II. Situation Analysis and II. Situation Analysis and SWOTSWOT

HousekeepingHousekeeping

First assignment (Due date: 9/19) First email from team leader (Due date:

9/17) If you don’t have a team or your team has

less than 4 members. Please contact me ASAP.

VERY IMPORTANT: Read Chiffon case. We’ll work on it next Wednesday!

Assignment 1: Know your product Assignment 1: Know your product

Electronic submission in WebCT Due September 19, 2007 5:00 PM This is an individual assignment but you can

cooperate with your team. Requires an assignment format. Write a short report (1-2 double spaced pages) of

A. Your shopping experience at Wal Mart. Describe briefly issues such as layout of store, parking, prices, products, service, ambiance.

B. Describe a typical consumer of this company. C. Describe the company’s competition.

The situation analysisThe situation analysis

The purpose of the situation The purpose of the situation analysisanalysis

Answers the why are we here?It provides a background on the factors

that influence the company’s functions and performance

Elements of the situation Elements of the situation analysisanalysis

Problem identification Situation analysis

Internal Strategic Resources Company Product

Strategic Consumer Insight Consumer Market

Elements of the situation Elements of the situation analysisanalysis

External Strategic Environment Industry Competition Trends

Globalization Demographic change Technology Social/Political/Economic issues

Problem identificationProblem identification

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

Example: HyundaiExample: Hyundai

The attributes of the brand, good value, many features, excellent quality, great design are not conveyed by the brand to the consumer.

Situation Analysis: Internal Situation Analysis: Internal Strategic ResourcesStrategic Resources

Company analysisCompany analysis

What the company is concerned withWhat it represents

Usually this information is found in the mission and vision of the corporation

The mission of The Walt Disney Company is to be one of the world's leading producers and providers of entertainment and information. Using our portfolio of brands to differentiate our content, services and consumer products, we seek to develop the most creative, innovative and profitable entertainment experiences and related products in the world.

Company analysis (cont)Company analysis (cont)

Company’s mission History Sales and profits Market standing/category share Product offerings Key personnel Capital resources Sources: Hoover’s, Factiva, Company’s Web

site, Annual Report.

Product analysisProduct analysis

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

Sources: Ad Spender, Company’s Web site, your research, check consumer sources.

Situation Analysis: Strategic Situation Analysis: Strategic Consumer InsightConsumer Insight

Consumer analysisConsumer 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?

Sources: Factiva (news articles), Mintel Euromonitor, MRI, Market Research.com (academic)

A snapshot of a consumer: A snapshot of a consumer: Holiday Inn ExpressHoliday Inn Express

A frequent business traveler segment made up of nearly 40MM adults who travel for business 3+ nights per month (this segment skews male).

This audience is often on the road more than they are at home, making them truly discerning travelers.

Dissatisfied with the quality of hotel showers. Some have even taken to traveling with their own showerhead (seriously, we spoke to them).

This audience clearly stated they will go so far as to base their stay decision on the quality of the bathroom/shower experience

Source: Effie 2006

Market analysisMarket analysis

Helps planners identify which geographic areas are key

These areas are important due to:The strong position the advertiser enjoys

in the regionThe problems associated with doing

business in the region

Market analysis: Market analysis: Development indexDevelopment index

Brand development index (BDI)

Category development index (CDI)

% of a brand’s total US sales in a market x 100% of total US population in a market = BDI

% of a category’s total US sales in a market x 100% of total US population in a market = CDI

Welcome to Circleland! (Pop Welcome to Circleland! (Pop 100)100)

APopulation = 10

$ of soft drinks = 10$ of Coke =5

BPopulation = 40

$ of soft drinks = 15$ of Coke = 5

CPopulation = 30

$ of soft drinks = 20$ of Coke = 2.5

DPopulation = 20

$ of soft drinks = 5$ of Coke =5

Total $ soft drinks = 10+15+20+5 = 50 Total $ Coke = 5+5+2.5+5 = 17.5

Step 1Step 1

Step 2Step 2

2.5/17.5=0.14

Step 3Step 3

(0.14/0.30)*100= 47.62

Step 4Step 4

Situation Analysis: External Situation Analysis: External Strategic ResourcesStrategic Resources

IndustryIndustry

North American Product Classification System

An industry is defined byProducts

Function: Restaurant (Serve food) Technology: Fast food/Fast casual

CustomersSegmented groups

Geography

Dell’s industrial sectorsindustrial sectors

USASm Bus Home

Desktop

Laptop

United KingdomSm Bus Home

Desktop

Laptop

Computer Industry

IndustryIndustry

Growth Profitability Size of market Product differentiation Distribution channels Product life cycle Number of competitors Size of competitors Sources: Standard & Poor’s, Business Insight,

Company sources.

Product Life CycleProduct Life Cycle

Strategic ramifications of Strategic ramifications of PLCPLC

Characteristic Emerging Growth Maturity Decline

Concentration of comp.

High Declining Increasing High

Product diff Low Increa-sing

Segmen-tation

Decrea-sing

Price elasticity

Inelastic Increa-singly elastic

Inelastic in segments

Very elastic

Advertising appeals

Information Differentiation

Affect Affect

Competitive analysisCompetitive analysis

Considers all options consumers might think about in their purchasing decision

CompetitionCompetition

Alternatives on a person’s mind when selecting a good to satisfy a need

I am thirsty!

Soft drink Beer Sports drink

Carbonated

Milk

Non-carbonated Water

Bottled

Tap

Pepsi

Coke

Indirect competitors

Categories

Direct competitors

Competitive analysisCompetitive analysis

In what category does the product compete?

Who are the brand’s major direct competitors? Indirect competitors?

What is the competitor’s brand position?

What is the price of their product?

Competitive analysis (cont)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? Sources: Ad Spender, Corporate Web sites,

your research, check company sources.

TrendsTrends

Globalization Free flow of trade, information Technology driven Effects

Companies are looking for new international markets Higher risk Global, regional vs. local approaches

Demographic change Birth rate, age, immigration, minorities, working

population. Effects

Market size Type of consumers

TrendsTrends

Technology Internet, digital media. Effects

Fragmentation of markets New distribution channels

Other trends Social

Roles of females, minorities and pop culture, overburdened families.

TrendsTrends

Other trendsPolitical

RegulationEconomic

InflationExchange rateEconomic activityEmployment

Looking for informationLooking for information

A word (or two) about A word (or two) about sourcessources

Primary vs. secondary sources Secondary sources:

Librarian: Pat Reikes Best starting point:

Marketing Center from the Business Library http://web.uflib.ufl.edu/cm/business/subjects/marketin.htm

FAQsFAQs

Can I Google all the way to obtain the information for the situation analysis?

Most likely the answer will be no Can I use information from Wikipedia

Hell, no. How can I access the UF databases from my home?

Use a proxy server Where can I find information to calculate BDI/CDI

It’s almost impossible to obtain this data besides MRI Product Usage Data

The publication that I was looking for is 5 years old. Can I still use it?

It’s better than no info. Just write a note when you present the data.

The most important assetThe most important asset

Your responsesYour responses

No clear favorites except for Facebook, youtube, Harry Potter, Friends, food shows (Top Chef, Bizarre Foods), Entourage, Scrubs.

Advertising: Coke, AT&T, Cingular, Apple, HP, Geico, Bud.

Heroes: Jesus, family members, sports stars, politicians.

Here in this classroom we Here in this classroom we have people whohave people who

Are cancer survivors Love to be outdoors (Wakeboard) Are training for a marathon Have worked with dolphins and whales Went to the 04 Olympics to see best friend Are pretty cool Have broken bones Are raveling overseas next semester Have a pet chinchilla Hate steak Run a PR internship Have a little sister

Here in this classroom we Here in this classroom we have people whohave people who

Don’t know how to ride a bike Stuntride street bikes Have a very well organized closet Design clothing Work as a nanny Speak Polish, Chinese, French, Spanish, Monkey Are drama directors Like to cook Have four dogs Play the violin (and bass) Graduated salutatorian Like to play the bongos

Here in this classroom we Here in this classroom we have people whohave people who

Love traveling Are artists Most of their family live overseas Were a ballerina Knows how to dance swing/salsa Are obsessed with Disney Are very sentimental Do not like mayonnaise Competed in beauty pageants Are big dorks Are scared of cockroaches

Dr. Villegas’ answersDr. Villegas’ answers

1. Please name your favorite:Movie: Wings of Desire (Dir: Wim Wenders)Television Program: SopranosMusician/Band: Mogwai, Explosions in the SkyBook: Fortress of Solitude (Jonathan Lethem)Web Site: igoogle.comMagazine: New Yorker

Who is your favorite celebrity? Jim Cantore

Who should play you in a movieabout your life?

4. If you have a "hero," who is it? Heroes come and go, my family is my source of examples and counterexamples.

5. What is your favorite advertising campaign of all time? a. All time: Bill Bernbach’s work for VW Beetle b. Current: Get a Mac (Chiat/Day)

Think small.

18 New York University students have gotten into a sun-roof VW; a tight fit. The Volkswagen is sensibly sized for a family. Mother, Father, and three growing kids suit it nicely.In economy runs, the VW averages close to 50 miles per gallon. You won't do near that; after all, professional drivers have canny trade secrets. (Want to know some? Write VW, Box #65, Englewood, N. J.) Use regular gas and forget about oil between changes.The VW is 4 feet shorter than a conventional car (yet has as much leg room up front). While other cars are doomed to roam the crowded streets, you park in tiny places.VW spare parts are inexpensive. A new front fender (at an authorized VW dealer) is $21.75.* A cylinder head, $19.95.* The nice thing is, they're seldom needed.A new Volkswagen sedan is $1,565.* Other than a radio and side view mirror, that includes everything you'll really need.In 1959 about 120,000 Americans thought small and bought VWs. Think about it.

6. What are two things about yourself that you think no one (or almost no one) in the room knows? a. I had my first and last beer in 1985.b. I cook dinner every night.

Our clientOur client

Initial resources available @Web CT

TeamsTeams

Questions to ask prior to making a commitmentWhat is your availability?What are your strengths?

WritingProofreadingLooking for dataOrganization….

Do you want to be a leader?

So you want to be a team So you want to be a team leader…leader…

Responsibilities Coordinate team Make sure that projects are turned in on time Contact instructor

Submit reports, projects, etc. Compensation

5 miserable extra credit points Learning to coordinate a project Know better the instructor

LeaderLeader

A leader is notA tyrantA maidResponsible for others’ stupidityThe only loser that stays until 5 AM

working on the project

Goals for todayGoals for today

Make a team with 4-5 members Get contact information Choose a leader (if possible) Plan for an initial meeting

Divvy up the sections of situation analysis among team members (NOT SWOT)

Agree on internal deadlines, format, reference style.

Final ProjectFinal Project

Formation, leaders and name of ad agency: 09/17 Team leader should send email with the following infoto

Dr. Villegas: Names and email addresses of members Name of ad agency

Please CC all members of the team

First stage Name of ad agency: 9/17 1st draft of situation analysis and SWOT: 10/8 Final draft: 10/19 1st INDIVIDUAL Call Report 10/19

SWOT analysisSWOT analysisAdvertising Strategy

What is a SWOT?What is a SWOT?

It is the organization of the information obtained in the situation analysis: The company’s

Strengths Weaknesses

The environment’s Opportunities Threats

Answers the so what? Of the situation analysis

What’s all about?What’s all about?

SWOT

Situation analysis

Problem/Opp./Challenge

Real world

The purpose of a SWOT The purpose of a SWOT analysisanalysis

To define the main issues that must be addressed in the strategic planClarifies opportunitiesIdentifies problems

Issues discovered in the SWOT will be used to define IMC objectives, strategies and tactics

Strengths and weaknessStrengths and weakness

Internal factors reflect situation-based considerations within a company’s controlKey question:

How and why are we better/worse than our competitors?

StrengthsStrengths

Strengths refer to what a company has done well or been successful at to date.Abercrombie & Fitch: Strong brand

portfolio

WeaknessesWeaknesses

Weaknesses refer to what a company needs to correct or that has worked to a company’s disadvantage to date.Abercrombie & Fitch: Limited geographic

reach

Opportunities and threatsOpportunities and threats

External factors reflect situation-based considerations beyond a company’s control

However, they have the potential to affect the future of the business Key question

What variables in the external environment affect the company’s challenges?

OpportunitiesOpportunities

Opp. refer to external factors that may benefit the company if pursued.Increase on online sales of clothing

ThreatsThreats

Threats refer to external variables that may negatively affect the company if ignored

Examples: Oil prices are high > Gas prices increase

From Datamonitor’s SWOT From Datamonitor’s SWOT Analysis (Apple)Analysis (Apple)

Apple has strong media content ___ S ___ W ___ O ___T?

MP3 player market is growing___ S ___ W ___ O ___T?

Dependency for key components___ S ___ W ___ O ___T?

From Datamonitor’s SWOT From Datamonitor’s SWOT Analysis (Apple)Analysis (Apple)

WiMax will be available in 1-2 years ___ S ___ W ___ O ___T? Growing health consciousness is resulting

in higher demand for healthy food.___ S ___ W ___ O ___T? Strong competition in every category___ S ___ W ___ O ___T?

Where do we go from here?Where do we go from here?

Strategic planners should understand what the company’s alternatives are for solving the market challenge