Hello, I’m Mike Berry, and we’re now considering digital planning and we start with situation analysis. Let’s begin at the beginning, which is putting our plan together. So clearly we’re going to need an understanding of the market. We’re going to have a good idea of what we’re trying to do, and some idea at this point of the stages that are required in order to get there. So that’s the beginning and we ask ourselves, how will we know if we’ve been successful? What will success look like? Also, how are we going to fine tune the programme? And particularly importantly, what are we going to test? Because we know we won’t get a 100% right first time.

So let’s start with this situation analysis. The sort of things we need to get our heads around would be customer characteristics, the behaviour of our buyers, which could be B to B or B to C, who are our competitors, and what are they offering? How does that threaten us? How does their positioning compare with ours? Also, our position in the market, the challenges that we face, how big is that market? And of course, we get old fashioned SWOT analysis, strengths, weaknesses, opportunities, and threats.

And the whole idea of the situation analysis is that it’s like an audit. It takes stock of our marketing health. We could call it a launch pad for the marketing plan, encouraging us to reflect as management systematically on the environment that we’re operating in and how well we can respond, because there may be some things that are in the way, things which hold us back, some difficulties which we need to overcome. And it’s good to consider them as early as possible.

The reason for the situation analysis is to know where we stand at the moment, also looking at the opportunities and the threats that we’re up against, and of course deciding how well we can cope with the demands of this environment that the organisation finds itself in. Really only are two sorts of variables that we’re up against. The internal operational variables and then the external stuff. So we would call them the environmental variables, which every organisation is facing because no company operates in a vacuum.

You may be familiar with this one. It’s one of the classic frameworks of the macro environment, and the reason that stood the test of time, I guess there are two reasons, it’s memorable, and B, if you apply the pastel variables, the framework, then we make sure we’ve considered everything. And it may be that not every one of these is a big deal for our company, but at least we considered it. So whatever your business, whatever your organisation, think about the impact of political factors, of economic factors, social and cultural factors, technological, environmental, and legal or legislative factors.

Clearly, it’s going to be some overlap between the P and the L, political and legislative, because in most countries, the law is made by the government. Of course, if you’re into a high-tech business like mobile phones or virtual reality headset, technological is a big deal. If you’re selling toothpaste or you’re a manufacturing company in heavy industry, maybe things are changing a bit less in the technological sense, but you can still have environmental factors. You may be considering your impact on the environment, the waste products you generate. Every company is going to have a different terms so to these pastel factors, but that doesn’t mean we shouldn’t consider them all because we can go through this checklist and decide how much they’re going to affect our own business.

Then we look at the micro environment, and the micro environment is effectively getting a bit closer to home, looking at the variables, which will actually affect us from much closer. So every organisation has got relationships with the various stakeholders, and stakeholders can include customers and potential customers. But also you can see on the chart, employees, governmental organisations, the journalists, politicians, suppliers, in other words, every group with which the organisation has relationships, and these can be two-way relationships. So they send information out and receive information back.

And to some extent, as the author of the book, Luck says that from this diagram is taken, he said, it’s controllable to some degree, but you look at them and you think, “Well, we can’t control them. It’s difficult to control them.” So the key bit there is some degree, but this is the micro environment. If you consider all these factors, these groups impacting your organisation, but also the macro factors that we just looked at under pastel, you’re getting a pretty good idea of the operational environment for your business.

This is another old Chestnut Porter’s five forces and Michael Porter at the Harvard Business School in the 1970s said, first of all, there is a threat of new entrance coming into our business. Then on the right hand side, the threat of buyers, who’ve got bargaining power. On the left-hand side, the competitive force of suppliers who may or may not be there. In other words, they’ve got some clarity of view. If you really, really need them, they can put their prices up depending on how many alternative suppliers you can find.

Then lastly, on the bottom, we’ve got substitute products. In other words, people who are offering something rather similar to your organisation, but effectively replacing it, not with the same product, not with a competitive product, but with a substitute. And an example might be the way that mobile phones have replaced lots of other existing products and technologies, more primitive technologies than smartphones clearly.

And then the final force that Michael Porter identified was good, old, competitive rivalry. Someone offering pretty much what you offer in your marketplace, perhaps at a lower price or perhaps a slightly superior technology. People that think they can do what you’re doing and fancy their chances, and every company is potentially at risk from such a competitor. So that’s, Porter’s five forces. It’s one of those models that stood the test of time. And again, you may consider that not all the forces are active in your situation, but it’s a good exercise to go through them.

At the end of our situation analysis, we will probably do the good old fashioned SWOT analysis. And at this point we’re thinking about what is good, our brand, our people, our customers, et cetera. What should we be concerned about? And these really can be categorised into internal factors, such as strengths and weaknesses, but also the external factors, the opportunities and threats. And I would say it’s a good thing when you’re doing the SWOT analysis about your business to be relatively sensitive, even paranoid. What can happen? Be honest about your business, about what’s good and what could be better.

Learn from the past, but look to the future. And if you are dishonest or if you’re fooling yourself, you literally are only fooling yourself. It’s good to look at the total situation and be as dispassionate as you can about it. So just to summarise, the internal factors would be the strengths and the weaknesses. They’re inherent to your organisation. But of course, every organisation is subject to these external factors, which could be either an opportunity or a threat. And another well-known model is this SWOT analysis.