Making a Situation Analysis

posted: March 09, 2010

The Situation Analysis makes an assessment of your marketing strengths and capabilities. You will need to complete this analysis before designing your marketing plan. The analysis has eight components:

1. Assess Your Product and Service Development Experience
2. Analyze Your Macro-Environments
3. Analyze Your Competitive Position
4. Analyze the Value-Chain Activities
5. Assess Your Internal Capabilities
6. Appraise the Corporate Culture
7. Analyze Your Product/Market Segments
8. Analyze the P-M-I Life Cycle

You use these component analyses to determine the type of marketing strategy you need to grow and manage your business.

We begin this review with an assessment of your business experience in new product and service development.

1: Assess YOUR product and service development experience

There are four types of business experience assessments when developing a marketing strategy around new product and service development. Determine how your business fits within one of these four categories:

1. Are Your a Prospector:
   • operates with a broad product-market domain that undergoes periodic redefinition
   • values being a "first mover" in a new product and market area, even if not all of these efforts prove highly profitable
   • responds rapidly to early signals concerning areas of opportunity; and these rounds often lead to new rounds of competitive actions
   • compete primarily by stimulating and meeting new market opportunities, but may not maintain strength over time in all markets it enters.
2. Are You a Defender:
• attempts to locate and maintain a secure position in relatively stable product or service areas
• offers relatively limited range of products or services as compared to competitors
• tries to protect its domain by offering lower prices, higher quality, or better service than the competitors
• usually not at the forefront of technological/new-product development in its industry; tends to ignore industry changes nor directly related to its area of operation.
3. Are You an Analyzer:
• An intermediate type; makes fewer and slower product-market changes than prospectors; but is less committed to stability and efficiency than defenders
• Attempts to maintain a stable, limited line of products or services, but carefully follows a selected set of promising new developments in the industry
• Seldom a "first-mover," but often a second or third entrant in product-markets related to its existing market base - often with a lower cost or higher quality product or service offering.
4. Are You a Reactor:
• lacks any well-defined competitive strategy
• does not have a consistent product-market orientation as its competitors
• not as willing to assume the risks of new-product or market developments as it competitors
• not as aggressive in marketing established products as some competitors
• responds primarily when it is forced to by environmental pressures.
  

Emphasis on market growth

If we were to take these four business-growth types and scale them using X,Y coordinates as shown, we would see the following marketing actions as it relates to a defined business:

• Prospector:
  primarily concerned with attaining growth through aggressive pursuit of new product-market opportunities. This business would have heavy emphasis on product development with high market differentiation.
  
• Analyzer:
  two type of units: 1) units with strong core business; actively seeking to expand into related product-markets with differentiated offerings; 2) units with strong core business; actively seeking to expand into related product-markets with low-cost offerings.
• Defender:
  two type of units: 1) units primarily concerned with maintaining a differentiated position in mature markets; 2) units primarily concerned with maintaining a low-cost position in mature markets.
• Reactor:
  business units with no clearly defined product-market development or competitive strategy.

what is your business experience?

How does your business fit into one of these defined categories? Understanding your position on market growth will help determine what type of marketing strategy you need to stay competitive. You will use this analysis (along with other analyzes to be discussed) to formulate the marketing strategy you need for your business.

Next topic

Our next topic will analyze your macro environments.

Don't forget to download our market model as we work through each of the issues needed to formulate your marketing plan.

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