Use SWOT Analysis to Build Market Research Plan

1. How to Make Connections Between Business Plans and Market Research

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Integrated Planning for Business and Marketing. Getty Images |Clerkenwell |Stockbyte

This article is the first in a series illustrating how to make powerful connections between business plans and market research.  

1. How to Make Connections Between Business Plans and Market Research

2. How to Identify Marketing Objectives Based on Market Research Findings

3. How to Determine the Best Marketing Mix Through Market Research

Market research is an important component of a business plan.  Marketing plans are generally built as part of a business plan, especially for a start-up.

 For an existing business, marketing strategy typically becomes the action plan, and refers back to the original marketing plan as appropriate.  Somewhere in all this flurry of pivotal activity, the process and product known as a SWOT analysis may be left on the shelf.  However, a SWOT analysis is intended to be a vital document that undergoes change as a business matures.  Regardless of where a business is in the life cycle of enterprise, a SWOT analysis should be connected to the market research that is conducted by the company. 

The following SWOT analysis is for the product launch of a Brite Briks, which is not an actual product, but was created to show the process for conducting an environmental scan for a new entrant to an existing market.  As the new entrant, the company producing Brite Briks wants to understand both the external environment and the internal environment.  Together, these perspectives make up the environmental analysis (environmental scan or situational analysis).

 

In order to show how market research connects to a SWOT analysis, pertinent market research questions will be associated with each of the sections of the SWOT analysis below.

Background and Competitors

Brite Briks is a multinational company in the business of manufacturing construction toys.  Brite Briks ranks third in size with Lego leading this market, followed by Mega Bloks.

  Both Legos and Mega Bloks are inter-competitors as the toy construction products they sell are very similar, and fundamentally compatible—although the brick to block match is not exact.  

Inter-competitors produce similar products or conduct similar services and do business in the same markets and in the same industry.

MARKET RESEARCH QUESTIONS

  1. What features do consumers like best about the brick or block design of the inter-competitors (Legos and Mega Blocks)?
  2. Do consumers expect the bricks and blocks for these different products to be compatible?
  3. What price do consumers expect to pay for the Brite Briks compared to the larger, better known inter-competitors (Legos and Mega Blocks)?

Market Share and Market Reach

Over 100 countries offer Brite Briks for sale, featuring a line of roughly 100 items in four block sizes. The exponential growth in Brite Briks’ sales over the past five years indicates that the company’s overall approach to marketing to its targets is effective.  Indeed, Brite Briks has the largest market share in the preschool construction toy segment.   

MARKET RESEARCH QUESTIONS

  1. Which sizes of bricks or blocks do consumers expect to have in their Bright Briks kits?
  2. How are consumers first becoming aware of Bright Briks?
  1. How do preschoolers play with Bright Briks?

External Environmental Analysis

•    Prestige of American made products 
•    Branding and distribution key to competitive advantage
•    Extensive Asian market, particularly Japan
•    Growing interest in pop culture and media influence

MARKET RESEARCH QUESTIONS

  1. How are Bright Briks perceived in Europe and Asia?
  2. What type of packaging would consumers in Japan find attractive?
  3. How important are licensed products (Hello Kitty, Frozen) to consumers?

Internal Environmental Analysis

•    A global market share leader in the early childhood segment
•    Lack of distribution network into new markets
•    Rapid growth and innovation culture
•    Product vulnerable to competitors as patent protection is not an option (Lego)

MARKET RESEARCH QUESTIONS

  1. Which Bright Briks design features are the most fun for preschoolers?
  1. Where do consumers shop for construction toys?
  2. What size Bright Briks kits are most appealing to families

SWOT Summary

Answers to the market research questions in the sections above provide the information needed to identify the most promising options for the business strategy, which is summarized below. 

•    Strengths – Utilize international experience and brand name to achieve economies of scale while entering the Japanese market
•    Weaknesses – Address inability to patent and protect product; discourage local competition by entirely customizing brand personality and product line for Japanese market
•    Opportunities – Integrate distribution with Japanese channels to cultivate relationship-focused retailers; hire Japanese customer-facing representatives to increase local feel of products and services
•    ThreatsRedesign packaging and offer integral storage to accommodate the limited space in Japanese homes; market the redesigned kits in Europe, as well

An alternative approach to integrated market research and business strategy processes is described in this article on Blue Ocean strategy

Sources:

Clark, T. (1990, October).  International marketing and national character: A review and proposal for an integrative theory.  Journal of Marketing, 54, 66-79.

Lundby, C. F. & Rasenowich, C.  (2003). The missing link. Marketing Research, Winter, 18.

Solomon, M. R., Marshall, G.W., Stuart, E. W., Smith, J. B., Chalebois, S., and Shah, B. (2013).  Marketing: Real people, real choices. (4th Canadian ed.) Toronto, CN: Pearson Publishing. 

Tedeschi, B. (2003).  Brand building on the internet.  The New York Times.