Situational Analysis

Learn About the Purpose and Elements of This Marketing Analytic

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Before developing any marketing strategy, it is important to conduct a situation analysis. A situational analysis is an essential part of any business or marketing plan and should be reviewed periodically to ensure that it is kept current. Many of my clients often ask me what factors are important when creating their situation analysis and what purpose does it serve?

A situational analysis defines the internal and external factors of a company or organization and clearly identifies the capabilities, customers, potential customers and the business environment and the impact they may have on that organization or business.

It can also help in identifying strengths, weakness, opportunities, and threats to the organization or business. This analysis can be eye-opening to what’s really going on within a business and can help in determining the next steps a business needs to take within the marketplace.

The following is just a basic marketing 101 introduction to what to take into account when conducting an analysis and provides a checklist if you will of the most important factors to take into account.

Elements Worth Considering

  • Product Situation
    What is my current product? You may want to break this definition up into parts such as the core product and any secondary or supporting services or products that also make up what you sell. It is important to observe this in terms of its different parts in order to be able to relate this back to core client needs. Feel free to also discuss here which of your client’s needs your product is meeting.
  • Competitive situation
    Analyze your main competitors – who are they what are they up to – how do they compare – feature/ benefit analysis. What are their competitive advantages?
  • Distribution Situation
    Review your distribution Situation – how are you getting your product to market? Do you need to go through distributors or other intermediaries?
  • Environmental factors
    What external and internal environmental factors are there that need to be taken into account. This can include economic or sociological factors that impact on your performance.
  • Opportunity and issue analysis
    Which requires conduction a SWOT analysis (Strengths, Weaknesses, Opportunity and Threats). Things to write down her are what current opportunities that are available in the market, the main threats that business is facing and may face in the future, the strengths that the business can rely on and any weaknesses that may affect the business performance.

I know for most of you marketing gurus this may be simple knowledge however it is important to realize that sometimes even the smartest forget the core fundamentals.

How to Know if Your Situational Analysis is Good

Your situational analysis must be functional or it's just another document that will be shoved in a file folder and stuffed in the file cabinet.  How do you know if you've created a situation analysis that will be functional and provide value? 

The Right Questions to Ask

  • Is my situational analysis simple and practical to use?
  • Is it easy and clear for even an outsider to understand?
  • Is it focused on key factors that are impacting my business both internally and externally?
  • Does it clearly identify future goals for the business?
  • Does it spark even further analysis?

If you've answered yes to the above questions you've created a situational analysis that you will find useful.  If not, you may want to go back and rework your analysis so that it provides you with the above information. You may find that you've run into one of these common challenges when it comes to your situation analysis:

  • You've listed an excessive amount of strengths, weaknesses, opportunities, and threats, so much so that it appears confusing and difficult to get a strong picture of your businesses at a glance. 
  • You are lacking prioritization within your situational analysis. 
  • You are too broad with going through the factors, so it's difficult to really focus on them.
  • The factors you have listed are an opinion, not fact. 
  • Strengths, weaknesses, opportunities, and threats are lacking distinguishing factors.