Situation analysis is an integral part of marketing. It may be considered to be the foundation of any marketing plan because the analysis of any result derived from the situation analysis will determine the direction of the marketing initiative or drive. The situation analysis refers to the combined external and internal factors that are related to marketing decisions. One relationship of situation analysis in marketing is its use in finding out what the company is all about. If a company can accurately define itself and what it stands for, then it has a better chance of devising an effective marketing strategy based on its core values and beliefs.
The first step when identifying the composition of the company is to list the company's goals. It is important to factor in what the company aims to achieve, the culture of the company, the kind of image the company wants to present, and the kinds of products it will offer. This is a way in which situation analysis in marketing can be effective. Another way of using situation analysis in marketing is by identifying the collaborators of the company. Such people include the various suppliers and distributors.
Determination of everything related to the customers is a use of situation analysis in marketing. This particular situation analysis refers to characteristics like the behavior of consumers, number of consumers, identifiable market segments, and the spending habits of consumers. Other aspects include consumer trends, process for distributing goods and services to consumers, and motivational factors that affect the buying of goods and services. This situation analysis will be added to other ones, enabling the organization to prepare a solid marketing plan.
Analyzing competitors is a situational analysis that can be used in making marketing decisions as well. Such an analysis includes considerations of whether the competition is a direct or indirect one, the types of products offered by competitors, the types of business strategies and marketing plans used by competitors, and the way the shares of the competitors are trading on the market. This analysis will separate the strengths and weaknesses of the various competitors with a view to properly addressing them.
Other considerations for in the situational analysis include economic issues like inflation, the business cycle, and also the interest rates. It includes external factors as well like the political climate, government policies, and legislative rules that might affect the company. Technology and its potentials are also explored with a view to finding out how it applies to the company.