Situational Analysis
Situational Analysis
The situational analysis should help you take a snapshot of where things stand at the time your plan is being developed. It is extremely important. The situational analysis covers these key areas: target market & customers, competitors & existing products, distributors & suppliers, demand and cost issues, and macro-environmental issues.
Important note: this is just an overview and is not a prescriptive roadmap for writing a situation analysis (such a thing does not exist). It just tries to point out the main issues to be researched. These issues include the micro-environment (your company, your customers, your competitors, and your channel (upstream suppliers and downstream distributors)—hence the four c’s), as well as the macro-environment (see #6 below).
1. Description of Customer Needs: Segments
General info on the basic nature of the types of needs and customers in this market
Segments (do this analysis for each segment)
Who are the customers – complete profile (demographics, psychographics, behaviors)
What are their needs
What benefits do they seek (i.e., what points-of-pain or problems are being solved)
What factors can affect their purchase or use decision
What attitudes do they have about the products/services currently or not currently offered
How are the current products being used
Size (dollars, volume), number of customers, etc.
Number of competing products (describe each product)
Number of competing firms (describe each competitor, see below)
Products and Services that appeal to the target market
In general terms (not particular brands) what is currently appealing to this market
If there are no current providers, what types of products/services may appeal to this market (i.e., what is used now to solve the problem).
2. Competitive Analysis (see “Guideline” in the appendix below for doing a detailed analysis of one competitor)
Examine the main competitors: it is better if you can do this by segment, or show in which segments they are competing. Use of comparison tables recommended.
Describe direct competitors in terms of marketing issues such as:
Products & Services (e.g., description, attributes, point of differentiation, pricing)
Current customers and target market segments
Rank competitors by market share in relevant target segments
Primary distribution used for each related product & product line
Positioning and promotion strategies by target market
Support services offered as part of the product
Discuss each competitor’s strengths and weaknesses:
May need to consider much more than just marketing issues such as:
financial standing
target market perception
R & D capabilities
Discuss competitive trends:
future competitive threats: who they are or may be and why they are seen as potential competitors—why they might enter the market.
3. Describe Supplier and Distributor Network/Situation Evaluate the company’s potential distribution channels and suppliers. Marketing plans for a service company may not have much detail here but this section will most likely have some relevance even for service firms (e.g., package delivery services, online legal service, etc,).
Describe the channels/supply chain employed to sell and deliver the type of product you are considering:
Options may include:
direct to customer
indirect via a distributor
combination of both
What are the needs/benefits sought by distributors?
Describe this type of product’s role within the distributor network:
How is this product used within the distributor’s business?
How important is product within the distributor’s strategy?
How is product positioned?
e.g., how does distributor view product in relation to competition
Attitudes and perceptions about company’s product(s)
Purchase process
How does distributor network make their purchase?
Who or what influence distributor’s purchases?
Demographics
Who makes up the distributor network?
types
size
geographic region
markets served
Do the same for suppliers, keeping in mind your market (customer) and product
4. Market Demand
Size estimates (current and future) for:
Overall market
Current size
Potential size
Actual penetration of current products/service within the total market
Individual market segments
Current size
Potential size
Actual penetration of current products/service within the total market
Usage rates
Frequency of product purchases
Growth estimates (current and future) for:
Overall market
Individual market segments
5. Financial Analysis for Product or Product Line
Sales Analysis
Overall industry sales and market share (for at least the last year)
total market sales
total for your company’s product(s)
total for competition
your projected share of the market
By segments/product categories
total for segments/product categories
total for company’s product(s)
total for competition
By Channels of Distribution
total for each channel
total for company’s product(s) by channel
total for competition by channel
By Geographic Region
total for each region
total for company’s product(s) by region
total for competition by region
Profitability Analysis
Revenues
For highly detailed plans break out into categories as shown above in the Current Sales Analysis section.
Marketing Expenses
Types:
Direct – those expenses that can be tied to the product
Indirect or Proportional – generally administrative or broad marketing expenses that may be assigned to a product based on some established criteria (e.g., a product’s percentage of overall company sales) Note: not all companies follow this approach
For highly detailed plans break out into categories as shown above in the Current Sales Analysis section.
6. Environmental Problems and Opportunities
Extraneous Variables
Discuss factors and trends that may affect this market (e.g., social/demographic, cultural, technological, economic, governmental/political, legal/regulatory, ethical)
Market Trends
What is expected to happen
7. Summary of Current Situation Summarize all information in the Situational Analysis. (Length: 1 page)
Provide a SWOT analysis for the company’s product(s) that includes:
strengths (internal)
weaknesses (internal)
opportunities (external—company has no control over this)
threats (external—company has no control over this)
APPENDIX I: Guidelines for Doing a Detailed Competitive Analysis
This report should be made for each major competitors. While most of this report focuses on the overall analysis of the competitor, you should recognize that you are primarily interested in how this information may impact your company and, specifically, a product or product line. Thus, you should make sure, where possible, to focus your information on how it impacts the markets in which your product will compete. Note each sub-section should contain a few sentences that explain the sub-section.
General Company Information – includes name, location (headquarters, other locations of importance), website address
Summary of Business – includes sections that summarize the company, business units and nature of business
Marketing – includes sections on products and services offered, target markets, positioning, customers/users, pricing model, promotional efforts, sales force, and distribution
Financial and Market Share Analysis – includes sections on corporate performance, trends, market share for product
Recent News/Developments – important company developments within last 6-12 months (e.g., reports from news sources, press releases, financial statements—especially for new products or major marketing changes)
Other Issues – includes sections on technology capability, partnership arrangements, intangible issues
Their Competitors – list key competitors facing this company
