What is SWOT: Situation Analysis in Marketing

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  • 0:06 Business Mission Statement
  • 1:23 Situational Analysis
  • 2:06 Internal Strengths and…
  • 3:39 External Opportunities…
  • 4:45 Lesson Summary
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Lesson Transcript
Instructor: Jennifer Lombardo
A successful business needs to know its capabilities as well as the marketplace in which it competes. In this video, learn how to define a mission statement and conduct a situational analysis.

Mission Statement

The foundation of any marketing plan is the firm's mission statement. A mission statement explains the purpose of why a company is in business, and what it is trying to accomplish. A company can't create a mission statement without first analyzing itself and the conditions of the environment in which it competes. A mission statement should be focused on the market and environment and not just on a company's products or services. When a company focuses too closely on its products or services rather than benefits to consumers, the company is exhibiting marketing myopia. If a company writes a mission statement that says it is in the soda business rather than the beverage business, it is limiting its opportunities.

An example of an excellent mission statement is Apple's. The mission statement is 'Apple is committed to bringing the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.' This covers a lot of ground and, as we know, allows Apple to delve into many areas of the market. Once a mission statement has been created, it is important to conduct a situational analysis on the overall business environment in order to compete effectively.

Situational Analysis

Have you ever had to decide whether to take a risk? Maybe the risk was buying a brand new car? Choosing your college? Most people make a list of the pros and cons to a choice before they make a final decision. Businesses also have to research and analyze choices before choosing a path. Their decision-making process is called conducting a SWOT analysis, also known as a situational analysis. SWOT stands for internal strengths, internal weaknesses, external opportunities and external threats. The main purpose of the situational analysis is for marketers to understand the current and potential environments.

Internal Strengths and Weaknesses

The first part of the SWOT analysis is examining a company's internal strengths and weaknesses. In this step, a marketing manager looks internally at the company's resources, such as finances, engineering, marketing, employees and production, to see where the company excels or needs improvement. Marketing managers should not just look at the current situation of the firm, but also look at historical sales, profit and cost data.

When looking for a company's strengths, it is important to ask, 'what do we do best?' 'What are we known for?' 'Do we have a unique selling proposition?' A unique selling proposition, or USP, is something that your company does very well, but your competition does not. Disney would be an example of a company with great internal strengths in the area of human resources and employee development. It is known for its excellent employee training via Disney University.

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