Situation analysis

Situation analysis is a marketing term, and involves evaluating the situation and trends in a particular company's market. Situation analysis is often called the "three c's", which refers to the three major elements that must be studied:

• Customers
• companies
• competitors

The number of "c's" is sometimes extended to four, five, or even six, with "Collaboration", "Company", and "Competitive advantage".

Background

The Situation Analysis is a step that all marketing firms must take in order to be successful. It is the second step in conducting a Marketing Plan:

• Introduction
• Situation Analysis
• Objectives
• Budgeting
• Strategy
• Execution
• Evaluation

The Situation Analysis allows a company to understand their own internal and external situation, the customer, the market environment, and the firm’s own capabilities. A SWOT Analysis is a type of situation analysis that examines the Strengths and Weaknesses of a company (it’s internal environment) as well as Opportunities and Threats in the market (in the external environment).

The "5 C Analysis" [1] tends to be the most useful and common approach to conducting a Situation Analysis. This approach is built off the "3 C Analysis", however is more extensive and provides more background and understanding to the situation. In this approach a firm will examine the:

• Company: This includes the product line, product image, production technology, as well as company culture and goals
• Collaborators: Those who help the company develop, produce, or distribute the product.
• Customers: The ideal target segment (researching demographics, geographic location, and psychographics), consumer trends and the characteristics of purchases they make, consumer motivation, as well as market size and growth
• Competitors: Both actual and/or potential, direct and/or indirect. This includes looking into their strengths and weaknesses, market share, products, and product or market positioning
• Climate/Context: Research in regards to the current or future political, economic, social/cultural, technological environments that will ultimately influence the success or failure of the product (PEST Analysis). A thorough historical context can also be useful.

The final written format of the situation analysis is ultimately broken down into different sections regarding each of the different “Cs” [2], and a thorough examination of each of them. It may also include information on the use and cost of different methods of advertising that the company desires to use for the launch of the product.

A situation analysis helps a company determine whether the rewards of a product outweigh the risks, depending on if they are entering it in a new market, developing a brand/product line extension, or creating a completely new product. Ultimately, the purpose of the situation analysis is to identify and define the product position, as well as analyze the environment in which it will be placed in, and will attempt to help the company determine if the product will survive and thrive, if drastic changes must be made for it to be successful, or if any more advancement on the product should be stopped immediately.

See also

• Health situation analysis
• Marketing mix
• SWOT analysis
• Marketing Plan

References

• Business Knowledge Center
• Business-Owner's Toolkit
• Situation Analysis: A Snapshot in Time
• Net MBA "Situation Analysis"
• Planning Skills: A web-based knowledge repository