eMarketing Situation Analysis

Where are we now? (Inetnal v External Perspectives

The situation analysis for eMarketing bridges the internal audit and competitor research. It answers the question where are we now in terms of our eMarketing (internal v external perspective)? The analysis literally considers your eMarketing situation by considering the fit between internal and external factors. There are similarities with traditional concepts and techniques, but you need to focus upon digital commerce. Here we consider the 5 S’s of Internet Marketing (Smith and Chaffey 2006), the Customer Life Cycle (CLC), and the application of SWOT analysis.

The 5 Ss of Internet Marketing.

Smith and Chaffey (2006) distil the situation of a business using Internet as part of its business under the following 5S’s:

  • Sell – Grow sales and attract business using digital technologies.
  • Serve – Add value through the benefits of the Internet such as speed.
  • Speak – Get closer to customers by making your business available to them at home, work or on the go with mobile technologies.
  • Save – Reduce costs by using information technologies to make your business more efficient.
  • Sizzle – Extend the online brand (or create a new one) – remember sell the sizzle not the sausage i.e. the benefits, aesthetics or value of a product or service rather than its features.

The Customer Life Cycle (CLC).

The Customer Life Cycle (CLC) is a tool that considers the creation and delivery of lifetime value to customers i.e. CLC looks at products and services that customers need throughout their lives. It is market oriented rather than product oriented (e.g. PLC). Key stages of the customer relationship are considered.

SWOT analysis – ranked and weighted.

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats.

Some of the problems that you may encounter with SWOT are as a result of one of its key benefits i.e. its flexibility. Since SWOT analysis can be used in a variety of scenarios, it has to be flexible. To overcome these issues, one should employ a Power Swot.

SWOT Analysis

Strengths, Weaknesses, Opportunities and Threats (SWOT).

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.

In SWOT, strengths and weaknesses are internal factors.

For example:

A strength could be:

  • Customer Relationship Management (CRM) and Information Technology (IT) support Amazon’s business strategy.
  • SWOT Analysis Amazon

    Amazon is a profitable organization. In 2005 profits for the three months to June dipped 32% to $52m (£29.9m) from $76m in the same period in 2004. Sales jumped 26% to $1.75bn. Until recent years Amazon was experiencing large losses, due to its huge initial set up costs. The recent dip is due to promotions that have offered reduced delivery costs to consumers. This SWOT analysis is about Amazon.

    Strengths.

    • Amazon is a profitable organization. In 2005 profits for the three months to June dipped 32% to $52m (£29.9m) from $76m in the same period in 2004. Sales jumped 26% to $1.75bn. Until recent years Amazon was experiencing large losses, due to its huge initial set up costs. The recent dip is due to promotions that have offered reduced delivery costs to consumers.
    • Customer Relationship Management (CRM) and Information Technology (IT) support Amazon’s business strategy. The company carefully records data on customer buyer behaviour. This enables them to offer to an individual specific items, or bundles of items, based upon preferences demonstrated through purchases or items visited.
    • Amazon is a huge global brand. It is recognisable for two main reasons. It was one of the original dotcoms, and over the last decade it has developed a customer base of around 30 million people. It was an early exploiter of online technologies for e-commerce, which made it one of the first online retailers. It has built on nits early successes with books, and now has product categories that include electronics, toys and games, DIY and more.

    Weaknesses.

    • As Amazon adds new categories to its business, it risks damaging its brand. Amazon is the number one retailer for books. Toy-R-Us is the number one retailers for toys and games. Imagine if Toys-R-Us began to sell books. This would confuse its consumers and endanger its brands. In the same way, many of the new categories, for example automotive, may prove to be too confusing for customers.
    • The company may at some point need to reconsider its strategy of offering free shipping to customers. It is a fair strategy since one could visit a more local retailer, and pay no costs. However, it is rumoured that shipping costs could be up to $500m, and such a high figure would undoubtedly erode profits.

    Opportunities.

    • The company is now increasingly cashing in on its credentials as an online retail pioneer by selling its expertise to major store groups. For example, British retailer Marks and Spencer announced a joint venture with Amazon to sell its products and service online. Other recent collaborations have been with Target, Toys-R-Us and the NBA. Amazon’s new Luxembourg-based division aims to provide tailored services to retailers as a technology service provider in Europe.
    • There are also opportunities for Amazon to build collaborations with the public sector. For example the company announced a deal with the British Library, London, in 2004. The benefit is that customers c an search for rare or antique books. The library’s catalogue of published works is now on the Amazon website, meaning it has details of more than 2.5m books on the site.
    • In 2004 Amazon moved into the Chinese market, by buying china’s biggest online retailer, Joyo.com . The deal was reported to be worth around $75m (£40m). Joyo.com has many similarities to its new owner, in that it retails books, movies, toys, and music at discounted prices.

    Threats

    • All successful Internet businesses attract competition. Since Amazon sells the same or similar products as high street retailers and other online businesses, it may become more and more difficult to differentiate the brand from its competitors. Amazon does have it s brand. It also has a huge range of products. Otherwise, price competition could damage the business.
    • International competitors may also intrude upon Amazon as it expands. Those domestic (US-based) rivals unable to compete with Amazon in the US, may entrench overseas and compete with them on foreign fronts. Joint ventures, strategic alliances and mergers could see Amazon losing its top position in some markets.
    • The products that Amazon sells tend to be bought as gifts, especially at Christmas. This means that there is an element of seasonality to the business. However, by trading in overseas markets in different cultures such seasonality may not be enduring.
  • Toys “R” Us has in excess of 1500 superstores in the United States and Worldwide.

SWOT Analysis Toys “R” Us

Strengths.

  • Toys “R” Us has in excess of 1500 superstores in the United States and Worldwide. It also owns the baby brand, Babies R Us which adds another 200 + stores. Toys “R” Us also markets successfully on the Web (in collaboration with Amazon.com). It has a huge distribution network that benefits from advanced logistical systems. Having so much shelf space means that the company has a strong bargaining position when it comes to buying prices from manufacturers. It turned over more than $11 billion in 2005.
  • The company sells many different product ranges. There are benefits and disadvantages to this. However, a key strength is that the company has a diversified portfolio of products, which means that while some ranges are underperforming, others are out performing. As long as technology allows them to spot successes and then to focus upon them, they have a competitive strength.

Weaknesses.

  • These days, Toys “R” Us has no single and sustainable competitive advantage, other than brand. In the US, its traditional stronghold, the company has lost its number one positions as toy retailer to Wal-Mart. Being large may not be enough, when customers can go to another large retailer and buy the same and similar goods, sometimes getting a better deal.
  • As with all retailers in Western society, Toys “R” Us is heavily dependent upon successful sales during the final quarter of the year. They need to make profit from Christmas. Retail is notoriously seasonal and Toys “R” Us is no different to other retailers. In fact it could be argued that toys are a key Christmas present product, so are even more likely to be dependent upon seasonal sales.

Opportunities.

  • There are opportunities for joint ventures and strategic alliances. Toys “R” Us works closely with Amazon.com and its baby products category. This not only plays to the strengths of both companies, but also provides opportunities. Amazon is strong at the online part of the business, creating the web site, warehousing products and delivering them to customers. Toys “R” Us will use its buying power, but ultimately carries the inventory risk (i.e. if it doesn’t sell, its money is tied up in physical stock).
  • Toys “R” Us is a good neighbour. For example, in 2005 it went out of its way to help the Louisiana victims of hurricane Katrina. Toys “R” Us donated six trucks full of toys and baby supplies including diapers, wipes, and formula, as well as batteries and water to multiple locations that were housing evacuees. Babies “R” Us has also donated over 17 pallets of baby and children’s clothing to the national charity Kids In Distressed Situations (KIDS). Such associations will help to sustain its brand with key consumers.
  • As with many of the brands considered by MarektingTeacher.com’s FREE SWOT analyses, the International market is very important to Toys “R” Us. The citizens of emerging nations such as China and India are getting wealthier and better educated. Consumers have more disposable income and leisure time, and both of these could increase over coming years. The types of goods and services retailed by the company could be marketed more aggressively overseas. Toys “R” Us could look out for strategic partners, or indeed go it alone.
  • Brand is all-important. Apple is one of the most established and healthy IT brands in the World.

SWOT Analysis Apple

Strengths.

  • Apple is a very successful company. Sales of its iPod music player had increased its second quarter profits to $320 (June 2005). The favourable brand perception had also increased sales of Macintosh computers. So iPod gives the company access to a whole new series of segments that buy into other parts of the Apple brand. Sales of its notebooks products is also very strong, and represents a huge contribution to income for Apple.
  • Brand is all-important. Apple is one of the most established and healthy IT brands in the World, and has a very loyal set of enthusiastic customers that advocate the brand. Such a powerful loyalty means that Ample not only recruits new customers, it retains them i.e. they come back for more products and services from Apple, and the company also has the opportunity to extend new products to them, for example the iPod.

Weaknesses.

  • It is reported that the Apple iPod Nano may have a faulty screen. The company has commented that a batch of its product has screens that break under impact, and the company is replacing all faulty items. This is in addition to problems with early iPods that had faulty batteries, whereby the company offered customers free battery cases.
  • There is pressure on Apple to increase the price of its music download file, from the music industry itself. Many of these companies make more money from iTunes (i.e. downloadable music files) than from their original CD sales. Apple has sold about 22 million iPod digital music players and more than 500 million songs though its iTunes music store. It accounts for 82% of all legally downloaded music in the US. The company is resolute, but if it gives in to the music producers, it may be perceived as a commercial weakness.
  • Early in 2005 Apple announced that it was to end its long-standing relationship with IBM as a chip supplier, and that it was about to switch to Intel. Some industry specialists commented that the swap could confuse Apple’s consumers.
  • Wal-Mart has grown substantially over recent years, and has experienced global expansion (for example its purchase of the United Kingdom based retailer ASDA).

WOT Analysis Wal-Mart

Strengths

  • Wal-Mart is a powerful retail brand. It has a reputation for value for money, convenience and a wide range of products all in one store.
  • Wal-Mart has grown substantially over recent years, and has experienced global expansion (for example its purchase of the United Kingdom based retailer ASDA).
  • The company has a core competence involving its use of information technology to support its international logistics system. For example, it can see how individual products are performing country-wide, store-by-store at a glance. IT also supports Wal-Mart’s efficient procurement.
  • A focused strategy is in place for human resource management and development. People are key to Wal-Mart’s business and it invests time and money in training people, and retaining a developing them.

Weaknesses

  • Wal-Mart is the World’s largest grocery retailer and control of its empire, despite its IT advantages, could leave it weak in some areas due to the huge span of control.
  • Since Wal-Mart sell products across many sectors (such as clothing, food, or stationary), it may not have the flexibility of some of its more focused competitors.
  • The company is global, but has has a presence in relatively few countries Worldwide.

Opportunities

  • To take over, merge with, or form strategic alliances with other global retailers, focusing on specific markets such as Europe or the Greater China Region.
  • The stores are currently only trade in a relatively small number of countries. Therefore there are tremendous opportunities for future business in expanding consumer markets, such as China and India.
  • New locations and store types offer Wal-Mart opportunities to exploit market development. They diversified from large super centres, to local and mall-based sites.
  • Opportunities exist for Wal-Mart to continue with its current strategy of large, super centres.

Threats

  • Being number one means that you are the target of competition, locally and globally.
  • Being a global retailer means that you are exposed to political problems in the countries that you operate in.
  • The cost of producing many consumer products tends to have fallen because of lower manufacturing costs. Manufacturing cost have fallen due to outsourcing to low-cost regions of the World. This has lead to price competition, resulting in price deflation in some ranges. Intense price competition is a threat.

‘Wal-Mart Stores, Inc. is the world’s largest retailer, with $256.3 billion in sales in the fiscal year ending Jan. 31, 2004. The company employs 1.6 million associates worldwide through more than 3,600 facilities in the United States and more than 1,570 units.

  • Ben and Jerry’s is a prestigious, established, successful, global operation, with sales in USA, Europe and Asia, which is synonymous with social responsibility and environmentalism.

Ben and Jerry’s SWOT

Strengths

  • Prestigious, established, successful, global operation, with sales in USA, Europe and Asia, which is synonymous with social responsibility and environmentalism. For example, its products are packed in unbleached cardboard containers.
  • Ben & Jerry’s also donates a minimum of $1.1 million of pretax profits to philanthropic causes yearly. The company sponsors PartnerShops, which are Ben & Jerry outlets independently owned and operated by nonprofit organizations such as Goodwill Industries. The company is also involved in other good causes, including global warming, gun control and saving family farms.
  • The company sells its colorfully named ice cream, ice-cream novelties, and frozen yogurt under brand names such as Chunky Monkey, Phish Food, and Cherry Garcia. It also franchises some 750 Ben & Jerry’s Scoop Shops worldwide.
  • Ben and Jerry’s were bought by consumer products manufacturer Unilever in 2000, but were still able to retain their social responsibility platform and kept both co-founders closely involved with product development. Their brands complement Unilever’s existing ice cream brands.
  • In 2009 Ben and Jerry’s Chunky Monkey ice cream flavor was named in a top ten list of the best ice cream in London.
  • In 2007 Ben and Jerry’s co-founders, Ben Cohen and Jerry Greenfield were asked to join Lance Armstrong in speaking about clean technology and alternative energy at the Ernst and Young national entrepreneur of the year awards.
  • In 2008, their market share was second only Haagen-Dazs who had a 44% market share while Ben and Jerry’s had 36%. This was achieved in spite of a premium price point. The premium price of the product was supported by a high quality image, and high quality products.

Weaknesses

  • In 2006, former CFO Stuart Wiles was convicted of embezzling some $300,000 from the company during his tenure at Ben & Jerry’s, which ran from 2000 to 2004.
  • In 2006 they had to stop using Michael Foods as their egg supplier, due to bad PR from the Humane Society, which alleged that Michel Foods treated chickens inhumanely.
  • They achieved success despite several corporate weaknesses. The most obvious was a lack of professionalism in its management, and no clear mission statement (which they have amended). They reinvested huge amounts of property and equipment in 1994 increasing their long-term debts by almost 45% in 1993. They increased marketing and selling expenses and administrative infrastructure, which increased 28% to $36.3 million in 1994 from $28.3 million in 1993 and increased as a percentage of net sales to 24.4% in 1994 from 20.2% in 1993. They took out a vast amount of capital lease in their aim to automate their production to keep up with the intense competition.
  • Their clear focus on multiple social responsibility issues could hurt the company by shifting the focus away from important business matters, and also add unnecessary costs.
  • They need more experienced management to fuel aggressive growth in a downturned economy and change flat sales in their premium product lines.

Opportunities

  • In today’s health conscious societies the introduction of more fat-free and healthy alternative ice cream and frozen yogurt products.
  • Provide allergen free food items, such as gluten free and peanut free.
  • In 2009 Ben & Jerry’s announced plans to roll out the country’s first HFC-free freezers; freezers that would be sold to grocery stores and would not emit harmful chemicals into the atmosphere.
  • In 2008 they acquired Best foods and Slim-fast which will allow them to enter a new industry of weight loss products. In turn they can now expand into new geographic markets-more countries, like Europe, where the weight loss/management trend is taking hold.
  • They could expand their existing product lines to compete with the ‘private-in house brands’ offered by supermarkets, and in developing countries.
  • Selling Ben and Jerry’s premium ice cream in South America (which is an emerging market that has yet to be capitalized upon). There is a growing demand for premium ice cream in new markets like Asia.

Threats

  • Much of their target market is constantly changing its product preferences (desiring to prevent diabetes, obesity etc.). That, coupled with a decrease in household sizes and discretionary income, has left sales flat in recent years.
  • Consumers are concerned about fattening dessert products. Especially Ben and Jerry’s target market, which are accustomed to reading nutrition labels.
  • Any contamination of the food supply, especially e-coli.
  • Major competitors, like Nestle (Pillsbury), Kraft Foods, Dunkin Donuts, and Dean Foods. They also have competition from global food companies with similar products and any grocery store label products. Much of their competition seems to be merging together, in order to remain marketable in this tough economy.
  • Experts say that animal feed prices are rising, partly because biofuel crops are replacing cow fodder. In turn, the high priced animal feed pushes up the cost of milk. Prices of all milk products are rising worldwide, due to what some call a “perfect storm” of low supply and high demand. There is a distinct possibility that their may not be enough milk to meet demand, and that there could be a global milk shortage.
  • Agricultural economists say today’s milk shortage is basically a case of low supply and high demand worldwide. Supply is down for many reasons. A bad drought in Australia dried up the grass that the country’s cows eat. New export taxes were added on Argentina’s milk in an attempt to keep the country’s food prices under control. Also, European farmers can’t significantly increase production until a quota system is phased out eight years from now. The U.S. and Europe always used to have spare dairy products to sell cheaply around the globe, but that’s no longer the case, says market expert Erhard Richarts.
  • Skim Milk powder (which is easier to transport than fresh milk) is used in a wide range of foodstuffs, and in 2007 its price shot up to record levels worldwide – almost twice as high as the year before. Then retail prices went up, a butter shortage, cheese prices went up, and then wholesale prices went up, and there doesn’t seem to be an end to it.

Back in ’66, in a school gym class, Ben Cohen and Jerry Greenfield found they hated running but loved food. Years later in ’78, Ben had been fired from a series of jobs while Jerry had failed for the second time to get into medical school.

  • Stakeholders in Bharti Airtel include Sony-Ericsson, Nokia – and Sing Tel, with whom they hold a strategic alliance.

SWOT Analysis Bharti Airtel

Strengths

  • Bharti Airtel has more than 65 million customers (July 2008). It is the largest cellular provider in India, and also supplies broadband and telephone services – as well as many other telecommunications services to both domestic and corporate customers.
  • Other stakeholders in Bharti Airtel include Sony-Ericsson, Nokia – and Sing Tel, with whom they hold a strategic alliance. This means that the business has access to knowledge and technology from other parts of the telecommunications world.
  • The company has covered the entire Indian nation with its network. This has underpinned its large and rising customer base.

Weaknesses

  • An often cited original weakness is that when the business was started by Sunil Bharti Mittal over 15 years ago, the business has little knowledge and experience of how a cellular telephone system actually worked. So the start-up business had to outsource to industry experts in the field.
  • Until recently Airtel did not own its own towers, which was a particular strength of some of its competitors such as Hutchison Essar. Towers are important if your company wishes to provide wide coverage nationally.
  • The fact that the Airtel has not pulled off a deal with South Africa’s MTN could signal the lack of any real emerging market investment opportunity for the business once the Indian market has become mature.

Opportunities

  • The company possesses a customized version of the Google search engine which will enhance broadband services to customers. The tie-up with Google can only enhance the Airtel brand, and also provides advertising opportunities in Indian for Google.
  • Global telecommunications and new technology brands see Airtel as a key strategic player in the Indian market. The new iPhone will be launched in India via an Airtel distributorship. Another strategic partnership is held with BlackBerry Wireless Solutions.
  • Despite being forced to outsource much of its technical operations in the early days, this allowed Airtel to work from its own blank sheet of paper, and to question industry approaches and practices – for example replacing the Revenue-Per-Customer model with a Revenue-Per-Minute model which is better suited to India, as the company moved into small and remote villages and towns.
  • The company is investing in its operation in 120,000 to 160,000 small villages every year. It sees that less well-off consumers may only be able to afford a few tens of Rupees per call, and also so that the business benefits are scalable – using its ‘Matchbox’ strategy.
  • Bharti Airtel is embarking on another joint venture with Vodafone Essar and Idea Cellular to create a new independent tower company called Indus Towers. This new business will control more than 60% of India’s network towers. IPTV is another potential new service that could underpin the company’s long-term strategy.

Threats

  • Airtel and Vodafone seem to be having an on/off relationship. Vodafone which owned a 5.6% stake in the Airtel business sold it back to Airtel, and instead invested in its rival Hutchison Essar. Knowledge and technology previously available to Airtel now moves into the hands of one of its competitors.
  • The quickly changing pace of the global telecommunications industry could tempt Airtel to go along the acquisition trail which may make it vulnerable if the world goes into recession. Perhaps this was an impact upon the decision not to proceed with talks about the potential purchase of South Africa’s MTN in May 2008. This opened the door for talks between Reliance Communication’s Anil Ambani and MTN, allowing a competing Inidan industrialist to invest in the new emerging African telecommunications market.
  • Bharti Airtel could also be the target for the takeover vision of other global telecommunications players that wish to move into the Indian market.

Airtel comes to you from Bharti Airtel Limited, India’s largest integrated and the first private telecom services provider with a footprint in all the 23 telecom circles. Bharti Airtel since its inception has been at the forefront of technology and has steered the course of the telecom sector in the country with its world class products and services. The businesses at Bharti Airtel have been structured into three individual strategic business units (SBU’s) – Mobile Services, Airtel Telemedia Services & Enterprise Services.

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