When you’re ready to create or update your marketing strategy, what is the first thing you should do? Evaluate your budget? Review your products/services? Update your marketing metrics? Identify your buyer personas? Profile your competitors?
Those are all things you need to do, but you first need a framework for understanding how your business fits in relation to its customers and competitors. An excellent approach for defining that framework is to perform a SWOT analysis for marketing. It will give you the insight you need to become more competitive and help your business grow.
What is a Marketing SWOT Analysis
SWOT analysis stands for Strengths, Weaknesses, Opportunities, and Threats. Businesses have seen the benefit of conducting a SWOT analysis since Albert Humphrey of the Stanford Research Institute created it in the 1960s. It provides you with the knowledge to create plans that will:
- Make the most of your strengths
- Minimize or eliminate your weaknesses
- Recognize all of your opportunities
- Avoid your threats
Strengths and weaknesses refer to things within your business that affect your ability to compete. For example, your business may strong because you have a large market share. But, your business may be weak because you haven’t established a robust social media campaign that would help you expand your market share.
Opportunities and threats are things outside of your business. They aren’t under your control, but you can make plans to take advantage of opportunities and evade threats in your marketplace. For example, you may see an opportunity in the huge projected market growth for your industry. But, you may be threatened by a wave of new competitors entering your market.
Why Do a Marketing SWOT Analysis
A marketing SWOT analysis helps you understand internal and external factors that will have the biggest influence on whether or not you reach your marketing goals.
The biggest mistake managers make is “trusting their gut.” It doesn’t matter how long you have been in business or how well you know your market, you need facts to make business decisions. Besides that, things change and in today’s business environment, they’re changing faster than ever.
A SWOT analysis isn’t something you do once. You can use a SWOT analysis whenever you need to make decisions about marketing, your workforce, your product line, or any other component of your business.
How to Complete an Effective Marketing SWOT Analysis
Step 1: Identify Your Strengths and Weaknesses
Look at the Strengths and Weaknesses within your own organization. Consider your skills, resources, and performance based on your existing marketing strategy. Consider global factors like:
- Financial resources to support marketing operations
- Physical resources such as your facilities and equipment
- Human resources such as number of marketing employees, their roles, and level of expertise
- Current processes that are in place to perform marketing tasks and the tools to support them
Step 2: Evaluate Marketing Activities
- The effectiveness of your website and social media activities
- Where you rank for critical keywords in the search engines
- The effectiveness of your content marketing strategy
- The reputation of your firm in the industry
- Your relationships with internal stakeholders, customers, and vendors
- The effectiveness of your marketing materials
- The effectiveness of your product mix
- Your product margins
- Your ability to gather and analyze performance data
- Your ability to gather and analyze data related to your customers’ experience, reviews, and feedback
- Your ability to respond to market changes
Deciding whether to name each of these factors as Strengths or Weaknesses is the next step. It’s crucial to include internal stakeholders in brainstorming sessions. For example, you may be proud of the company’s website. But, if the website isn’t producing a steady flow of leads, it needs to be labeled a weakness.
This is an opportunity to evaluate the website’s design to find opportunities for improvement.
Identify Your Opportunities and Threats
During this part of the analysis take a look at the following.
- Market trends
- Economic Trends
- Political, environmental and economic regulations
- Competitors’ strengths and weaknesses
- Customer expectations
- New technologies
- Distribution channels
- Marketing channels
- Market regulations
- Advertising costs
- Underserved markets
Every industry is different, but the forces that drive profitability are similar.
2. Threat of New Entrants
New competitors entering a market are always a threat. New competitors can force you to keep your prices down and increase your budgets to keep existing customers. The size of the threat depends on the strength of the potential competitor. If the competitor is a well-established company entering your territory for the first time, the threat is larger than if the new entrant will need to start at the beginning to gain visibility in the market, develop marketing channels, and more.
The airline industry provides a good example of this. New airlines can often be tough competitors because their staff is new and usually costs less than seasoned workforces in established airlines. In addition, a new airline will have newer airplanes that cost less to operate.
3. Threat of Substitute Products or Services
A business can suffer when a new product or service meets customer needs in a different way. Substitutes are the most threatening when they are cost-effective and the cost of switching is low. For example, businesses are now using videoconferencing much more than they previously did because of COVID-19. In April, Zoom’s daily active users jumped from 10 million to over 200 million in 3 months.
Translate Your SWOT Analysis into Actionable Strategies
Your SWOT analysis isn’t worth anything if you don’t turn what you learned during the analysis into actionable strategies and tactics.
SWOT Analysis Example and Presentation
You can present the results of a SWOT analysis in a grid or in columns. You can create a four-sector grid and separate your Strengths, Weaknesses, Opportunities, and Threats into each of the four sectors. You can also use four columns to identify each of the four factors.
The SWOT presentation needs to be short and to the point to facilitate analysis. Review the information you’ve gathered, remove redundancies, and eliminate any unnecessary information or detail. Use bullet points that you’ve boiled down to their essence. For example:
- Wrong: Our website is set up properly to attract visitors and we receive leads from 10 percent of our visitors.
- Correct: Website conversion rate is 10%
As you discover these connections, you can turn them into strategies. For example, assume that part of your SWOT analysis for Marketing produced these results:
- Strengths: You have no trouble getting marketing dollars for any campaign that produces results.
- Weakness: You haven’t taken advantage of social media marketing.
- Opportunity: You could aggressively take advantage of the growth in your industry.
- Threat: You have emerging competition from extremely internet-savvy competitors.
You might develop the following strategy:
- Use your marketing budget to create a robust social media marketing campaign and track results. This would use a Strength to offset a Weakness. It would also allow you to leverage the Opportunity for growth and reduce the Threat from emerging competitors.
Once you’ve identified all the possible connections, you’ll need to prioritize your alternatives. For example, a connection other than the one shown above may produce better results, and require less money to implement.
When you’ve completed your SWOT for marketing project, you’ll have learned a lot about your company’s marketing, from unrecognized strengths to hidden threats. You’ll find that you have better insight into how your marketing activities will help the business as a whole. And, you’ll have all your stakeholders on the same page and agreeing to a set of strategies for reaching your marketing goals.