How to make SWOT analysis better and segment markets and customers much more effectively

This outtake is from an hour of discussion recorded exclusively for our Pivotal Marketer Community on Facebook sees Angela Hatton, marketing consultant, trainer and published author and MMC’s Rene Power discussing The Product Manager’s Toolkit, how to produce effective SWOT analysis and segmentation for competitive advantage.

It’s the fourth part in a series of serialisations on marketing management, be sure to check all new posts as they publish (or see the recommended reading below).

Rene Power:

So you were encouraged to write a book last year, The Product Manager’s Toolkit. It’s not just for product managers. It’s for marketers as well.

Angela Hatton:

Yeah, it is.

Rene Power:

So what drove that and what sort of things are you talking about in there?

Angela Hatton:

Well the lady that I worked with on and off for a long time and she picked up a lot of my clients when I left, bullied me into it.
In fairness, I’d had a toolkit of analysis tools that I had generated as a big handout that I used to use with students doing the (CIM) planning and control papers, a diploma and case studies and all those kind of things.

And always people that had had it, had always come back and said how helpful it was and how useful it was.

And Louisa, who is my colleague and did the book with me, she’d found the same thing and just decided we needed to smarten it up and actually make it more accessible.

And I think the thing for me is just always making sure that market… again, strategic marketing… is soundly based. It’s science not art. It’s not the creative stuff that really makes a difference in the business. It’s the analysis that helps you understand your offer, what the customers want, the competitors and being able to do something with that.

And I’m also very aware and was becoming more and more aware in the last decade, I suppose, of work about how much data people were being swamped with.

But they weren’t turning it into information and intelligence.

That’s the job of those tools. They take data and they help you turn it into information which you can then use with insight because you know the industry and the sector and so on.

And it’s that interpretation bit that’s so important, which is really what we’re saying about competitor watching and noticing the ads for the customer service job. That’s a piece of data. If you then start to recognise that that company is also saying, they’re trying to expand and grow their share of market, we can now start to use that as information with insight.

Rene Power:

Right. It’s really interesting. And yes, modelling that forward and looking at taking in all the different data sources and all the different things that, particularly when you’re looking at competitors, what they’re doing in other countries, other markets, what products they’re talking about, what current themes are in there, and their PR. It all plays a part.

Angela Hatton:

Yes it does.

Rene Power:

It’s important to have toolkits that help you think critically but also act consistently. And I think the consistency thing sometimes falls by the wayside as well because if you don’t have a plan, it’s very difficult to be consistent and creative, isn’t it?

If you’ve not got any founding principles that sort of drive everything. And we talk a lot about that in things like content these days. But that still has to come from somewhere. There still has to be something that kind of drives all of that.
So the heart of it is a strategic plan that’s operating like a toolkit.

Angela Hatton:

Breaking down SWOT to make it more effective

You mentioned Mark Ritson earlier on and I know one of the things that he’s been talking about recently are things like SWOT. And I think there’s a danger that people have interpreted some of what he said as “Therefore the tools don’t work,” kind of thing.

I’ve always, always, literally for decades, I have always said that people should be licenced to use SWOT because it is the most dangerous of the management tools because people think they’ve done analysis when they’ve done a SWOT. Four boxes, strengths, weaknesses…

Rene Power:

Yeah, yeah.

Angela Hatton:

And what happens of course is someone sits down and says, “Oh, we’re going to do some planning. We better do a SWOT.” And so literally someone stands up with a marker pen, kind of thing and does the four boxes. And of course that, if it’s anything, is data. It’s certainly not information.

Rene Power:

It’s only what they think they know.

Angela Hatton:

And it is. Yes that’s right.

Rene Power:

And I took the same point, when I saw Mark’s 10 marketing, biggest, whatever language he used, and he was basically saying models and misconceptions and myths and things like that. And yeah, he was right to put SWOT in there because as it stands on its own, four boxes, it’s very subjective.

Angela Hatton:

It’s very subjective, yeah. And misleading potentially.

And partly because it kids people that they have done the analysis.

So there’s a number of things about SWOT. I mean SWOTS should be done at the end of the analysis stage, not the beginning. It’s not instead of.

It’s a way of pulling it together, summarising it and moving it forward.

We talk about a nine box, strengths and weaknesses grid where the middle column, if you like, is “we’re as good as the competition”, competitive parity. Strengths, we’re better than the competition and weaknesses, we’re worse than the competition. And then down the other axis it’s how important is that to the customer.

So we don’t waste our time worrying about our price being high compared with the competition, if it’s unimportant to that segment of customers.

So we’ve got the two things. We’ve got competition, customers and us if you like. And those are the three dimensions that need to be analysed and understood. And similarly the opportunities and threats thing.
The danger of a SWOT normally is when people fill the opportunities and threats bit in, they’re telling you what’s happening now in the environment.

But of course, we’re planning for the next three, four, five years. So it’s the, “What’s going to happen?”

There’s no point telling us that COVID’s going to turn up last year. It’s too bloody late. We’ve either dealt with it, as it were, effectively. But it’s going to restrict people’s international travel in the next four years. Now well maybe that’s important to us.

[Also read Why and how the SWOT analysis is still an essential marketing effectiveness tool for modern marketers]

Rene Power:

Planning for and predicting the future

And I think that is, and as you alluded to earlier (see previous posts), thinking about the things that might not even be an issue now but they might come along in two, or three, or four years time.

The sorts of things that people like Elon Musk and people we haven’t even heard of yet, are working on. We’ve got cars being phased out by 2030.

The impact that’s going to have on the grid, for a start, infrastructure. But everybody’s going to need chargers on their drives. The cars and the batteries are going to need to have to run a lot longer than they do right now.

There’s a massive education piece and a real opportunity for manufacturing there and that’s just one example but that’s something that’s going to completely change the car industry.

And it’s only nine… Well probably eight, eight and half years away and I just don’t see them at all preparing for that.

Angela Hatton:

No, no.

Rene Power:

And that’s a classic case. Also there’s the things from left field, like Netflix and things like that. They didn’t just do for Blockbuster but they did for bowling alleys, DVD sales, restaurants, date night.
Who goes out for date night now? They just get a bottle of wine and a takeaway and sling Netflix on.

So the threats thing, they’re further and wider and harder to ascertain.

Segmenting for competitive advantage

Angela Hatton:

I think that’s right. And I think one of my other kinds of angst, if you like, in terms of people using the tools effectively and the analysis properly… And the analysis is the prep. It’s the foundation. It takes a lot of work but then your plan will be built on solid foundations and you’ll know where you are.

But we’ve tended to work it too macro a level. So we talk about doing analysis even at market level. And of course, the differences in customer demand and customer needs and behaviour is at segment level, not market level.

And if the segmentation is not right, if it does not deliver, clusters of customers with a similar need and behaviour in the same market space, then all the marketing in the world isn’t going to make any difference. You’re not really going to move that sales dial.

And the thing that the COVID stuff and the changes you’re talking about, kind of make you realise is that those segments are much more moveable than perhaps they used to be.

And people switch from one to another. You can see people who’ve been long time commuters to the office suddenly becoming homeworkers and staying that way.

So people are switching all the time in terms of which segment they’re in.

So the work on segmentation and understanding that a market is made up of people that have the same problem – but a segment of people whose needs and behaviour in solving that problem are similar and different from everybody else.

Now that’s a really interesting test for everyone that’s listening to this, everyone doing the qualification with you guys, can ask for themselves, because in my experience very, very few organisations have got their segmentation right.

And that means that if you can get it right, you’ve got a really big opportunity to win competitive advantage.

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