A successful business needs to know its capabilities as well as the marketplace in which it competes. In this video, learn how to define a mission statement and conduct a situational analysis.
The foundation of any marketing plan is the firm’s mission statement.
A mission statement explains the purpose of why a company is in business, and what it is trying to accomplish. A company can’t create a mission statement without first analyzing itself and the conditions of the environment in which it competes. A mission statement should be focused on the market and environment and not just on a company’s products or services. When a company focuses too closely on its products or services rather than benefits to consumers, the company is exhibiting marketing myopia. If a company writes a mission statement that says it is in the soda business rather than the beverage business, it is limiting its opportunities.An example of an excellent mission statement is Apple’s.
The mission statement is ‘Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.’ This covers a lot of ground and, as we know, allows Apple to delve into many areas of the market. Once a mission statement has been created, it is important to conduct a situational analysis on the overall business environment in order to compete effectively.
Have you ever had to decide whether to take a risk? Maybe the risk was buying a brand new car? Choosing your college? Most people make a list of the pros and cons to a choice before they make a final decision.
Businesses also have to research and analyze choices before choosing a path. Their decision-making process is called conducting a SWOT analysis, also known as a situational analysis. SWOT stands for internal strengths, internal weaknesses, external opportunities and external threats. The main purpose of the situational analysis is for marketers to understand the current and potential environments.
Internal Strengths and Weaknesses
The first part of the SWOT analysis is examining a company’s internal strengths and weaknesses.
In this step, a marketing manager looks internally at the company’s resources, such as finances, engineering, marketing, employees and production, to see where the company excels or needs improvement. Marketing managers should not just look at the current situation of the firm, but also look at historical sales, profit and cost data.When looking for a company’s strengths, it is important to ask, ‘what do we do best?’ ‘What are we known for?’ ‘Do we have a unique selling proposition?’ A unique selling proposition, or USP, is something that your company does very well, but your competition does not. Disney would be an example of a company with great internal strengths in the area of human resources and employee development. It is known for its excellent employee training via Disney University.
When looking for company weaknesses, a marketing manager asks what areas need improvement? What could our competitors view as our weaknesses? What issues could cost us sales? They then attack those areas and put a plan in place to protect and improve the situation. If a company is realistic up front, it is less likely to fail down the road or be caught by a competitor. A marketing manager needs to consider factors like location, marketing, quality and reputation as weaknesses. In national polls, Comcast frequently receives votes for poor customer service, which would be considered a massive weakness in the cable industry.
External Opportunities and Threats
The second part of the SWOT analysis is examining the external opportunities and threats.
Marketing managers analyze the overall marketing environment. They can accomplish this through the use of environmental scanning, or the collection and interpretation of environmental conditions such as relationships, the economy, events, demographics and social, political and technological changes. Scanning is done in order to see what changes are happening in the marketplace that could result in a positive opportunity or negative threat. For example, the fall of the housing market and the inability for people to buy homes has led to many companies shifting their products from expensive redecorating and home improvement to cheaper home fixer-upper items. Marketers can consider new markets, mergers or even taking over an area left by an ineffective competitor as excellent opportunities. Threats come in the form of new competitors, pricing wars, product innovation from a competitor or government intervention in the industry, such as new or higher taxes.
One of the very first steps in creating a marketing plan is the formation of a mission statement. A mission statement should be worded according to a company’s market and not just about a specific product or service. Once a mission statement has been created, it is important to conduct a SWOT analysis, or situational analysis, on the overall business environment to compete effectively. SWOT stands for strengths, weaknesses, opportunities and threats. A marketer must look at each part of the SWOT analysis to decide on the correct path to take in order to create an effective marketing strategy.
After watching this lesson, you should be able to:
- Interpret a business’s mission statement
- Define each part of a SWOT Analysis, and how it’s used for businesses