss of market due to camera in mobile phones
In this scenario, if they had focussed on their strength of a great market capitalisation, navigating towards digital would win them a wide customer base owing to their existing brand loyalty.
The weakness of a product moving towards obsolescence could be catered to with research and product development to keep up with the threat. This is what I meant by ‘conversion’ under the section Benefit of Conducting SWOT Analysis.
They lost the game by focussing on the strengths ignoring both the opportunities and threats. The ignorance of change in external environment came with a huge cost.
A thoughtful SWOT analysis in this situation could have helped them with the clarity of future course of action and not lose their lion’s share.
Advanced Approach to SWOT
The Simple SWOT Analysis has some clear limitations. While they are not so important for a basic foundation, understanding of the same is helpful in driving more meaningful outcomes in many situations.
Addressing some issues –
- Personal Opinion: Since SWOT can be subjective, it’s a good idea to do it as a team exercise incorporating diverse views so that nothing important is missed out or misconstrued in the big picture.
What might be looked as strength and opportunity by one could be perceived as a threat by another.
- Multiple Pointers – Ranking: Listing out S-W-O-T gives a list of points. It is important to rank and prioritise them in order of importance. This aids in executing the marketing management process with SWOT effectively.
- Multiple Pointers – Weighting: Another way to go about it is to assign weights to points under a head. For instance Opportunity A is worth 40 percent, Opportunity B is 20 and so on. In this way, all opportunities should sum up to 100. Weighting helps us to understand the relative importance of each in addition to rank.
- Emphasis On Detail – SWOT is usually a quick list of the heads. It’s a good idea to keep the pointers specific. Gray areas bring with them ambiguity which is not good for an analysis.
For example: If for the print newspaper industry, the threat is technology, it is better to write it as technology led e-papers.
SWOT Analysis because of its very basic nature is often ignored.
However, its importance cannot be understated.
It helps to quickly analyse the situation at hand which helps to outline key focus areas.
This, in turn, enables to take correct decisions to make best of opportunities available, and capitalise on strengths.
There are ways to get into more detail with SWOT, and they are discussed in the Advanced Approach to SWOT Analysis.
It’s a good idea to conduct a periodic SWOT to ensure that the organisation doesn’t get derailed in the dynamic marketplace.