There are many ways how a SWOT analysis is used. It is not my intention to compare what are the differences but to share how I used it in my Strategic Planning workshops.

Strength

This is an internal factor deals with the strength in the operation. It is internal because it takes into considerations of the level of competence for their internal capability. They are many factors in an operation that can be considered as strength. It is normally highlighted during brainstorming among management members. When the list of factors for Strength is too many, then it should be grouped using Stratification method. Then reduce it further to three to five items using appropriate tools such as , multi-voting, Selection grids etc. Once it is done, rank these items by comparing own company with better competitors. Force ranking is sometime used an alternative to multi-voting.

Weaknesses

Similar to the above, it is an internal factor deals with the weaknesses of the operation considering the level of competence as compared to their better competitors. With weaknesses identified by way of brainstorming, the factors might be too many. When the list of factors for weaknesses is too many, then it should be grouped using Stratification method. Then reduce it further to three to five items using appropriate tools such as , multi-voting, Selection grids etc. Once it is done, rank these items by comparing own company with better competitors. Force ranking is sometime used an alternative to multi-voting.

Opportunities

This is an important factor to identify opportunity as a result of external influence. It is often leads to more business or investment as well as opportunity for innovation of products and services. Due to the fact it is external, many assumptions is used. However, given the constraints, one should try to quantify the assumptions so that the conclusion of this factor is real. In real life application, there are cases where opportunities derived from operation are park in this section. Rightfully, it can be rephrased such that it became a Strength instead..

Threats

This is another important and critical factor to deal with. It has great influence to the success or failure of an organization if not dealt with appropriately. This section look for factors that can put an organization in a loss-loss situation where example may either reduce the market share or its profitability. Once again, since it is an external factor, its reality is assumed. However, in many cases, they can be verified by announcement, publications etc. On the other hand, if organizations act on these factors, it may not always mitigate the threat because the threat is not real. One example is the Y2K issue.

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About the Author

The author publish artciles and case studies in Malcolm Baldrige, TQM Implementation, SWOT Analysis and Strategic Planning. More can be view from http://TQMCaseStudies.com

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To maximize the power of SWOT Analysis, all the four factors in SWOT should be well understood. In this article, I share with you one of the comment I received from one of my reader to my article entitle: SWOT Analysis in Strategic Planning

The comment read as below:-
I think the approach to SWOT by the author of the article is not adequate to formulate an effective business strategy, as he says that SW are related to internal and OT are related to external factors. Each of the components in SWOT should be related to both internal and external factors. Analyzing strengths and weaknesses merely based on internal operational factors is not enough, as there are perhaps more critical factors on strengths and weaknesses that a company should look into, analyse and focus on - like branding, market and products positions as compared to competitors, what the company see other competitor sand what others would see your company. On the other hand, opportunities and threats may consist of internal factors like talent acquisition and retentions, and the availability of talents as compared to the competitors.

To share with you my response to the comment as follows:-
First of all, I like to take this opportunity to thank you and your group reading my article. The fact that the way my article was written purely based on sharing of knowledge. And due to limitation of article submission guidelines.
I appreciate you took his time to point out the inadequacy the definition of SWOT Analysis in my article and I agreed with him. Perhaps, I take this opportunity to share my thought as follows:-

a) I consider SW as internal factors because it deal with capabilities of an organization. However, when deal with capabilities, a reference point is used. I normally use comparing with a benchmark such as competitors. In this case, you have rightly pointed out.

b) I faced with similar situation when deal with the OT factor. There are two school of thoughts i.e. consider OT as a pure external factor (like what I normally do) or alternatively, include them into internal as well. Why I said that. Let’s consider this scenario:-
Scenario A: An organization is loosing talented employee and resulted in talent acquisition

My thought on scenario A is below:-
I consider an organization not able to retain talented employee (for whatever reason) as an internal weakness. And I consider “talent acquisition” as an action rather than a factor.

I normally separate an action from the SWOT factors and consider these action items when I analysis the SWOT further. I do that with another tool called SWOT or TOWS matrix. ( sorry for not elaborate in more detail here)

I hope my explanation satisfy your member’s view and looking forward to answer any other comments.
Thanks and Best regards

In conclusion: This is a typical situation that SWOT Analysis can be interpreted based on individual knowledge and application experience. At the end of the day, it is important that all members who are involved in the SWOT Analysis session have a common understanding.

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About the Author

Dr. L M Foong publishes TQM articles, ebooks, case studies, trainer manual and presentation slides. He can be contact at http://tqmcasestudies.com/ContactUs.html

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1. A Priori segmentation 

In a priori segmentation, the market is split according to pre-existing demographic criteria such as age, sex or social economic status. More sophisticated versions include lifestage (which combines information about age, presence of children and working status) and geodemographics such as Experian’s Mosaic or CACI’s Acorn classification systems where households are allocated to specific clusters on the basis of typical household make up and housing type.

A priori segments are easy to define and easy to target with advertising and media. For some sectors, for instance technology, there are such strong relationships between age and use, that a priori segments are all that are needed. However in other markets - for instance drinks, it is more difficult to use pre-existing variables for segmentation.

A priori segmentations are also the simplest segmentation to apply and use. A database can be flagged or sorted on the pre-existing data and that data used to drive sales and marketing campaigns.

However, although better than pure mass marketing, even the most sophisticated a priori systems are quite crude. In geodemographics there is the assumption that you buy or think the same way as your neighbour which is clearly not always the case.

2. Usage segmentation (also known as decile analysis or pareto analysis)

There are two ways of carrying out a usage segmentation, firstly customers are split according to their weight of use. - heavy users/buyers being more important targets than light users.

This segmentation can be carried out directly on customer databases and can be extremely powerful in focusing activity based on the value to the business, not just the number of contacts. Decile analysis splits users into 10 evenly numbered groups, which Pareto analysis splits the top 20% from the bottom 80%. This is normally used in business-to-business markets and is a core part of database analysis for consumer markets.
Secondly, usage can be considered in terms of time and place. A cafe might sell sandwiches at lunchtime but main meals in the evening because the purchasers are looking for different things. It may even be the same purchaser just in a different “mode”.

Usage studies are also extremely common in market research, but normally to determine measures of market share and other metrics. However this information can also be used as the basis of a segmentation approach.

Often usage segmentation is used to try and establish underlying driving forces from other demographic variables. So if women are more likely to be heavy users would it be easier to convert more light users who are female, rather than target their male counterparts. This focusing of market activity on groups that are similar to heavy users gives rise to measures such as “uplift” - the improvement possible over a purely random approach.

3. Attitudinal research and cluster analysis

When market research is used for usage studies, it is also often accompanied by attitudinal research - what do customers think or believe about the category in question. This is commonly achieved through banks of agree-disagree scales or ratings out of 5,7 or 10. The aim of these studies is not just to understand commonalities in opinion, but also what makes one group of users different from another.

To understand how attitudes affect purchase statistical techniques such as “cluster analysis” are used where people with similar attitudes are combined together. For instance grouping those for whom the environment is important separately from those who think price is more important.

This information can then be used to target groups by what they think and how they feel, rather than just who they are. This is particularly valuable in determining branding strategies and keeping a brand in tune with consumers.

However, attitudinal clusters do not fit easily into database or conventional media targeting which are more often than not based on demographics. The translation from attitudes to demographics means that some of the usefulness of an attitudinal segmentation is lost. Companies can reach different attitudinal groups by offering a range of products and a range of communication, but clearly the lack of a clear definition means cross-over between the targeting of segments.

Attitudinal grouping also suffer from some problems with regard to their robustness and replicability. Cluster analysis cannot be carried out in the field so scoring systems (similar to credit scoring) or surrogate measures and variables are needed to allocate individuals to a group. These additional measures can be guessed at, but normally need to be defined and tested post-hoc. Repeating attitudinal analysis successful can be very difficult and expensive.

Attitudinal groups may also change or move over time as some views become fashionable or unfashionable. It is possible to find a segmentation that quickly disappears or is superceded by events (imagine the music market). There is also debate about how attitudes change - is it the advertising and the product that create the attitudes, or do the attitudes lead to the choice of a particular product. In particular a single individual in different circumstances or mode, may fit into a different segment. Capturing this complexity in a single dimensional study is difficult.

4. Needs based segmentation

The fourth method is to try and determine fundamental drivers for the decision to create what is known as a needs based segmentation.

Most needs-based segmentation uses Conjoint Analysis to split a category into different levels of functional performance (see Conjoint Design). By understanding what elements are key drivers for individuals, specific needs and requirements can be identified from the trade-offs that each person makes. Using cluster analysis, this information can be drawn together to find different segments with similar preferences and needs from the product category in question.

Needs based segments are typically the most actionable forms of segments as you know what drivers and performance the product or service has to satisfy. These are normally more stable than attitudinal groups as they should directly reflect and predict existing market share.

However, like attitudinal studies, because cluster analysis is used, targeting each of the underlying groups can be difficult.

Nonetheless you also have the benefit of being able to product a market model or market simulation using the Conjoint output.

Choosing a technique

The type of segmentation you use will depend on a lot of factors including the cost not only of conducting the research, but also of implementing the solution and the business impact. Consequently ideally for each segment or group you want to know what the economic value and the economic potential for each group is and have some idea as to whether this is increasing or falling. Consequently most quantitative segmentation studies are detailed and complex.

A more cost-effective approach is to develop groups based on qualitative research. Typically a business wants to minimise the number of segments it has as each costs money to target properly (database marketing and digital printing techniques allow for far finer targeting without too much additional cost).  With small numbers of big segments, a good researcher will be able to identify these groups within a programme of qualitative research. This will not gather economic data, but it enables deeper insight into each group and, if monitored over time, provides core information about how segments change and develop.

About the Author

dobney.com is the trading name of The Dobney Corporation Limited a Choice Consultancy based in Bath, England and Barcelona, Spain. We provide experimentation, analysis and information services to help companies identify the choices that drive successful market strategies.

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A market research may sound so complicated, but it’s really not that difficult. Yes, it may take a lot of work and require you to browse through volumes of information. It is tedious at most, but not something people will have a hard time learning. Here are a few tips and tricks to make sure that you make the most out of your market research.

Base It All On Your PIPE$

If you are conducting your market research, you must base all your pursuits on your target niche. Your target niche will help make your research easier. It will guide you with what exactly you are looking for as you do your market research. They are the core with which you will base most of your market research activities.

Search Engines

Go to Google, Yahoo, MSN and all those other famous search engines. When people are looking for anything in the Internet, they are surely consulting their favorite search engines to crawl throughout the World Wide Web to get the information they need. And in a way, you use those search engines in a sort of backwards manner. You use to find what consumers want by going to search engines and see what sells in the market, particularly in your target niche.

Website Bigwigs

Ebay is an example. Big websites are frequented by so many Internet users, and most probably your target market. You will find so much information by logging in yourself in these websites and checking out the scene. Sell what sells. See which of the products are making big hits and find something that is related to what you are planning to do.

Concept of Coopetition

This concept is cooperation and competition in action. In the Internet, linking up is the lifeline of your business. So if you find yourself with a lot of competition, be just as happy because it must be really be a good market that many people are competing for that target market.

The concept of coopetition occurs when you make a way to work hand in hand with your competitors without really compromising your income.

Keywords That Sell

Finding keywords that sell has never been easier. You will find websites that offer free service such as overture.com. Keyword research is the way to be able to know what your target niche is looking for when they visit the search engines. 

About the Author

Joel Christopher is a best-selling author, speaker and mentor, known worldwide as The Masterlistbuilder. To find out more on how you can triple your leads, sales and profits. Go to http://www.Masterlistbuilder.com

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