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This course reviews the external environmental factors and
internal organizational capabilities that impact how a company operates to
create a successful product or brand. Since companies operate in dynamic
environments, understanding the changing landscape and current trends that are
impacting the business helps to develop a sound Marketing Strategy. This course
includes three process namely - Determine Strengths and Weaknesses, Determine
Opportunities and Threats and Define Market and Identify Market Segments. The
course is useful to students and professionals who wish to gain an in depth
understanding of the topic analyzing market opportunity. The many authors,
advisers, and reviewers of the course have worked in numerous Sales and
Marketing areas and geographic regions across a variety of industries. Thus,
insights provided by them make this course industry independent. The course
defines the topic in terms of processes that comprise a series of actions that
leads to a particular result. Each process requires specific inputs and then
uses tools to create specific outputs.
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|Section 1: Introduction|
|This chapter reviews the external environmental factorsand internal organizational capabilities that impact how a company operates to create a successful product or brand. Since companies operate in dynamic environments, understanding the changing landscape and current trends that are impacting business helps develop a sound Marketing Strategy.|
|Section 2: Determine Strengths and Weaknesses|
|The strengths and weaknesses of a company determine its internal capabilities to compete in a market and to fulfil customer expectations. Strengths provide the company with a competitive advantage and can include factors such as skilled human resources, existing brands, patents, technology expertise, and distribution capabilities. Weaknesses place the company at a disadvantage, for example, factors such as unskilled resources, inflexible organizational structure, lack of updated technology, and inefficient operational processes.|
|Section 3: Determine Strengths and Weaknesses - Inputs|
|Since the senior management team regularly receives information from the functional strategy teams, it acquires a comprehensive view of the company and, as a result, can provide insights into the strengths and weaknesses of the company as a whole. These insights allow the senior management team to provide an overall vision for the company, which individual functional teams may not be able to fully recognize.|
|An assumption can be defined as anything that is considered to be true without proof. For example, there may be an assumption that all of the required skill sets for Sales and Marketing activities are available inside the company, or an assumption that a new product will capture ten percent market share in a particular market segment.|
|Section 4: Determine Strengths and Weaknesses - Tools|
|Meetings and discussions are very useful for gathering insights about a company’s readiness to fulfill customer demands—not just from the marketing team, but also from senior management, other functional teams, external consultants, subject matter experts, stakeholders, and industry groups.|
|Understanding the overall product portfolio of a company, and evaluating the current and future product lines is an important component of the Marketing Strategy. In 1973 Peter Drucker proposed a classification method for analyzing a company’s product portfolio based on each product’s current and expected profitability.|
|The BCG Growth-Share Matrix, originally conceptualized by the Boston Consulting Group (BCG) in the late 1960s to evaluate various business units, can be applied equally well to products or services. It consists of a two-by-two matrix containing four quadrants, with the vertical axis depicting market growth rate and the horizontal axis showing market share.|
|Value Chain Analysis is used to analyze the value created by a company’s current activities. It explores where more value can be added, as well as where value is not being added throughout the chain of activities. It is a useful tool for internal analysis of strengths (activities that add value) and weaknesses (activities that do not add value).|
|When existing marketing research reports are insufficient for understanding a company’s internal environment, the company may choose to conduct new marketing research to fill any gaps in market intelligence. Such marketing research projects generally fall into two categories—primary research and secondary research.|
|Section 5: Determine Strengths and Weaknesses - Outputs|
|Understanding a company’s strengths and weaknesses with respect to its ability to meet its customers’ demands and to face competition helps the Marketing Strategy team determine the competitive positioning of the company’s products. A detailed list of strengths and weaknesses should be documented so it can be used as an input to other processes within Marketing Strategy and other functional strategies.|
|Section 6: Determine Opportunities and Threats|
|A company needs to identify the external factors that may impact fulfillment of its corporate goals. Those external factors that help the company achieve its goals are considered opportunities, while those that hinder the company’s efforts are considered threats. Identifying opportunities and threats, together with strengths and weaknesses discussed in the previous process, constitute what is commonly known as a SWOT (Strengths, Weaknesses, Opportunities, and Threats) Analysis.|
|Senior management has a comprehensive understanding of a company’s business, and this knowledge helps in identifying market opportunities and threats. Senior management may also be able to identify attractive market segments for the company.|
|Section 7: Determine Opportunities and Threats - Tools|
|Meetings and discussions are useful for identifying and discussing external factors and their relative impact on a company. As in the previous process, Determine Strengths and Weaknesses, many entities could be involved in these discussions as each of them provides additional value.|
|Porter’s Five Forces model is used to analyze the long-term attractiveness of an industry. Understanding the interaction of these forces with the existing competing organizations helps explain the differences in profitability amongst industries. It also helps a company decide whether or not to enter an industry.|
Market analysis involves analyzing market data to identify patterns and predict future events. The purpose of performing a market analysis is to understand the attractiveness of a market.
When existing industry reports, internal company reports, or generic reports are insufficient for understanding the external factors that can impact a company, the company may choose to conduct primary marketing research in order to improve knowledge of the marketplace, reduce risk, and improve marketing decisions.
|The PESTEL Analysis framework is used to analyze macro-environmental factors that are sources of opportunities and threats, and therefore positively or negatively impact the organization, its customers, and/or its suppliers. The six factors of PESTEL Analysis framework are political factors, economic factors, social factors, technological factors, environmental factors, and legal factors.|
|Section 8: Determine Opportunities and Threats - Outputs|
|It is important to understand a company’s opportunities and threats with respect to its external environment and competition. The goal is to first identify the key strategy-related factors that impact the company and then build on key strengths, address weaknesses, exploit important opportunities, and avoid or mitigate threats, and then ultimately create a competitive position that is sustainable in the long term.|
|Section 9: Define Market and Identify Market Segments|
|After a company has analyzed its internal capabilities and the external environmental factors affecting it, it then needs to broadly define the type of market in which it plans to operate. This process includes identifying the type of customers a company plans to target and specific product categories it wishes to explore.|
|The strengths and weaknesses of a company are outputs of the Determine Strengths and Weaknesses process. They are important inputs for segmentation and targeting because a company typically seeks to target those market segments where it can leverage and build on its strengths and perhaps avoid entering those where it has weaknesses.|
|Section 10: Define Market and Identify Market Segments - Tools|
|Meetings and discussions can be very useful for determining segmentation criteria and identifying the ideal segments for the strategy teams to consider. They bring a variety of perspectives not just from the marketing team, but also from other internal teams (e.g., product team and senior management team) that can add value to the discussions.|
|This tool involves segmenting customers on the basis of their consumption behavior or attitude towards a product and also takes into account their lifestyles and patterns of buying and/or using the product. This is a more objective method of segmentation than psychographic segmentation. It is used for both the consumer and business markets.|
This tool is analogous to the demographic segmentation for consumer markets. Here, the business market can be segmented on the basis of various company characteristics including, but not limited to, the following:
|Section 11: Define Market and Identify Market Segments - Outputs|
|A market is defined as the set of potential customers who have a demand for the product category that includes the company’s product. Thus, the definition of market at this stage is not at a specific product level, but at a product category level. It sets the boundaries within which segmentation is carried out.|
SMstudy has been created by VMEdu, Inc., a global certification course provider that has educated over 400,000 students world-wide in more than 3,500 companies. SMstudy's certification training is provided through its 500+ Authorized Training Partners (A.T.P.s) across the globe. The SMstudy courses explain Sales and Marketing concepts through a practical, process-oriented approach. This helps Sales and Marketing professionals understand the specific processes they should follow to be effective in their Sales and Marketing roles.