SWOT Analysis or the TOWS Matrix is a strategic marketing tool designed to evaluate the Strengths, Weaknesses, Opportunities and Threats (SWOT) of a business plan. Albert Humphrey, a research project leader at Stanford University developed the technique in the 1960’s to monitor the internal and external marketing environment of companies. This form of analysis is particularly useful for identifying ways in which to develop a company’s marketing efforts and categorize their ideas.
How to Use SWOT Analysis
The way to begin a SWOT analysis is to determine an objective. This information can then be included in the strategic mapping of a marketing plan. It can determine the strengths and weaknesses of an organization by attributing the company’s traits that will lead to the objective. It will also examine external conditions that may help determine opportunities or threats to the desired goal. Once these have been identified, steps can be taken to achieve more return on investment and improve sales.
Internal and External Factors that Affect SWOT Analysis
The internal and external factors affecting a business are the key points in a SWOT analysis. These internal factors may include the 4 P’s of marketing: Product, Price, Place and Promotion. They may also include information on the financial and manufacturing capabilities of the company, or the company personnel. External factors could include technological changes, potential legislation, socio-cultural changes, macroeconomic matters or other possible conditions.
Why Not to Rely Solely on SWOT Analysis
As with any other marketing tool, it is wise not to rely solely on a SWOT analysis to develop a marketing plan. This method tends to allow businesses to create a list of information rather than using that information to form a comprehensive overview of the company objectives. It is an outline rather than an actual plan of action and does not prioritize the data. Marketers should remember to employ a variety of techniques to get a complete picture of the research. It can be used effectively in conjunction with other marketing analysis plans and development.
Problems to Avoid in SWOT Analysis
As stated before, it is crucial to have a business objective in mind before beginning a SWOT analysis. These are descriptions of conditions rather than actual strategies. A marketing strategy on the other hand should be built on this information. Businesses should also include details on each strength, weakness, opportunity and threat with evidence and data to back up the factors. A general overview of the material will be too vague and open to interpretation rather than actual fact.
When building a detailed profile of the market, SWOT analysis can help to pinpoint vital information. Cost structure, profits, resources, positioning and product differentiation can all be reviewed. It can be used in conjunction with other market research to provide a comprehensive view of the market and any competition. A SWOT analysis should be regularly reviewed as well to continually identify changes in performance and new risks or opportunities that may become available.