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The Role Of Situation Analysis For A Marketing Plan

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Situation analysis becomes increasing important for a marketing plan development. This essay aims to explain why it is so important and what factors it focus on and finally, a guild list is present and justify for the construction of an effective situation analysis for a Marketing Plan of J Boag & Son Brewery.

Analyzing situation prior a strategic decision is critical for generating or sustaining competitive advantages, especially when facing the dynamic environmental trend which can affect corporations’ performance positively or negatively. The main task for a situation analysis is to explore the external factors (that can imply what opportunities a firm should seize and what threats it has to pay caution to) and internal factors (that can tell what a firm can do to develop its strengths and to avoid its weaknesses). And as Sally, Lyndon & John (1996: 3) defined, the terminal object of a marketing plan is to achieve particular marketing strategy. And a marketing strategy, which expressed clearly by Subash (2004: 26), requires a corporation using its relative corporate strengths to better satisfy customer needs and finally achieve maximum positive differentiation over its competitors in a numbers of internal and external variables. While Malcolm (2006: 376) concluded that the main concern of a strategic marketing plan is to establish, defend and maintain competitive advantage. However, the market environment today is changing quickly, followed by the increasing keen competition. To maintain a certain competitive advantage is impossible in such situation and the only way to earn above-average return is to react rapidly with updated information from environmental scanning. Thus, no matter what the purpose of a marketing plan is, situation analysis is crucial to provide an overall understanding of existing competitive position, organizational capabilities and market trends which is ever-changing.

For example, soused from Malcolm (1989: 75), a company found itself competing unsuccessfully and unprofitably in motor components market in Europe. Its strategy is to compete against a European giant on price, which had been implemented for a while without analyzing its market situation previously. The fact in such market is that only can a firm focus on investing certain equipments thrive. That is, when there was a strong competitor who dominated major market shares with a strategy of cost leadership, it is not wise to beat it on price. And if this company could firstly conduct a situation analysis, it would found that there were many opportunities for motor-products manufactured to very high technical specifications where technical reputation, rather than price, was the major concern. The implication from this example is that situation analysis is necessary to exam the hostile environmental factors thoroughly before making a strategic decision.

When conducting a situation analysis, there is a set of variables needed to consider carefully. George (1999: 65) depicted a standard structure for situation analysis, which consists of two main parts, external factors and internal factors. External factors, which can not be controlled, are related to opportunities or threats. These include macro-environment (political, economic, social, and technological dimensions) and industry environment (market size and potential, customer behavior, segmentation, benefits sought, suppliers, distributors, substitutes, potential entrants and industry profit trends). However, internal factors reflect a corporation’s strengths and weaknesses, which include dimensions of resources, capabilities and current strategies in the firm. Besides, direct competition is considered relating to both external factors and internal factors which includes competitor’s performance, capabilities, strategies and intentions.

An example of the European market for 35mm cameras, provided by Sally et al (1996: Foreword xx-xxi), is an effective practice that bring all these factors together into situation consideration.

Object Company:

Leica is a German company that made the first 35mm camera in 1912 and was once the market and technological leaders but in 1980s survived via occupying high-priced niche market. The 35mm camera market was dominated by Japanese manufacturers.

Market Nature:

Large, complex, fast-developing market for 35mm-camera manufacture

During the 1960s and 1970s, the 35mm single lens reflex became increasingly popular. By 1980s, the trend turned to automatic rangefinder type that called �point and shoot’ and the disposable plastic was welcome to be used in cameras.

Situation Analysis вЂ" External Factors

п‚ÑŸ Legislation dimension: international tariffs are removed by GATT agreement

п‚ÑŸ Social dimension: people in Europe have income and leisure time increased as well as the environmental concerns arisen in terms of chemical waste and disposal

п‚ÑŸ Economic dimension: currency fluctuations of Yen would impact the price of Japanese products including camera, while manufacturing costs in German factory 15% higher than in UK

п‚ÑŸ Technological dimension: automatic вЂ?point and shoot’ technology and cheap plastic disposable models were still popular in 1980s

п‚ÑŸ New entrants: Chinese and Korean manufactures that can provide low price

п‚ÑŸ Supplier power: Lens manufacturers tend to forward integrate into cameras and films making

п‚ÑŸ Threat of substitutes: Digital camera is replacing traditional camera

п‚ÑŸ Buyer power: not dominated by certain distributors

Situation Analysis вЂ" Direct Competitor

Japanese manufacturers such as Nikon and Canon which have good reputation of �high tech’ and dominate the market of 35mm camera

Situation Analysis вЂ" Internal Factors

п‚ÑŸ Technical resources: competence in plastics

п‚ÑŸ Financial resources: adequate financial resources to fund R&D

п‚ÑŸ Have well established European distribution network

п‚ÑŸ Physical resources: manufacturing facilities

п‚ÑŸ Innovation resources: R&D with spare capacity

п‚ÑŸ Reputation



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