What to think about when doing an External Analysis for your Strategic Marketing Plan

The aim of the analysis is to know the historical evolution of the company, the clients and the providers in order to identify what are the opportunities and threats this market presents that we can benefit from and what strengths and weaknesses we need to be aware of in order to differ from our competitors. In the end, the idea is to identify those key factors that would lead us to success. Read the introduction in previous post.

Naturally, you start with the External analysis – the market analysis. This analysis is composed by several areas to be covered in order to get a total picture of the situation. Those areas are:

  1. The market environment
  2. The (business) sector
  3. The clients
  4. The competitor

Studying the environment

These are the areas that are studied in this phase:

  1. Economical factors that can impact the business
    Examples: Gross Domestic Product (GDP), inflation
  2. Technological factors that can hinder or strengthen the business
    Examples: new products that have urged in our sector
  3. Political or legal factors that should be taken into consideration
    Examples: laws, regulations, protections, environmental guidelines
  4. Social factors that could impact on the demand
    Examples: changes of consumption behaviors, new attitudes

The purpose of analyzing these areas, normally related to as PESTELI analysis, is to study the impact these areas could have on a business or a product/service.Imagine that you plan for the launch of a product but have not studied the regulation in that country and discover (too late) that the country forbids, or puts very high taxes on your type of products. E.g. Sugar beverages in certain states in USA. Hard to launch a new sugar-heavy beverage? A good guidelines is to look at 3 years ahead when it comes to laws and regulations as those take time to implement but could have a huge impact on your product.

Studying the sector

It is very convenient to apply Porters 5 forces to the market analysis as it complements the PESTELI with its identification of the level of competitiveness of your market. The areas to be studied are:

  1. Existing competitive rivalry between suppliers
  2. Threat of new market entrants
  3. Bargaining power of buyers
  4. Power of suppliers
  5. Threat of substitute products (including technology change)

The idea is to study the real situation in the present and in the future in order to be able to set a sustainable strategy that can compete on the market where we plan to enter ir expand.

STUDYING THE market

The market needs to be studies from a historical point fo view and a trend point of view in order to understand “where it is going” and what is characteristic for this market.

Factors to take into considerations are:

  1. Size and evolution of the market
  2. Growth rate of the market
  3. The life cycle of a product
  4. Attractiveness of the market
  5. What strategic groups are important to study
  6. What other substitute products are present that meets the same needs
  7. What possible new players could enter the market
  8. What benefits are generated, margins and cost structures
  9. What is the evolution of the prices over time
  10. What is the number of bought product and what segments can be identified

STUDYING THE customer

  1. the profile of the customer and if its interesting for our Business or offering
  2. the grade of importance our offering has in the customer’s life
  3. the difficulty for the customer to switch to other provider
  4. the level of sensibility of customer to the services related to the product (time-to-delivery, location, price, portfolio, after sales, brand)
  5. the analysis of the purchase process and defining when decision for purchase is taken

If you liked this post you probably like this one about the market environment as well.

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2 thoughts on “What to think about when doing an External Analysis for your Strategic Marketing Plan

  1. Pingback: Creating a Strategic Marketing Plan from scratch | Patricia Polvora's Blog

  2. Pingback: Introduction to the External and Internal Analysis of your Strategic Marketing Plan | Patricia Polvora's Blog

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