The situation analysis

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The situation analysis

• A University of Florida Presentation
• Abridged and Modified 2004/2005 by
• R. W. Bodo

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The purpose of the situation analysis

• Answers the why are we here?
• It provides a background on the factors that
  influence the companys functions and performance

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Elements of the situation analysis

• Problem identification
• Situation analysis
• Industry/Category
• Company
• Product
• Competition
• Market
• Consumer
• Other considerations Legal, political...

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Problem identification

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

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Industry/Category Analysis

• Whats going on in the Industry?
• Whats going on in the category?
• Overall what does the situation portend for the
  clent?

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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

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Company analysis

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

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Company analysis (cont)

• Companys mission (Annual report)
• History
• Sales and profits
• Market standing/category share
• Product offerings
• Key personnel
• Capital resources

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Product analysis

• Focuses on the abstract and concrete qualities of
  the companys product
• Product attributes/functions
• Positioning/Brand personality
• Cost/Margins
• Price
• Packaging
• Distribution
• Promotions used
• Media spent

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Product Life Cycle (Traditional view)
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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

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Competitive analysis

• Considers all options consumers might think about
  in their purchasing decision

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Competition

• Alternatives on a persons mind when selecting a
  good to satisfy a need

Direct competitors
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Competitive analysis

• In what category does the product compete?
• Who are the brands major direct competitors?
  Indirect competitors?
• What is the competitors brand position?
• What is the price of their product?

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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?

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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

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Market analysis Development index

• Brand development index (BDI)
• Category development index (CDI)
• If BDIgt100
• If CDIgt100

of a brands total US sales in a market x 100
of total US population in a market
BDI
of a categorys total US sales in a market x
100 of total US population in a market
CDI
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• Brand development index (BDI)

of a brands 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 Cal
ifornia 10 20
BDI(FL) (40 x 100)/10 400 BDI (TX) (30 x
100)/30 100 BDI (CA) (10 x 100)/20 50
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• Category development index (CDI)

of a categorys 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 Cal
ifornia 10 20
CDI(FL) (40 x 100)/10 400 CDI (TX) (30 x
100)/30 100 CDI (CA) (10 x 100)/20 50
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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?

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SWOT analysis

• Advertising Strategy

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What is a SWOT?

• It is the organization and summary of the
  information obtained in the situation analysis
• The companys
• Strengths
• Weaknesses
• The environments
• Opportunities
• Threats
• Answers the so what? Of the situation analysis

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Whats all about?
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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

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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

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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

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Strengths and weakness

• Internal factors reflect situation-based
  considerations within a companys control
• Key question
• What factors internal to the company influence
  the current situation?

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Strengths

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

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Weaknesses

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

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Opportunities and threats

• External factors reflect situation-based
  considerations beyond a companys control
• However, they have the potential to affect the
  future of the business
• Key question
• What variables in the external environment
  affect the companys challenges?

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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)

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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)

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A short SWOT for Kodaks disposable camera

• High priced
• Lower priced brands are considered low quality
• Photos are not a priority for this market
• Brand is well known and trusted

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A short SWOT for Kodak

• Bad image of DC - environmental issues
• Market makes frequent spontaneous trips
• Kodaks DC offer the best film
• Kodak doesnt offer a panoramic camera

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