Situation Analysis in Marketing Plan

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Introduction

Under the competitive and dramatically changing environment, some companies are successful but some are failed. Considering the reasons are various, however, offering the right products for the right growth markets at the right time is the key factor for some of the successful companies. Chinese idiom says ‘know the enemy and know yourself, and you can fight a hundred battles with no danger of defeat’. Hence, the company must make marketing plan systematically, in terms of its objectives and missions, if it pursues maintaining a high level of operating efficiency, and achieving above-average returns.

The role of situation analysis

Situation analysis is an essential first step in the process of marketing plan. Jain (2004) states situation analysis is an important way in terms of forecasting the shape of things, analyzing strategic alternatives and developing greater sensitivity to long-term implications.

Situation analysis takes account of three key forces: the customer, the competition, and the corporation. (Jain, 2004, p25) Jain (2004) explained the role of situation analysis is to (1) make a clear market definition; (2) make a good match between corporate strengths and the needs of the market; and (3) perform superior to the competitions in the key success factors of the business. Based on the three Cs, situation analysis indicates three decisions: where, how, and when to compete. Thus, without the reflection on the changing environment and the developing business system, as well as the ability of coping with three decisions at the same time, no one, including shareholder, will profit in the long run, even if these corporations at one time controlled huge resources, dominated their market, and had the high-skill workers. Hence, the situation analysis plays a key role in the successful business. It is the process that firm can match its own capabilities with the opportunities in order to fulfill customers’ needs better than the competition. (http://www.netmba.com/marketing/process/) Thus, the results of an effective situation analysis direct firm’s development, strengthen its competitive advantage, and expand its above-average returns.

External environment

Hanson & Dowling (2005) suggest the external environment influences the firm’s strategic options, as well as the growth and profitability. In order to achieve competitiveness and earn above average returns, marketing managers should be aware of the different dimensions of the external environment, which are divided into competition, economic growth and stability, political trends, legal and regulatory issues, technological advancements, and socio-cultural trends. (http://ferrel.swlearning.com)

Competition

Competition is various, which may from products or sources either within or outside industry. The competitor may be a small firm or a large multinational corporation. Nevertheless, it is necessary for marketing manager to identify all current and potential sources of competition in respect of gaining an adequate perspective on the competition. (Rafii & Kampas, 2002, pp. 115-123) Especially, as Jain (2004) mentioned, knowledge about major competitors comprise their size, growth, marketing capabilities, target markets etc. For example, In Australia, the major competitor of Boag’s Brewery is Cascade Brewery in beer industry. The competition is fierce because their size, growth, product and target market is similar. Also, they both receive a high value of brand and a good reputation in Australia.

Economic growth and stability

The economic environment refers to the nature and direction of the economy in which a firm competes or may compete. (Fahey & Narayanan, p. 105) It is unreasonable for all companies to examine the economic environment in the marketing plan. So the marketing manager should identify ‘the specific economic conditions of the country, region, state, and local area in which the firm operates and are relevant to...
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