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The situation analysis

The situation analysis. A University of Florida Presentation Abridged and Modified 2004/2005 by R. W. Bodo. The purpose of the situation analysis. Answers the why are we here? It provides a background on the factors that influence the company’s functions and performance.

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The situation analysis

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  1. The situation analysis A University of Florida Presentation Abridged and Modified 2004/2005 by R. W. Bodo

  2. The purpose of the situation analysis • Answers the why are we here? • It provides a background on the factors that influence the company’s functions and performance

  3. Elements of the situation analysis • Problem identification • Situation analysis • Industry/Category • Company • Product • Competition • Market • Consumer • Other considerations: Legal, political...

  4. Problem identification • A brief statement that summarizes the core dilemma and/or challenge a company must overcome

  5. Industry/Category Analysis • What’s going on in the Industry? • What’s going on in the category? • Overall what does the situation portend for the clent?

  6. Macro-environmental considerations • Industry/category • Size of the market in general • Growth trends • Demographic trends • Economic trends • Technological issues • Political/legal issues • Socio/cultural trends

  7. Company analysis • What the company is concerned with • What it represents • Usually this information is found in mission and vision statements

  8. Company analysis (cont) • Company’s mission (Annual report) • History • Sales and profits • Market standing/category share • Product offerings • Key personnel • Capital resources

  9. Product analysis • Focuses on the abstract and concrete qualities of the company’s product • Product attributes/functions • Positioning/Brand personality • Cost/Margins • Price • Packaging • Distribution • Promotions used • Media spent

  10. Product Life Cycle (Traditional view)

  11. Product Life Cycle New perspective - Golder and Tellis’ MSI Report • Informational cascades • Few buy a new product based on personal judgment but the majority base their decision on what they see others doing. • This leads to fast growth AND even faster declines of sales • Particularly true for leisure products (VCR) compared to time-saving products (Microwave). • Example: OnStar

  12. Competitive analysis • Considers all options consumers might think about in their purchasing decision

  13. Competition • Alternatives on a person’s mind when selecting a good to satisfy a need Direct competitors

  14. Competitive analysis • In what category does the product compete? • Who are the brand’s major direct competitors? Indirect competitors? • What is the competitor’s brand position? • What is the price of their product?

  15. Competitive analysis (cont) • What is the respective market share? • What is their communication strategy? • How much do they spend on media? • Where is competitive media spending concentrated?

  16. Market analysis • Helps planners identify which geographic areas are key • These areas are important due to: • The strong position the advertiser enjoys in the region • The problems associated with doing business in the region

  17. Market analysis: Development index • Brand development index (BDI) • Category development index (CDI) • If BDI>100 • If CDI>100 % of a brand’s total US sales in a market x 100 % of total US population in a market = BDI % of a category’s total US sales in a market x 100 % of total US population in a market = CDI

  18. Brand development index (BDI) % of a brand’s total US sales in a market x 100 % of total US population in a market = BDI Nestea Sweet Tea % of sales % of pop Florida 40% 10% Texas 30% 30% California 10% 20% BDI(FL)= (40 x 100)/10 = 400 BDI (TX) = (30 x 100)/30 = 100 BDI (CA) = (10 x 100)/20 = 50

  19. Category development index (CDI) % of a category’s total US sales in a market x 100 % of total US population in a market = CDI Sweet Tea % of sales % of pop Florida 40% 10% Texas 30% 30% California 10% 20% CDI(FL)= (40 x 100)/10 = 400 CDI (TX) = (30 x 100)/30 = 100 CDI (CA) = (10 x 100)/20 = 50

  20. Consumer analysis • Information that helps us gain a grasp on the (current/potential) consumer • Major questions to be answered • Who are they? • What motivates them to buy? • How do they use the product? • What is important to them in a product? • How do they look at life? • Where are they?

  21. SWOT analysis Advertising Strategy

  22. What is a SWOT? • It is the organization and summary of the information obtained in the situation analysis: • The company’s • Strengths • Weaknesses • The environment’s • Opportunities • Threats • Answers the so what? Of the situation analysis

  23. What’s all about?

  24. The purpose of a SWOT analysis • To define the main issues that must be addressed in the strategic plan • Clarifies opportunities • Identifies problems • Issues discovered in the SWOT will be used to define IMC objectives, strategies and tactics

  25. A good SWOT • Has a focus: Maybe more than one analysis • Searches extensively for competitors • Does not forget other areas of the company • Thinks as the consumer (internal/external) • Separates clearly internal from external sources

  26. Components of a SWOT • A complete SWOT analysis consists of two components: • Strengths/Weaknesses analysis • Opportunities/Threats analysis • Study Exhibit 4.4 of SWOT chapter

  27. Strengths and weakness • Internal factors reflect situation-based considerations within a company’s control • Key question: What factors internal to the company influence the current situation?

  28. Strengths • Strengths refer to what a company has done well or been successful at to date. • Examples • Dell’s ability to sell directly (Phone/Web) • Apple’s ability to come up with innovative designs

  29. Weaknesses • Weaknesses refer to what a company needs to correct or that has worked to a company’s disadvantage to date. • Examples • Dell’s inability to create a mystique among users. • Apple’s relaxed culture made difficult to make the company work as a one unit.

  30. Opportunities and threats • External factors reflect situation-based considerations beyond a company’s control • However, they have the potential to affect the future of the business • Key question What variables in the external environment affect the company’s challenges?

  31. Opportunities • Opp. refer to external factors that may benefit the company if pursued. • Examples • Baby boomers’ waistlines are expanding, so demand for baggy pants is stronger. • A weak economy might make business people look for better airfares (Priceline.com)

  32. Threats • Threats refer to external variables that may negatively affect the company if ignored • Examples: • A negative legal environment for tobacco companies. • A weak economy might force business people to look for cheaper airfares (AA, Continental)

  33. A short SWOT for Kodak’s disposable camera 1 High priced Lower priced brands are considered low quality Photos are not a priority for this market Brand is well known and trusted 2 3 4

  34. Bad image of DC - environmental issues Market makes frequent spontaneous trips Kodak’s DC offer the best film Kodak doesn’t offer a panoramic camera A short SWOT for Kodak 1 2 3 4

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