Porters Five Forces and SWOT by Bobette Kyle

How strong are your Website marketing strategies? Do they move your business toward achieving your objectives or overall goals?

You can increase marketing strategies’ effectiveness by taking into consideration the business environment you operate in – both online and offline. Two approaches to analyzing the business environment are to complete 1) an industry analysis such as Porter’s Five Forces Model * and 2) a situation analysis such as a SWOT analysis.

* Named for creator of the model, Michael Porter, strategy professor at Harvard Business School.

Porter’s Five Forces

A formal industry analysis such as Michael Porter’s Five Forces Model is more in depth than simply looking for trends and general industry information. It can also help you better develop successful marketing strategies.

The analysis can provide insight into both your online and offline competitive environments. In the Five Forces Model, Porter explains that in any industry there are five forces that influence what happens within the industry:

1. Existing companies,
2. potential new companies,
3. substitutes for products offered,
4. the suppliers, and
5. the customers.

These five forces combine to make up the business environment. By studying the structure of and dynamics between these forces, you can discover opportunities for improving upon your marketing strategies. Porter designed his basic model to be applied to an entire industry. The same analytical method, however, could also be used to study a narrower universe, such as online presence within an industry. When developing your Website marketing strategies, for example, you can identify the “forces” as:

Competitors: Those sites that offer the same product, service, or information as your site.

Potential new entrants: Your site-less off-line competitors as well as new companies entering the industry via a Website.

Customers: Visitors and potential visitors to your Website and your competitors’ sites.

Suppliers: Those companies that supply you with the products (or parts if you are a manufacturer) and/or services offered on your site. Other suppliers are the Web hosting, software, and other vendors that supply Web-enabling technology.

Substitutes: Other means and sources for the same products, services, or information as your Website provides.

Using these definitions for the five forces, you can get a clearer picture of the business environment in which your Website competes. Be aware, however, this is not a true Five Forces analysis.

This analysis only borrows Porter’s forces to lend structure. His full analysis goes beyond the information gathering and cursory analysis explained here. By fully utilizing Porter’s strategic methods you can gain an even clearer picture of the industry, resulting in sounder marketing strategies. To fully appreciate Porter’s model, study his two classics, Competitive Strategy and Competitive Advantage.

SWOT Analysis

In a SWOT analysis you identify strengths, weaknesses, market opportunities for your company, and threats to your business. One way to use the analysis it to then develop marketing strategies that will minimize the affect of weaknesses on your business while maximizing your strengths. Ideally, you will match your strengths against market opportunities that result from your competitors’ weaknesses or voids.

When completing a SWOT analysis, you may find it helpful to create a table identifying observations relative to each SWOT component for both your company’s site and your competitors’ sites.

In the table, note Internet related activities such as trade organization participation, search engine inclusion, and outside links to the sites. This way, you are better able to spot your company’s strengths and weaknesses as well as opportunities and threats to your business.

Often, marketing strategy opportunities arise as a result of a changing business environment. As you study your competitors, be on the lookout for these opportunities. Some situations that could represent opportunities for a company include, but are certainly not limited to:

  • New technology is created, but the competition has been unable to deliver acceptable customer service.
  • A customer segment is becoming more predominant, but their specific needs are not being fully met by your competitors.
  • A customer, competitor, or supplier goes out of business or merges with another company.

Once you develop your marketing strategies, you are more able to complete a strategy based marketing plan that takes into account the overall business environment.

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