S.W.O.T. Analysis Explained

SWOT analysis explained

When it comes to marketing it’s very easy to get side tracked by an exciting new marketing venture only to find out three months down the track and many tens of thousands of dollars later, that it didn’t work. With that, it’s vitally important to plan your marketing activities thoroughly so you have a road map of the strategies that are most likely to help reach your goals in the shortest timeframe possible and with the least amount of risk.

The first step in that process is to understand the health of your business – in other words, what’s the current state of play. What is currently working for your business and what isn’t? Or more specifically, what are your strengths, weaknesses, opportunities and threats.

The most efficient method to identify these factors is by completing a SWOT analysis. A SWOT analysis stands for “Strengths, Weaknesses, Opportunities, Threats”. It is often used in strategic planning as a vital tool in helping with profit improvement, organisational development and in identifying a company’s competitive advantage.

Strengths

The “strengths” of your company relate to your point-of-difference – what sets you apart. Knowing your strengths enables you to formulate a “unique selling proposition” (USP) that helps set you apart from the competition. To identify your strengths, ask yourself questions like:

• What makes you better than your competition?
• What sets you apart by way of size, flexibility, product range etc.?
• What is the perception of your brand and more?

Once the strengths are identified these areas can then be worked on in order to improve or maintain that strength.

Weaknesses

Okay, strengths are very important to look at but it’s also very important to be clear on your weaknesses.

Being clear on that enables you to put in place measures to either eliminate those weaknesses or play them down in your marketing. Or – it’s even possible in some situations to highlight those weaknesses in your marketing for a positive result.

When coming up with a list of your weaknesses, be honest and ask all your people to be honest as well. It’s vital that you are aware of all your business’ weak points because these weak points are affecting your sales results.

Here are some examples of potential weak points:

• Lack of expertise of team
• Small capacity – poor flexibility
• Slow turnaround times
• More expensive, slower, poorer quality, smaller range, less variety etc. than competition

One weaknesses are identified they can then be prioritised for improvement.

Opportunities

Opportunities are “external” factors that relate to the opportunities that your company can tap into based on current market conditions. Opportunities specifically relates to opportunities to steal market share from your competitors or to grow your market.

Here are some examples...

• New markets for your products or services 

• Economic upturn 

• Weather fluctuations that create additional demand 

• Poor performance of your competitors creating more demand 

• New technology you have or could adopt


Once identified, opportunities are prioritised and capitalised on. 


Threats 


Threats are, as its name suggests, things, companies, situations or people who are a threat to the viability of your business. They can be either external or internal. 
Threats include ...

• Economic downturn 

• Change in Government legislation 

• Dwindling cash flow 

• Increase in competition
• Competitor activity
• Weather changes (drought) and more.

You know what they are, now what? 


Once you have listed all your strengths, weaknesses opportunities and threats, it’s important to “rate them” as to the impact they are currently having or could potentially have on your business. Once you’ve developed your lists you can then mark out the factors on the SWOT chart. This gives you an excellent visual representation of the state of your business – a snapshot, if you like. Here’s what to do next ...

Strengths

Consider what your greatest strengths are and determine how well your customers know these strengths.

• Are they aware of them at all?
• Do you promote them heavily in your marketing?
• Could you promote them more heavily?
• How do these strengths impact on your sales?
• How could you communicate these strengths in a point-of difference or positioning statement or tagline (see “Unique Selling Proposition” Study Guide”).

In many situations, we’ve seen a company’s greatest strengths remain hidden so customers didn’t even know about these strengths. And once they did become aware of these strengths, the companies’ sales skyrocketed. Playing up your strengths will significantly increase your conversion rates.

Weaknesses

Consider what your greatest weaknesses are as well as how aware your customers are of those weaknesses. The weaknesses of your company and/or your product will impact on your conversion rates. The more disadvantageous the weakness, the more reluctant a potential customer is to purchase from you. And the more favourably they will look upon the competition. You can then develop strategies and tactics to minimise the effects of the weaknesses.

Opportunities

Knowing what your greatest opportunities are, and then tapping into them, will produce a significant increase in leads and sales. It will also increase repeat business, minimise product refunds, and customer defections. Again, rate your opportunities according to the ones that bring you the greatest return for the investment in time and money (to implement). Once you’ve done that, evaluate each of the major opportunities and make a decision on how you can capitalise on these opportunities as part of your marketing activities over the next year. Incorporate them into your marketing plan.

Threats

Consider what your greatest threats are and rate them according to the detrimental impact these threats could potentially have on your business. Once you’ve done that, brainstorm strategies to avoid those threats or turn those threats into opportunities. For instance, if you sell luxury items and a recession is looming and threatening the viability of your business, introduce products that people buy more of during a recession.

This article is an extract from the 10X Library of information on Business Improvement.

For more information on Business Improvement Strategies, please message me via LinkedIn or via the Contact Us page on my website www.asgstrategies.com.au.