Conducting an internal and external situational analysis is crucial for any business that wants to understand its current position and identify growth opportunities. A situational analysis helps identify a business’s strengths, weaknesses, opportunities, threats (SWOT) and environment. By understanding the internal and external factors that affect a business, organisations can make informed decisions and develop effective strategies for growth. This guide will explore the internal and external situational analysis process, including how to conduct a SWOT analysis, identify key stakeholders, and evaluate the competitive landscape. We will also discuss the importance of regularly updating the analysis to ensure that the business stays on top of changes in the market.
The internal marketing environment informs decisions for planning campaigns
Analysing the internal marketing environment can provide valuable information to inform decisions for planning campaigns. The internal marketing environment includes all the factors within the organisation that can affect the planning and implementation of marketing strategies. These factors include the organisation’s culture, structure, resources, processes, and capabilities. Some of the key elements of the internal marketing environment that can be analysed to inform decisions for planning campaigns include:
- Organisational culture: The values, beliefs, and attitudes that shape the organisation’s behaviour and decision-making. Understanding the organisation’s culture can help to identify potential challenges or opportunities for the campaign.
- Organisational structure: The way in which the organisation is structured and how decision-making is centralised or decentralised. Understanding the organisational structure can help identify potential barriers to the campaign’s success and key stakeholders.
- Resources: The financial, human, and technological resources available to the organisation. Understanding the available resources can help identify potential constraints on the campaign and make decisions about the budget and staffing needs.
- Processes: The systems, procedures, and protocols that are in place within the organisation. Understanding the processes in place can help identify potential challenges or opportunities for the campaign and identify areas where improvements can be made.
- Capabilities: The skills, knowledge, and expertise available within the organisation. Understanding the available capabilities can help identify potential challenges or opportunities for the campaign and areas where additional resources or training may be needed.
Analysing the internal marketing environment can help identify potential challenges or opportunities for the campaign and make informed decisions about the budget, staffing, and resources needed. It also allows the organisation to identify and address any internal issues impacting the campaign’s success and align it with its overall goals and objectives.
Organisational type, mission, objectives and strategies
Understanding the organisational type, mission, objectives, and strategies can help to align the marketing campaign with the organisation’s overall goals and objectives. It also allows the organisation to identify and address any internal issues that may impact the campaign’s success. Additionally, it can help identify the legal and ethical requirements the organisation has to follow and how the campaign should be tailored accordingly.
- Organisational type: The organisational type refers to the structure and legal form of the organisation. This can include for-profit, non-profit, or government organisations. Understanding the organisational type can help to identify the goals, values, and legal requirements that shape the organisation and may impact the planning and implementation of marketing campaigns.
- Mission: The mission refers to the overall purpose or goal of the organisation. It is a statement of the organisation’s reason for existence and its goal. Understanding the mission can help to align the marketing campaign with the organisation’s overall purpose and goals.
- Objectives: Objectives are specific, measurable, and time-bound goals that an organisation aims to achieve. These can be short-term or long-term and include financial, operational, or strategic goals. Understanding the organisation’s objectives can help align the marketing campaign with the organisation’s overall goals and objectives.
- Strategies: Strategies refer to the plan of action that the organisation will take to achieve its objectives. These can include marketing strategies, operational strategies, or financial strategies. Understanding the organisation’s strategies can help identify potential opportunities or challenges for the marketing campaign and align the campaign with the organisation’s overall strategies.
Organisational structures, history, culture, and scale
Understanding organisational structures, history, culture and scale can help to align the campaign with the organisation’s overall goals and objectives and to identify potential challenges or opportunities for the campaign. Additionally, understanding the size and resources of the organisation can help to make decisions about the budget and staffing needs of the campaign and how to align the campaign with the organisation’s culture and values.
- Organisational structures: Organisational structure refers to how the organisation is structured and how decision-making is centralised or decentralised. Different types of organisational structures include hierarchical, flat, and matrix structures. Understanding the organisational structure can help identify potential barriers to the campaign’s success and key stakeholders.
- History: The organisation’s history refers to past experiences, successes, and failures. Understanding the organisation’s history can provide valuable insights into the organisation’s culture, values, and priorities and help identify potential challenges or opportunities for the campaign.
- Culture: Organisational culture refers to the values, beliefs, and attitudes that shape the organisation’s behaviour and decision-making. Understanding the organisation’s culture can help identify potential challenges or opportunities for the campaign and align the campaign with the organisation’s values and priorities.
- Scale: The scale of the organisation refers to its size and resources, including the number of employees, revenue, and assets. Understanding the organisation’s scale can help identify potential constraints on the campaign, such as budget and staffing needs, and make decisions about the resources required for the campaign.
Internal stakeholders
Internal stakeholders are individuals or groups within an organisation who are directly interested in the organisation’s success and marketing campaigns. These include employees, management, and shareholders. Some of the key responsibilities of internal stakeholders include:
- Employees: Employees are responsible for implementing the marketing campaign and ensuring it is executed effectively. They also provide feedback and input on the campaign and may be involved in decision-making and problem-solving.
- Management: Management is responsible for overseeing the campaign and ensuring that it is aligned with the organisation’s overall goals and objectives. They also provide support and resources for the campaign and are involved in decision-making and problem-solving.
- Shareholders: Shareholders are the organisation’s owners and are directly interested in the campaign’s success. They provide funding for the campaign and are interested in the organisation’s financial performance.
Internal stakeholders play a crucial role in the success of a marketing campaign. They are responsible for implementing the campaign, providing feedback, and ensuring that it is aligned with the organisation’s overall goals and objectives. It is important to involve internal stakeholders in the campaign’s planning, implementation, and evaluation to ensure that it is executed effectively and efficiently.
Product/service portfolios
A product or service portfolio is a collection of products or services a company offers its customers. It can include existing products and services, as well as new or planned products and services. The product or service portfolio is an important element of a company’s overall strategy and can significantly impact the marketing campaign’s success.
- Existing products/services: These are the products or services currently being offered by the company. Understanding the existing products or services can help to identify potential opportunities or challenges for the campaign and to align the campaign with the company’s overall product or service offerings.
- New products/services: These are products or services that the company plans to introduce in the future. Understanding the new products or services can help to identify potential opportunities or challenges for the campaign and to align the campaign with the company’s overall product or service offerings.
- Product/service development: This refers to the process of creating new products or services. Understanding the product or service development process and aligning the campaign with the company’s overall product or service development strategy is important.
- Product/service life cycle: This refers to the stages that a product or service goes through from its introduction to its retirement. Understanding the product or service life cycle can help to identify potential opportunities or challenges for the campaign and to align the campaign with the company’s overall product or service strategy.
Understanding the company’s product or service portfolio is important for any marketing campaign. It allows the align the campaign with the company’s overall product or service offerings, identifies potential opportunities or challenges, and aligns the campaign with the company’s overall product or service development and life cycle strategies.
Marketing/communications plans – evaluation of past campaigns
A marketing or communications plan is a document that outlines the goals, strategies, tactics, and resources for a marketing or communications campaign. Evaluation of past campaigns is an important step in creating a new marketing or communications plan as it allows one to identify what worked well and what did not work well in the past. The goal of evaluating past campaigns is to learn from successes and failures and improve future campaigns’ effectiveness.
When evaluating past campaigns, the following factors should be considered:
- Campaign objectives: Did the campaign achieve its objectives? Were the objectives clear and measurable?
- Target audience: Was the target audience accurately identified and reached?
- Message: Was the message effectively communicated to the target audience?
- Tactics: Were the tactics used (e.g. advertising, public relations, events) effective?
- Budget: Was the budget effectively managed?
- Results: What were the results of the campaign? Did it achieve its goals?
- Feedback: Was feedback collected from the target audience and stakeholders?
By evaluating past campaigns, businesses can identify what worked well, what didn’t work well, and what can be improved upon in future campaigns. This information can create a more effective marketing or communications plan and make more informed decisions about future campaigns’ goals, strategies, tactics, and resources.
Internal sources of information to inform decision making
Internal sources of information refer to the data and insights collected within the organisation and can be used to inform decision-making. These sources can include:
- Sales data: Sales data includes information on revenue, customer demographics, sales trends, and product or service performance. This information can be used to identify market opportunities, make informed decisions about product or service development, and evaluate the effectiveness of marketing campaigns.
- Market research: Market research includes data collected through surveys, focus groups, and other research methods. This information can identify customer needs, preferences, and behaviours and inform decisions about product or service development, pricing, and marketing strategies.
- Operational data: Operational data includes information on production, inventory, logistics, and other operational processes. This information can identify inefficiencies and make informed production, inventory, and logistics management decisions.
- Customer service data: Customer service data includes information on customer complaints, feedback, and support requests. This information can identify customer needs and preferences and inform decisions about product or service development, marketing strategies, and customer service.
- Employee feedback: Employee feedback includes information on employee satisfaction, engagement, and feedback on the organisation’s products, services, and practices. This information can identify potential challenges or opportunities for the campaign and align the campaign with the organisation’s culture, values and priorities.
By using internal sources of information, organisations can make more informed decisions about their products, services, marketing campaigns and operations. These sources of information can provide valuable insights into customer needs, preferences, and behaviours and help to identify opportunities for growth and improvement within the organisation.
Summary of strengths and weaknesses of campaigns
A summary of strengths and weaknesses of campaigns refers to an assessment of a marketing campaign’s positive and negative aspects. The goal of this assessment is to identify what worked well and what didn’t work well in the campaign to improve the effectiveness of future campaigns.
Strengths:
- The strengths of a campaign refer to the aspects of the campaign that were effective and contributed to its success. These include the campaign’s message, target audience, tactics, budget management, and results.
- For example, a campaign with a clear, compelling message that resonated with the target audience and was delivered effectively through appropriate tactics, such as social media, events, etc., would be considered a strength.
Weaknesses:
- The weaknesses of a campaign refer to the aspects of the campaign that were ineffective and hindered its success. These include the campaign’s message, target audience, tactics, budget management, and results.
- For example, a campaign with a message that was not communicated or not well-targeted, or a campaign that was delivered through tactics that were not appropriate or not well-executed, would be considered as a weakness.
A summary of the strengths and weaknesses of a campaign can be used to identify areas for improvement in future campaigns and to make more informed decisions about the goals, strategies, tactics, and resources for future campaigns. This assessment can help identify what worked well and what didn’t work well and for making changes to improve the effectiveness of the campaigns.
The external marketing environment informs decisions for planning campaigns
Analysing the external marketing environment can provide valuable information to inform decisions for planning campaigns. The external marketing environment includes all the factors outside of the organisation that can affect the planning and implementation of marketing strategies. These factors include economic, technological, demographic, cultural, and legal/political environments. Some of the key elements of the external marketing environment that can be analysed to inform decisions for planning campaigns include:
- Economic environment: The state of the economy and how it affects consumer spending and business operations. Understanding the economic environment can help to identify potential opportunities or challenges for the campaign and to make decisions about the budget and resources for the campaign.
- Technological environment: The state of technology and how it affects the way that products and services are marketed and consumed. Understanding the technological environment can help to identify potential opportunities or challenges for the campaign and to make decisions about the tactics and resources for the campaign.
- Demographic environment: The characteristics of the population, such as age, income, and education level. Understanding the demographic environment can help to identify the target audience for the campaign and to make decisions about the message and tactics for the campaign.
- Cultural environment: The values, beliefs, and attitudes of the population. Understanding the cultural environment can help to identify potential opportunities or challenges for the campaign and to make decisions about the message and tactics for the campaign.
- Legal and Political environment: The laws and regulations that govern business operations and marketing activities. Understanding the legal and political environment can help to identify potential opportunities or challenges for the campaign and to make decisions about the message and tactics for the campaign.
Analysing the external marketing environment can help identify potential opportunities or challenges for the campaign and make informed decisions about the budget, tactics, and resources needed. Additionally, it can help the organisation to align the campaign with the overall market conditions and cultural, legal and political aspects. This analysis can also help the organisation predict potential risks and opportunities and develop strategies accordingly.
PESTLE analysis
PESTLE analysis is a framework used to analyse the external macro-environmental factors that can impact an organisation. The acronym stands for Political, Economic, Sociocultural, Technological, Legal, and Environmental factors. PESTLE analysis is often used in the early stages of strategic planning to help organisations identify opportunities and threats that may impact their business.
- Political factors: These include government policies and regulations, taxes, tariffs, and political stability. Understanding the political environment can help organisations to identify potential opportunities or threats, such as changes in regulations or taxes that may impact their business.
- Economic factors: These include factors such as inflation, interest rates, exchange rates, and economic growth. Understanding the economic environment can help organisations to identify potential opportunities or threats, such as changes in consumer spending or fluctuations in exchange rates that may impact their business.
- Sociocultural factors: These include factors such as population demographics, social trends, and cultural values. Understanding the sociocultural environment can help organisations identify potential opportunities or threats, such as changes in population demographics or social trends that may impact their business.
- Technological factors include factors such as the pace of technological change, technological advances, and the availability of technology. Understanding the technological environment can help organisations identify potential opportunities or threats, such as technological changes that may impact their business.
- Legal factors: These include factors such as laws, regulations, and compliance requirements. Understanding the legal environment can help organisations to identify potential opportunities or threats, such as changes in laws or regulations that may impact their business.
- Environmental factors: These include factors such as climate change, natural disasters, and environmental regulations. Understanding the environmental environment can help organisations to identify potential opportunities or threats, such as changes in environmental regulations or natural disasters that may impact their business. Conducting a PESTLE analysis can help organisations to identify potential opportunities and threats that may impact their business by providing insights into the external macro-environmental factors that may influence their operations and performance. This analysis can be used to develop and implement strategic plans and identify areas for improvement in their business. Additionally, it can help organisations to anticipate potential risks and to develop strategies accordingly. It also allows organisations to take a proactive approach to managing their external environment.
External stakeholders
External stakeholders are individuals or groups outside the organisation who have an interest in or influence the organisation’s activities, policies and decisions. They can include customers, suppliers, investors, competitors, regulators, and the wider community. Some of the key responsibilities of external stakeholders include:
- Customers: Customers are the individuals or organisations that purchase the organisation’s products or services. They can have a significant impact on the organisation’s revenue and reputation. Understanding customers’ needs and preferences can help inform decisions about product or service development, pricing, and marketing strategies.
- Suppliers: Suppliers are the individuals or organisations that provide the organisation with goods or services. They can significantly impact the organisation’s production, inventory, and logistics management. Understanding suppliers’ needs and preferences can help inform production, inventory, and logistics management decisions.
- Investors: Investors are the individuals or organisations that provide the organisation with funding. They can significantly impact the organisation’s financial performance and reputation. Understanding investors’ needs and preferences can help inform funding, financial performance, and reputation management decisions.
- Competitors: Competitors are other organisations that offer similar products or services. They can significantly impact the organisation’s market share and reputation. Understanding competitors’ strategies can help inform decisions about product or service development, pricing, and marketing strategies.
- Regulators: Regulators are government agencies that enforce laws and regulations. They can have a significant impact on the organisation’s operations and reputation. Understanding the regulations and compliance requirements can help inform operations and reputation management decisions.
- Community: The community is the wider group of people living in the area where the organisation operates. They can significantly impact the organisation’s reputation and social responsibility. Understanding the community’s needs and preferences can help inform social responsibility and reputation management decisions.
External stakeholders play a crucial role in the success of an organisation. They can significantly impact the organisation’s revenue, reputation, and operations. It is important to understand external stakeholders’ needs and preferences and involve them in planning, implementing, and evaluating the organisation’s activities, policies, and decisions.
Network analysis
Network analysis studies the relationships and interactions between different entities, such as individuals, organisations, or groups. Network analysis can be applied in various fields, including sociology, anthropology, economics, and marketing. The goal of network analysis is to identify patterns and trends in the relationships and interactions between entities and to understand how these relationships affect the behaviour and performance of the entities.
There are several key components of network analysis, including:
- Nodes: Nodes represent the entities in the network, such as individuals or organisations.
- Edges: Edges represent the relationships or interactions between the entities. These relationships can be represented as ties or links.
- Measures: Measures are used to quantitatively analyse the network, such as centrality, betweenness, and density.
- Visualisation: Visualisation techniques are used to represent the network, such as graphs or matrices, to help identify patterns and trends in the relationships and interactions.
Network analysis can be applied in the marketing field to identify the key players and influencers in a market, understand the relationships and interactions between different organisations and customers, and identify patterns and trends in the market. For example, network analysis can identify an organisation’s key suppliers and customers and understand how these relationships affect the organisation’s performance. It can also be used to identify key influencers and opinion leaders in a market and to understand how these individuals or groups affect the behaviour of other entities in the market.
Network analysis can provide valuable insights into the relationships and interactions between different entities and help organisations identify market patterns and trends. This can help organisations to make more informed decisions about their products, services, marketing strategies and operations.
Customer analysis
Customer analysis is the process of studying and understanding the characteristics, needs, and behaviours of a business’s customers. It is an important step in developing a marketing strategy and can help businesses identify opportunities for growth and improvement.
There are several key elements of customer analysis, including:
- Demographic information: This includes age, gender, income, education level, and geographic location of customers. Understanding demographic information can help businesses to identify their target market and to make decisions about product or service development, pricing, and marketing strategies.
- Psychographic information: This includes information such as customers’ lifestyles, values, and personality traits. Understanding psychographic information can help businesses to identify the values and needs of their target market and to make decisions about product or service development, pricing, and marketing strategies.
- Behavioural information: This includes information such as purchasing habits, brand loyalty, and product usage patterns of customers. Understanding behavioural information can help businesses to identify patterns in customer purchasing habits and to make decisions about product or service development, pricing, and marketing strategies.
- Customer feedback: This includes information such as customer complaints, feedback, and support requests. Understanding customer feedback can help businesses to identify customer needs and preferences and to make decisions about product or service development, marketing strategies, and customer service.
- Competitive analysis: This includes information about the business’ competitors, such as their products, pricing, marketing strategies and customer base. Understanding the competition can help businesses to identify potential opportunities or threats and to make decisions about product or service development, pricing, and marketing strategies.
By conducting customer analysis, businesses can gain a deeper understanding of their target market and make more informed decisions about their products, services, marketing strategies, and operations. Additionally, it can help organisations to identify new opportunities, to improve the customer experience, increase customer loyalty and to differentiate their products and services.
Competitor analysis – market differentiation
Competitor analysis is the process of studying and understanding the characteristics, strategies, and market position of a business’s competitors. It is an important step in developing a marketing strategy and can help businesses identify opportunities for growth and improvement. Market differentiation is a strategy that aims to make a product or service stand out from competitors by highlighting its unique features or benefits.
There are several key elements of competitor analysis, including:
- Identification of competitors: This includes identifying the businesses or organisations that compete directly or indirectly with the business. Identifying direct and indirect competitors is important as they can impact the business differently.
- Analysis of competitor’s products or services: This includes studying the features, benefits, and pricing of competitor’s products or services. Understanding competitors’ product or service offerings can help businesses identify potential opportunities or threats and make decisions about product or service development, pricing, and marketing strategies.
- Analysis of competitors’ marketing strategies: This includes studying the marketing strategies of competitors, such as advertising, promotions, and distribution channels. Understanding competitors’ marketing strategies can help businesses identify potential opportunities or threats and make decisions about marketing strategies.
- Analysis of competitor’s market position: This includes studying competitors’ market share, customer base, and financial performance. Understanding competitors’ market positions can help businesses identify potential opportunities or threats and make decisions about marketing strategies.
- Market differentiation: This includes identifying the unique features, benefits or characteristics of the product or service that differentiate it from the competitors. It also includes developing a positioning statement that communicates the product or service’s unique value proposition to the target market.
By conducting competitor analysis, businesses can gain a deeper understanding of the competitive landscape and make more informed decisions about their products, services, marketing strategies, and operations. It can also help organisations identify new opportunities, improve their product and service offerings, target new market segments, and develop differentiating strategies.
External information sources on markets and sector/industry
External information sources on markets and sectors/industries are sources of data and information that are available outside of the organisation and can be used to inform decisions about markets and industry trends. These sources can include:
- Government statistics: Government agencies often collect and publish data on a wide range of economic, demographic, and social factors that can affect the performance of markets and industries. These sources include the Office for National Statistics, the UK Statistics Authority, and the UK Census Statistics.
- Industry associations: Many industries have trade associations that collect and publish data on industry trends, such as production and sales statistics, and conduct market research. These sources include the British Hospitality Association, the British Bankers’ Association, and the Confederation of British Industry.
- Market research firms: Many market research firms conduct surveys, focus groups, and other forms of research to gather data on consumer attitudes and behaviours, market trends, and industry performance. These sources can include Nielsen, Gartner, and Forrester Research.
- Financial data: Financial data can be gathered through financial reports, stock exchange data, and other financial databases. These sources include Moody’s, Standard & Poor’s, and Bloomberg.
- News sources: News sources such as newspapers, magazines, and online news websites can provide information on trends, events and announcements that can affect the performance of markets and industries.
- Social media: Social media can provide real-time data and insights on customer preferences, market trends, and industry news.
By utilising these external information sources, organisations can better understand the market and industry trends, which can inform decisions about product or service development, pricing, marketing strategies, and operations. Additionally, it can help organisations to identify new opportunities, to anticipate changes in the market and to develop strategies accordingly.
Summary of opportunities and threats
A summary of opportunities and threats summarises a business’s key opportunities and threats. The summary is usually based on the information gathered through a situation analysis, which includes an analysis of the internal and external environment of the business. The summary informs decisions about product or service development, pricing, marketing strategies, and operations.
A summary of opportunities and threats typically includes:
- Opportunities: This section lists the potential opportunities that the business may be able to capitalise on, such as new market segments, new technologies, or changes in consumer preferences.
- Threats: This section lists the potential threats that the business may face, such as changes in regulations, new competitors, or economic downturns.
- SWOT analysis: SWOT analysis is a framework that helps to identify and evaluate the internal strengths, weaknesses, opportunities, and threats of a business. The summary of opportunities and threats usually includes the results of a SWOT analysis.
- Recommendations: This summary section provides recommendations on how the business should respond to the opportunities and threats identified in the analysis.
- Action Plan: This section of the summary provides an action plan that details the specific steps that the business should take to capitalise on opportunities and mitigate threats.
A summary of opportunities and threats can help organisations identify new opportunities, anticipate market changes and develop strategies accordingly. It also allows organisations to take a proactive approach to managing their internal and external environment. Additionally, it can help keep the business on track towards its goals and objectives by providing a clear overview of the potential opportunities and threats it might face.