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Situational Analysis

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Digital Marketing - Study Notes:

What is situational analysis?

A situational analysis is a review of activities both competitors as well as various things that are happening in the marketplace, such as trends.

A situational analysis brings a number of benefits:

  • Define your target market and target audience: You can do this in a robust way. Ultimately, what you’re looking for is to try and identify new targets and new audiences that are not currently targeted by competitors.
  • Understand your competitors’ weaknesses and strengths: This helps you to define the digital marketing approach that you then take to find a gap in the marketplace to be able to penetrate in a better way and be more successful than your competitors.
  • Identify opportunities and threats to your offering: Being able to identify these will be critical for you to be able to overcome some of the hurdles and challenges that you may find in your way.

Stages of a competitor analysis

A competitor analysis involves seven key stages.

Identify your current competitors

You might think it's easy to understand who your competitors are. In reality in today’s environment, it’s very difficult. For example, who was to ever think that Vodafone was going to become one of the biggest financial services institutions in Kenya with M-Pesa, for example? So it’s very difficult to identify who your current and future competitors could look like.

There are a number of different techniques that you can use to do this:

  • The first one is by being able to determine who your primary set competitors are.
  • The next thing is to look at who could possibly be your secondary set or even competitor substitutes. If it’s not the product that you are currently offering, what other products could it be? A simplistic example would be if a customer’s not traveling by train, they may take a plane or car so those individuals or those companies operating in that environment actually become your competitors as well.
  • The third layer to think about is who else could potentially move into your space given their core capabilities that they have around? So, for example, organizations may be able to leverage data to be able to start a bank which is what a number of institutions are thinking about doing.

Identify your future competitors

This is in essence that third layer. Who are the key people that could be competing with you in the next five to 10 years? This helps you understand who your current and future competitors could be

Determine competitors' market share

Next, map out what exactly are their market share in that environment. This will give you a good understanding of exactly who are the leaders in that environment which can then help you to identify who are the organizations you need to worry about, who are the organizations you may not need to worry about, but also where can you gain valuable insights about what they’re doing versus what you’re currently doing. It can give you some great benchmarks to work to against as well from a digital perspective.

Identify your competitors

Identify your competitors’ strengths and weaknesses

rsquo; strengths and weaknesses

This will help you to determine where you are better than others and perhaps where you have to position your own strategy.

Now to give you an example, if you look at the insurance space you have some traditional players, such as Direct Line Group or Aviva, versus new age players, such as Hastings Direct in the UK. Now one of Hastings’ major advantages is the fact that they haven’t built up heavy infrastructure – offices, as well as people – and they have a much more digitally-inclined approach. So in essence their cost base is much less than that of Aviva or Direct Line Group. Now one of the big advantages of that is it enables them to be able to offer cheaper pricing.

So from a Direct Line or Aviva perspective, understanding that dynamic enables them to move in a more digitally-agile way which then enables them to shed cost from their business letting them offer similar pricing to their customers, enabling them to retain their customers as well as acquire new ones because they’ve got greater brand equity.

Identify your competitors

Identify your competitors’ opportunities and threats

rsquo; opportunities and threats

This will help you avoid some of the pitfalls that organizations may fall into.

Take the insurance example again where you’ve got price comparison websites Now over the last five to 10 years, they’ve pretty much democratized the insurance sector. Now for example thinking about a world of comparison websites, you know, 2.0 or 3.0, what does that potentially look like? And is that a threat for the key insurance companies to think about when thinking about their strategies?

Identify your competitors

Identify your competitors’ offerings

rsquo; offerings

Think about your current competitors' offerings.

Identify your competitors

Identify your competitors’ strategies

rsquo; strategies

Think about what those strategies could be for the future.

If you’ve understood the holistic seven points around your competitors, you’ll be very well placed to be able to identify, capitalize on opportunities, as well as mitigate the threats that these competitors could do for you at the moment and in the future. Now one of the ways to think about how you gleam this information from competitors as well as consumers is through digital insights.

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Richie Mehta

Ritchie Mehta has had an eight-year corporate career with a number of leading organizations such as HSBC, RBS, and Direct Line Group. He then went on setting up a number of businesses.

Data protection regulations affect almost all aspects of digital marketing. Therefore, DMI has produced a short course on GDPR for all of our students. If you wish to learn more about GDPR, you can do so here:

DMI Short Course: GDPR

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