A woodsman was once asked what he would do if he had only four hours to chop down a large tree. His response: “I’d spend the first two hours sharpening my axe.”
This adage reminds us that executive action is most effective when backed by planning and preparation.
For marketers, that groundwork takes place in a myriad of forms, but one of the the most useful instruments in the toolbox is a SWOT analysis.
- Strengths: Positive internal advantages you possess over others
- Weaknesses: Negative internal disadvantages you need to overcome
- Opportunities: Positive external circumstances to exploit
- Threats: Negative external factors you might have to face
A fully completed SWOT analysis reveals where you need to focus your attention to achieve strategic positioning and a unique differentiation in your market.
Use a SWOT Analysis to Align Your Resources and Capabilities for a Competitive Advantage
A SWOT analysis is only effective when it produces actionable strategies that promote a competitive advantage.
Once the strategy has been set, a detailed SWOT analysis gives decisionmakers a more nuanced and actionable understanding of the resources and capabilities needed to support their strategic objectives.
Every undertaking must be supported by the right mix of resources and capabilities. Since resources are not infinite, it is imperative to prioritize the usage of resources around a given strategy. Likewise, attempting to execute on a strategy without adequate capabilities will end in failure. That understanding is essential for developing a good strategic fit–a proper match of an organization’s resources and capabilities to the current market environment. Without that knowledge, decisionmakers can end up setting unachievable goals, getting distracted by business pursuits that don’t fit their organization, or missing lucrative opportunities that they don’t realize are uniquely right for them.
Because every company’s resources and capabilities are unique, it is incumbent upon strategists to direct those assets in a manner that stands the greatest chance of creating a true competitive advantage.
Leverage Your SWOT Analysis to Put Strategies into Action
Analyzing your SWOT matrix provides guidance for how you set an action plan to support your broader strategic decisions.
For example, a robust relationship between strengths and opportunities implies the environment is right for aggressive, growth-oriented approaches. When weaknesses and threats are interacting strongly, defensive and conservative strategies are usually recommended for the short term, while you contemplate how to strengthen your position for future opportunities.
Two methodologies that derive directly from the SWOT analysis are Matching and Converting.
Matching refers to the process of assigning strengths to opportunities. For example, if an entity has strengths that allow them to be agile in their response times for service, then they would match that to an opportunity to meet a market demand for faster delivery. For example, the Domino’s Pizza campaign for 30-minute pizza delivery.
Converting is attempting to change a weakness into a strength. Kmart did this with their “Ship My Pants” campaign. Their weakness was an inability to inventory enough product in their stores. They turned it into a strength by emphasizing their home delivery service.
Know Your Competition’s Weakness
For marketers, a big part of the threat component of the matrix is competitive analysis. The more you know about the competition, the better you can attack their weaknesses and find opportunities for differentiation, superior positioning, and achieving a competitive advantage.
The type of information that goes into competitor research includes:
- Cost Structures
- Profit Sources
- Resources and Capabilities
- Brand Positioning
- Product or Service Differentiation
- Vertically Integrated Processes
- Historical Record
In addition to competitor research, a fair amount of market research goes into a SWOT analysis. Qualitative information is derived from focus groups. Quantitative data is acquired through surveys and statistical analysis.
Market research also relies on experimental strategies, such as the use of test markets to study a product’s chances before a wide launch.
The more information you have to feed into your SWOT model, the more reliable the insights you derive from it will be.
Southwest Airlines used competitive analysis to identify how using a standardized fleet of 737 airplanes, short flights to and from second tier cities, and turning flights in and out of gates much quicker than larger competitors could lead to lower cost fares, more flights, and a brand value that couldn’t be easily duplicated.
Get Sharp and Get Started
Don’t hack away at difficult tasks with a blunt instrument. A SWOT analysis provides plenty of opportunities to sharpen your axe. It helps you find solutions you didn’t know existed, expose issues you didn’t know you had, make clear the challenges you face, and direct your resources in the most effective manner possible.
Are you interested in creating your own SWOT analysis and understanding other ways to differentiate your brand and set a strategic position for success? Check out our Blueprint for Successful Branding.