PEST ANALYSIS

t is very important that an organization considers its environment before beginning the marketing process. In fact,
environmental analysis should be continuous and feed all aspects of planning The organization's marketing
environment is made up of:

1. The internal environment e.g. staff (or internal customers), office technology, wages and finance, etc.

2. The micro-environment e.g. our external customers, agents and distributors, suppliers, our competitors, etc.

3. The macro-environment e.g. Political (and legal) forces, Economic forces, Sociocultural forces, and Technological
forces. These are known as PEST factors.

Political Factors.
The political arena has a huge influence upon the regulation of businesses, and the spending power of consumers
and other businesses. You must consider issues such as:

[Link] stable is the political environment?

[Link] government policy influence laws that regulate or tax your business?

[Link] is the government's position on marketing ethics?

4. What is the government's policy on the economy?

5. Does the government have a view on culture and religion?

6. Is the government involved in trading agreements such as EU, NAFTA, ASEAN, or others?

Economic Factors.
Marketers need to consider the state of a trading economy in the short and long-terms. This is especially true when
planning for international marketing. You need to look at:

1. Interest rates.

2. The level of inflation Employment level per capita.

3. Long-term prospects for the economy Gross Domestic Product (GDP) per capita, and so on.

Sociocultural Factors.
The social and cultural influences on business vary from country to country. It is very important that such factors are
considered. Factors include:

[Link] is the dominant religion?

[Link] are attitudes to foreign products and services?

[Link] language impact upon the diffusion of products onto markets?

[Link] much time do consumers have for leisure?

[Link] are the roles of men and women within society?

[Link] long are the population living? Are the older generations wealthy?

[Link] the population have a strong/weak opinion on green issues?

Technological Factors.
Technology is vital for competitive advantage, and is a major driver of globalization. Consider the following points:

1. Does technology allow for products and services to be made more cheaply and to a better standard of quality?

[Link] the technologies offer consumers and businesses more innovative products and services such as Internet
banking, new generation mobile telephones, etc?

[Link] is distribution changed by new technologies e.g. books via the Internet, flight tickets, auctions, etc?

[Link] technology offer companies a new way to communicate with consumers e.g. banners, Customer Relationship
Management (CRM), etc?

POETER FIVE FORCES

Five Forces Analysis assumes that there are five important forces that determine competitive power in a
business situation. These are:

1. Supplier Power: Here you assess how easy it is for suppliers to drive up prices. This is driven by
the number of suppliers of each key input, the uniqueness of their product or service, their
strength and control over you, the cost of switching from one to another, and so on. The fewer the
supplier choices you have, and the more you need suppliers' help, the more powerful your
suppliers are.
2. Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is
driven by the number of buyers, the importance of each individual buyer to your business, the
cost to them of switching from your products and services to those of someone else, and so on. If
you deal with few, powerful buyers, then they are often able to dictate terms to you.
3. Competitive Rivalry: What is important here is the number and capability of your competitors. If
you have many competitors, and they offer equally attractive products and services, then you'll
most likely have little power in the situation, because suppliers and buyers will go elsewhere if
they don't get a good deal from you. On the other hand, if no-one else can do what you do, then
you can often have tremendous strength.
4. Threat of Substitution: This is affected by the ability of your customers to find a different way of
doing what you do – for example, if you supply a unique software product that automates an
important process, people may substitute by doing the process manually or by outsourcing it. If
substitution is easy and substitution is viable, then this weakens your power.
 5. Threat of New Entry: Power is also affected by the ability of people to enter your market. If it
costs little in time or money to enter your market and compete effectively, if there are few
economies of scale in place, or if you have little protection for your key technologies, then new
competitors can quickly enter your market and weaken your position. If you have strong and
durable barriers to entry, then you can preserve a favorable position and take fair advantage of it.

These forces can be neatly brought together in a diagram like the one below:

PORTER GENERIC STATERGY

Generic strategies were used initially in the early 1980s, and seem to be even more popular today. They outline the
three main strategic options open to organization that wish to achieve a sustainable competitive advantage. Each of
the three options are considered within the context of two aspects of the competitive environment: Sources of
competitive advantage - are the products differentiated in any way, or are they the lowest cost producer in an
industry? Competitive scope of the market - does the company target a wide market, or does it focus on a very
narrow, niche market?
The generic strategies are:  1. Cost leadership, 2. Differentiation, and 3. Focus.
1. Cost Leadership.
The low cost leader in any market gains competitive advantage from being able to many to produce at the lowest
cost. Factories are built and maintained, labor is recruited and trained to deliver the lowest possible costs of
production. 'cost advantage' is the focus. Costs are shaved off every element of the value chain. Products tend to be
'no frills.' However, low cost does not always lead to low price. Producers could price at competitive parity, exploiting
the benefits of a bigger margin than competitors. Some organizations, such as Toyota, are very good not only at
producing high quality autos at a low price, but have the brand and marketing skills to use a premium pricing policy.

2. Differentiation
Differentiated goods and services satisfy the needs of customers through a sustainable competitive advantage. This
allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better
margin. The benefits of differentiation require producers to segment markets in order to target goods and services at
specific segments, generating a higher than average price. For example, British Airways differentiates its service.

The differentiating organization will incur additional costs in creating their competitive advantage. These costs must
be offset by the increase in revenue generated by sales. Costs must be recovered. There is also the chance that any
differentiation could be copied by competitors. Therefore there is always an incentive to innovated and continuously
improve.

3. Focus or Niche strategy.

The focus strategy is also known as a 'niche' strategy. Where an organization can afford neither a wide scope cost
leadership nor a wide scope differentiation strategy, a niche strategy could be more suitable. Here an organization
focuses effort and resources on a narrow, defined segment of a market. Competitive advantage is generated
specifically for the niche. A niche strategy is often used by smaller firms. A company could use either a cost focus or
a differentiation focus.

With a cost focus a firm aims at being the lowest cost producer in that niche or segment. With a differentiation focus a
firm creates competitive advantage through differentiation within the niche or segment. There are potentially problems
with the niche approach. Small, specialist niches could disappear in the long term. Cost focus is unachievable with an
industry depending upon economies of scale e.g. telecommunications.

The danger of being 'stuck in the middle.'

Make sure that you select one generic strategy. It is argued that if you select one or more approaches, and then fail
to achieve them, that your organization gets stuck in the middle without a competitive advantage.
SWOT ANALYSIS
SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps
marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and
weaknesses are internal factors. Opportunities and threats are external factors.
 In SWOT, strengths and weaknesses are internal factors.
For example:

A strength could be:

 Your specialist marketing expertise.

 A new, innovative product or service.

 Location of your business.

 Quality processes and procedures.

 Any other aspect of your business that adds value to your product or service.

A weakness could be:

 Lack of marketing expertise.

 Undifferentiated products or services (i.e. in relation to your competitors).

 Location of your business.

 Poor quality goods or services.

 Damaged reputation.

 SWOT, opportunities and threats are external factors.

An opportunity could be:
 A developing market such as the Internet.

 Mergers, joint ventures or strategic alliances.

 Moving into new market segments that offer improved profits.

 A new international market.

 A market vacated by an ineffective competitor.

A threat could be:
 A new competitor in your home market.

 Price wars with competitors.

 A competitor has a new, innovative product or service.

 Competitors have superior access to channels of distribution.

 Taxation is introduced on your product or service.

Simple rules for successful SWOT analysis.

 Be realistic about the strengths and weaknesses of your organization when conducting SWOT analysis.
 SWOT analysis should distinguish between where your organization is today, and where it could be in the
future.

 SWOT should always be specific. Avoid grey areas.

 Always apply SWOT in relation to your competition i.e. better than or worse than your competition.

 Keep your SWOT short and simple. Avoid complexity and over analysis

 SWOT is subjective.

Once key issues have been identified with your SWOT analysis, they feed into marketing objectives. SWOT can be
used in conjunction with other tools for audit and analysis, such as PEST analysis and Porter's Five-Forces analysis.
So SWOT is a very popular tool with marketing students because it is quick and easy to learn. During the SWOT
exercise, list factors in the relevant boxes. It's that simple. Below are some FREE examples of SWOT analysis - click
to go straight to them

CREATIVE MARKETING(( ESAY ))

The six thinking hats is a method for doing one sort of thinking at a time. Instead of trying to do everything at once,
we wear only one hat at a time. It's a metaphor. There are six colored hats and each color represents a type of
thinking.

White Hat.
The white hat means neutral information. White hat thinking focuses on the available information. There are three key
questions:

1. What information do we have?

2. What information is missing?

3. How do we get the information we need?

Red Hat.
The red hat is for emotions, feelings, hunches and intuition. Unlike white hat the red hat is not interested in facts, but
only in people's feelings. The purpose of the red hat is to allow us to put forward our feelings so they can take part in
the thinking. The red hat provides a clear label for those feelings. Intuition is often based upon experience about a
matter, but we cannot exactly explain why we have such an intuition. The red hat allows the thinker to put forward a
hunch or intuition without any need to support or justify it.

Black Hat.
The black hat is generally the most used of all the hats. It is the one that prevents us from making mistakes and doing
silly things. The black hat is concerned with the truth, reality and critical thinking. The key questions are:

1. Is it true?

2. Does it fit?

3. Will it work?

4. What are the dangers and the problems?

Yellow Hat.
In general the yellow hat is optimistic and looking forward to the future. It can however be used to review the past but
from the perspective of what we can learn from past experiences i.e. being positive and looking on the bright side.
The key questions are:

1. What are the benefits?

 2. Why should it work?

Green Hat.
The green hat is for creative thinking. Creative thinking may mean new ideas, alternatives, new solutions or
inventions. It could also mean making something happen. The main uses of green hat are:

1. To explore the situation in terms of ideas, concepts, suggestions and possibilities.

2. To put forward proposals or suggestions of any sort, e.g. suggestions for action, possible decisions, etc.

3. To consider further options or alternatives. The green hat seeks to broaden the range of options before pursuing
any one of them in detail. Yellow and black hat thinking are used to assess alternatives.

4. To come up with some new ideas. Lateral thinking techniques can be used deliberately in order to generate some
new ideas.

5. To put forward some deliberate provocations. A provocation is not meant to be a usable idea. It is a way of
releasing the mind from its usual track.

Blue Hat.
The blue hat gives an overview of our thinking. It covers the following points:

1. Where are we now in our thinking?

2. What should we do next in our thinking?

3. To establish an agenda or sequence for our thinking.

4. To summarize what has been achieved so far in the thinking.

TRAFFIC SIGNAL CONCEPT

The six thinking hats can be used occasionally as a means of switching thinking or systematically where a sequence
of hats is established in advance to enable the thinker(s) to go through each stage of thinking.

Red - STOP.
 Depending upon narrow and out modish, traditional products. Today's drinkers much prefer lagers than old
fashioned beers.

 Spending a disproportionate amount of our marketing communications budget on products that consumers
no longer value, simply because the campaigns are great.
 Amber - PROCEED WITH CAUTION, and make some improvements.
 Positioning was great but now needs to be altered. Let's reposition our traditional brand to make it appeal to
today's drinkers. This could even mean making 'beers' in general more acceptable to new segments.

 Differences between international and domestic marketing need to be addressed. Continue with
international marketing activities where the traditional brand is easier to protect. Reconsider domestic marketing.

Green - Go or Let's carry on with this activity.

 Develop new and innovative products to compete in the new, exciting and innovative markets. Let's develop
(or buy into) a new lager brand, a new cider brand and an innovative spirit-based designer brands.

 Develop want tomorrow's consumers will want, and jump one step ahead of our competitors.

 Generate stylish and creative marketing communications campaigns for our new products that enhance and
build upon our reputation for marketing excellence.

Brainstorming
What is Brainstorming?
Brainstorming is simply a means of getting a large number of ideas from a group of people in a short time.
Brainstorming is great for marketers! Marketers can generate new creative ideas for products, services, solutions or
concepts. Not only is brainstorming useful for creative thinking, but is can also be used for marketing problem solving
and marketing decision making.

Successful brainstorming depends upon four key rules:

1. Suspend judgement.

2. Let yourself go and freewheel.

3. Go for quantity - quality implies evaluation (which means that you have not suspended judgement).

4. Cross-fertilize - pick up someone else's ideas and suggest others leading from it.

Steps in Brainstorming.
A. State the problem.

B. Restate the problem.

C. Select restatement.

D. Warm-up.

E. Brainstorm.

Oiling the Wheels

If brainstorming group dries up the leader can get the ideas flowing again by using any one of the following
approaches:
1. Silent review - let the group review silently the ideas already generated in order to stimulate their thinking.

2. Quantity targets - encourage the group to go for 10, 50 or 100 ideas!

3. The one idea - get the group to focus on one idea and use that as a stimulus.

4. Select a restatement from the list the group produced earlier and brainstorm it.

5. Wildest idea - let the group silently review the ideas already generated in order to use the wildest idea as a
stimulus for more productive ideas.

Evaluating ideas
1. Scrutinise all the ideas and pick out any that instantly jump out at you.

2. Sort the remaining ideas into groups of a manageable size and examine using some predefined criteria e.g.
profitability or relative competitive advantage.

3. Subject ideas to reverse brainstorming. Ask the question 'In how many ways can this idea fail?'