What Is SWOT Analysis in Marketing?

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A SWOT analysis is a detailed assessment of a company's strengths, weaknesses, opportunities and threats (SWOT), taking into account everything that can potentially affect a company. Most SWOT analyses consider strengths and weaknesses primarily as internal issues and opportunities and threats mostly as external issues. However, strengths and weakness also can stem from external forces. The purpose of a SWOT analysis is to capitalize on strengths, minimize weaknesses and develop strategies to both capitalize on opportunities and thwart any potential threats.

Strengths

When conducting a SWOT analysis, start with an assessment of you core strengths. Examples of strengths can include a strong brand name that is highly recognized and respected among consumers. Other strengths can include plenty of capital, strong market share, stellar customer service and quality ratings, and efficient distribution channels, according to the website Quick MBA.

Weaknesses

Contrapuntal to strengths, weaknesses are factors that can be detrimental to a corporation. Your business might be new to the industry and not have an established brand presence. Additionally, your new entry into the market obviously means you have a low initial market share. Other weaknesses can include a poor reputation, poor quality products, high product costs, limited access to natural resources and even a bad business location.

Opportunities

The next step of the SWOT analysis is to pinpoint opportunities for your business. You might have recently conducted marketing research that indicates consumers use your products for purposes you didn't realize, in addition to the intended purpose. For example, a dish washing detergent also might be effective in removing grease from automobiles and trucks. Other opportunities could be the chance to use new technologies, or the removal of trade barriers in a foreign country that might have previously prevented your entrance into that market.

Threats

The last assessment of a SWOT analysis uncovers various threats to your business. Perhaps a new and large competitor has entered your market. The competitor might be well-established in other markets and have plenty of capital. Additionally, they have a reputation of succeeding in most ventures. Other threats can include shifts in consumer tastes, or an increase in regulations. For example, a soft drink manufacturer can be affected by health-conscious Americans who prefer bottled water. Also, laws to regulate smoking in the workplace and at businesses and public places has drastically affected tobacco manufacturers during the first decade of the 21st century.

Marketing Strategies

Once you have fully analyzed all strengths, weaknesses, opportunities and threats to your business, you can create a matrix with strengths and weaknesses running horizontally on the matrix and opportunities and threats running vertically. Hence, in the upper left quadrant, the opportunities-strengths box would represent opportunities that would be a good fit for your company's strengths. The opportunities-weakness quadrant to the immediate right would indicate opportunities your company can pursue to overcome certain company weaknesses--like raising capital for expansion. The lower left quadrant, or threats-strengths, would include ways that your company strengths can minimize the effects of certain threats. An example would be an increase in marketing, a possible strength, to combat a new competitor's aggressive promotional strategies. Finally, in the threats-opportunities quadrant (lower right), you would develop a marketing strategy to minimize the impact of your company's vulnerability to certain threats.

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