When was the last time you did a marketing situation analysis for your company?

Performing a marketing situation analysis and designing marketing strategies is a critical step within the planning process for strategic marketing.

Situational analysis marketing is all about market research. If you haven’t looked closely at your competitor it’s the main element in a situation analysis in marketing. And it’s up to the marketing department to get it done. No marketing department than that’s you.

What is a situation analysis in marketing?

The definition of a situation analysis refers to a set of methods that marketing managers use to analyze a company’s internal and external environment to understand the organization’s capabilities, customers, and business environment.

Your marketing plan is critical and the importance of situational analysis in your marketing plan is paramount.

I will dive into how to write a situational analysis, types of situational analysis, and a situational framework.

Your situational analysis will become part of your marketing plan where the situational analysis applies to different marketing situations.

The situational analysis for the marketing plan is your marketing benchmark.

The selection of the people (or organizations)  to be targeted by the company follows the situation analysis. The target market decision indicates the need to be satisfied with the marketing program positioning strategy.

Positioning is the combination of product, the channel of distribution, price, and promotion strategy selected by marketing management. It is designed to position the firm against its key competitors and meeting the needs of the target market.

New product strategies are essential to provide a continuing stream of new entries to replace mature products that are eliminated. Strategy selection considers situational and competitive factors presented in the product market that is targeted.

Marketing Situation Analysis

situational analysis marketing
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The marketing situation analysis is the first step in the design of a new strategy and marketing plan. This analysis will include a SWOT analysis as well.

Situation analysis is also conducted on a regular basis after a strategy is implemented to determine necessary strategy changes. The situation assessment includes market definition and analysis, market segmentation, and competitor analysis.

Market Definition and Analysis

importance of situational analysis
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Markets must be correctly defined in order to analyze buyers and competition and to forecast future trends.

Your situational analysis starts with a market analysis.

The strategic analysis and planning are not very useful to refer to the market in general terms. For example, the Colorado market, the European market, or some other geographic area that contains people and organizations with diverse needs and wants.

More specific identification of needs and wants is necessary. For a market to exist, there must be people with particular needs and wants in one or more products that can satisfy these needs.

Additionally, the people in the market must be willing and able to purchase a product that satisfies your needs and wants. Thus, the concept of product-market facilitates the task of definition.

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A product market is a specific product (or line of related products) that can satisfy your particular set of needs and wants for all people or organizations willing and able to purchase the product or service.

The term product refers to either a physical product or an intangible service. This definition matches people or organizations with a particular set of similar needs and wants a product category that can satisfy those needs and wants.

Of course, depending on how specific or general the needs are, the corresponding product category will also be specific or general.

Analyzing product markets and forecasting how they will change in the future are essential aspects of business and marketing planning.

Decisions to enter new product markets, how to serve existing product markets, and window exit from unattractive product markets are critical strategic marketing choices.

Marketing professionals have the skills, experience, and techniques essential to (1) conduct product marketing analysis, (2)  interpret the strategic consequences of the results, and (3) choose strategies for serving product markets.

Analyzing product markets consists of the following activities:

  • Locating in defining new product markets that offer opportunities for a company.
  • Evaluating existing product markets to determine strategic priorities.
  • Scanning the environment and forecasting future trends and new product markets.

An important part of product marketing analysis is evaluating demand and supply. The demand represents the buying potential of the people and organizations that comprise the market.

Supply concerns the degree to which the firm serving the market can satisfy the demand that is available.  I know you might be thinking this is economics 101, but you’d be surprised how many people miss this.

A detailed study of buyers needs and requirements is also an essential part of product marketing analysis. These customer analysis activities help marketers in deciding which buyers to target and how to meet their needs.

Your situational analysis uncovers things you may have missed before.

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As head of the check reader product for Soricon in Boulder, CO, I helped identify a huge gap in the single and multi-lane retail markets.

The retail management, banks, and clearinghouses wanted to reduce and eliminate check fraud. And the check reader was born.

The check reader allowed the POS attendant to scan the check where MICR data was transferred back to the bank to ensure funds were sufficient before finishing the sale. This saved the retail outlets millions in fraudulent transactions.

Market Segmentation Analysis

Market segmentation identifies groups of buyers within a product market whose needs are similar. Segmentation helps an organization to match its capabilities to the requirements of one or more groups of buyers.

Your situational analysis uncovers things within the market segments. This might include an account-based marketing strategy.

The key idea in segmentation is to examine differences and needs. Also, to identify two or more segments within the product market of interest.

Each target market containing buyers with similar needs and wants for the product category of interest to marketers and senior management. Usually, the segments differ concerning the characteristics of the buyer, the reasons that they buy or use certain products, and their preferences for certain brands of products.

Likewise, segments of industrial product markets may be formed according to the type of industry, the uses for the product, frequency of product purchase, and various other factors.

A particular segment may vary considerably from the average characteristics of the entire product market. The similarities of people’s needs within a market segment enable more effective targeting of the marketing program.

Factors such as age, income, and lifestyle are related to purchasing patterns for foods, financial services, automobiles, and other consumer products.

Analyzing the Competition and Your Situation Analysis

Evaluation of competitor strategies, strengths, limitations, and plans is a key aspect of the situation analysis. It is important to identify both existing and potential competitors.

Typically, a subset of firms in the industry makes up the strategic group of the companies key competitors. The analysis should indicate the important strengths and weaknesses.

There is often considerable variation in the companies that make up an industry. This is illustrated by the competing firms in the computer service industry in the United States shown in Exhibit 1.

The company’s display substantial differences based on the extent of interaction with a client and the extent of customizing of the services. Each quadrant of the map contains companies with similar characteristics.

2019 database competitive map
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Marketing Strategy Design

The situation analysis provides useful information for designing marketing strategies. Marketing strategy design includes market targeting and positioning analysis, marketing strategy choice,  in developing and positioning new products.

Market Targeting and Positioning Strategy

Marketing advantage is influenced by situational factors including industrial characteristics, type of firm, the extent of differentiation and buyers’ needs, and the specific competitive advantages of the company that is designing the marketing strategy.

The essential issue is deciding how to compete, given a company’s situational environment. For example, the marketing strategy for the leading firm in an emerging industry differs and several important ways from that of a small firm competing in a mature industry.

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Target Market Strategy and Your Situation Analysis

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Target market strategy identifies the people (or organizations)  that management wishes to serve within the product market. When the buyer’s needs and wants vary, the market target is usually a segment of the product market. Marketing management must decide to target more than a single segment.

Once a company’s product markets are identified and their relative importance to the company determined, management must decide on a targeting strategy.

The target market decision is the focal point of marketing strategy;  targeting serves as the basis for setting objectives and developing a positioning strategy.

Target market strategy options range from targeting all or most of the segments. The targeting decision is based on revenue cost analysis and assessment of the competitive position.

The following information for each market target is needed:

  • Size and growth rate of the target market.
  • Description of users in the target group.
  • The customer profile or persona.
  • Information about end-users that will be helpful in selecting a positioning strategy.
  • Guidelines for developing short-term marketing plans.

Marketing Program Positioning Strategy.  

The marketing program’s positioning strategy is the combination of the product, the channel of distribution, price, and promotion strategy. These are selected by management to the position of the company against its key competitors and meeting the needs and wants of the target market.

Your situational analysis should help you align your message with the ideal customer profile.

This strategy may also be called the marketing mix or the marketing program.  This positioning strategy supplies the unifying concept for the role and strategy of each marketing mix component.

The positioning statement indicates how marketing management would like the target market to view the company’s marketing mix.

The first step in developing a positioning strategy is deciding what is to be accomplished for each target market. Marketing objectives are established at several levels in the company. The corporate objectives indicate overall performance targets (e.g., growth, profit, employee development, and other broad objectives).  

Specific objectives are set for each target market. Objectives form a hierarchy, ranging from very broad corporate objectives to the specific objectives of a sales rep. I’ve included some examples of marketing objectives in Exhibit 2.

marketing objectives
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Positioning is formulated by taking into account:

  1. The criteria or benefits that the buyer considers when purchasing a product, including the relative importance of the criteria.
  2. The extent to which, and how, the company is differentiated from its competition.
  3. The limitations of competing products regarding important buyer need and wants.

The positioning statement is a starting point in formulating a strategy. Positioning indicates how the firm would like to be perceived in the eyes and minds of the target market and the customers within it. Positioning is stated in terms of some reference basis, usually competition.

Strategy development logically begins with product strategy, followed by distribution, price, and promotion strategies. Importantly, the strategy components constitute a team of actions that both complement and reinforce each other.

Choices of a good marketing program strategy are complicated by the wide range of options that confront management.  Yet often there is a clear logic as to how the marketing program components should fit together in a given situation.

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Decisions about products, distribution channels, price, advertising, and personal selling must lead to a cohesive marketing program aimed at meeting the needs and wants of customers in the company’s target market.

Designing a digital marketing program combines the company’s marketing capabilities into a package of actions intended to position the company against its competition in order to compete for the customers that compose its target market.

Marketing management must decide both the role and amount of resources to use for each marketing program activity.

These decisions determine the total amount to be spent on the marketing program during the planning period, and also indicate how the resources will be allocated among the various program activities, such as content marketing, SEO, advertising, and direct selling.

Marketing Strategy Selection

The choice of a marketing strategy is affected by the situational and competitive factors confronting the business.  Strategy selection is aided by identifying the type of strategy that is appropriate for the situation confronting a particular company.

For example, a company that is developing a strategy for entering a new market can benefit from the study of the strategic issues and strategy guidelines pertaining to new market entry.  

Other situations include product lifecycle strategies, strategies for fragmented markets, and global strategies, and strategies for enterprise firms.

The analysis of various strategies situations is useful in developing strategic design processes that focus on the importance of strategic variables confronting a company.

By examining the different factors affecting strategy selection and appropriate strategies action guidelines, management develops skills in strategy selection. Important strategy selection criteria (e.g.,  implementation complexity) can be assessed to further guide the strategy choice process.

New Product Strategies and Your Situation Analysis

New products are essential for replacing old products with declining sales and profits. Use marketing situation analysis for developing and positioning new market entries to involve all functions of the business.  

Closely coordinated new product planning processes are necessary to satisfy customer requirements and produce products with high quality and competitive prices.

Listening to the customer is critical to focusing on planning processes on the important product attributes that influence customer satisfaction. The planning process starts by identifying gaps in customer satisfaction.

These differences between existing product attributes and those desired by customers constitute opportunities for new and improved products.


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Wrapping Up for situational Analysis in Marketing

It is essential that when you are designing the marketing strategies that you take into account an in-depth situation analysis.

From this situation analysis, you will gain insights into what markets to target, your best positioning strategy, and competitive landscape. From here we can begin to work on the marketing program development to activate the target market.

When was the last time you or your organization did an in-depth marketing situation analysis?

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General FAQ’s about Situation Analysis

What is a marketing situation analysis?

Using market research, a situational analysis defines potential customers, evaluates projected growth, assesses competitors, and makes a practical assessment of your business. It involves targeting the explicit objectives in the market and identifying the factors that support or hinder those objectives.

What is the purpose of a situation analysis?

The purpose of the situation analysis is to indicate to a company about the organizational and product position, as well as the overall survival of the business, within the environment.

How do I start a situation analysis?

Your situation analysis provides value; it should:
1. Be practical and straightforward to use.
2. Be understandable to an outsider.
3. Focus on key factors impacting your business, both internally and externally.
4. Identify future goals for your business.
5. Spark even further analysis.

What is situation analysis marketing?

Using market research, a situational analysis defines potential customers, evaluates projected growth, assesses competitors, and makes a realistic assessment of your business. It involves targeting the business’s specific objectives and identifying the factors that support or hinder those objectives.

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