How Companies Miss Opportunities to Innovate their Marketing When Doing a Situational Analysis

Strategic planning, which usually includes developing a situational analysis e.g. Porter’s Five Forces, SWOT, 5C Analysis, etc. to help companies decide where the best opportunities are in terms of customers, products and markets can be used to identify opportunities for marketing innovation. But companies often miss this opportunity. Here we will look at five common mistakes to avoid when doing a situation analysis if you are looking for opportunities to innovate your marketing.

When developing the strategic plan, a company will try to determine if the best opportunity for growth is in existing markets with existing products, new markets with existing products, new products in existing markets or new products in new markets. However, instead of just looking at new or existing products or markets, the opportunity exists to use the situational analysis to determine if there is an opportunity to market, sell and service customers in a new way.

A situational analysis may provide ideas for where to obtain new data for “Big Data” applications and advance your marketing science efforts, and it also may indicate where potential marketing technology and engineering opportunities exist. Most companies will miss the opportunity (ies) to innovate their marketing. Here are the five most common mistakes made when conducting a situational analysis that leads to missed marketing innovation opportunities.

Underestimating the Power of New Platforms

When IT departments shifted to a client-server model, few saw the potential applications for marketing. Many missed the potential re-engineering processes had on all company functions including marketing.  The companies that did realize the potential developed everything from new ways to service customers better to ways to get products to market faster, e.g. time based competition. The same was true with ERP systems. The Internet was not thought of as a new platform, but largely dismissed as a way to sell consumer goods such as “books” (Amazon) and used items (eBay) online. Cloud computing was thought of as an infrastructure play for small companies who could now get access to computing power they could not normally afford, or a way for larger companies to get computing power on an as needed basis. This discussion was often taking place among IT professionals debating the pros and cons, with no one from marketing in the room, thinking about how this could change how we compete and go to market. Someone, somewhere is making a similar mistake in terms of underestimating how the Internet of Things (IOT) will disrupt business.

Ask yourself, how could or would new infrastructure change the playing field? Remember, technology creates its own demand and if you don’t find an application for the new infrastructure, someone else, potentially a competitor will. Monitor to see what potential applications are being explored with the new technology.

Underestimating New Product Developments that Incorporate Digital

Companies are most likely to underestimate new product developments that combine the physical with the digital. We are used to side by side product comparisons. However, when digital technology is added to what is thought of as an analog product, it is hard to compare and thus the significance is often underestimated. Wearable computing such as the Nike + Fuel band or Google Glasses are current examples. But what is the potential of a pocketbook or yoga pants that incorporates digital technology?  As such, these developments are most likely to be underestimated.

In the past, there were clear distinctions between the product and the product intangibles or the product and the service. Companies thought of moving from providing a product to providing a service based on that product as a strategic forward integration move. Now developing a digital service to complement the product may be the next logical step and doesn’t cost as much in a virtual world as a physical one. Ask yourself, does this new digital development open up a new service opportunity for us? Does it provide an opportunity to enhance our customer’s experience?

Underestimating New Entrants and Experiments 

When conducting a situational analysis, there is a good chance you will come across a company doing some interesting things/experiments. These companies are easy to write off because they are small, unknown, under-capitalized, etc., and the idea might be thought of as interesting, but dismissed because there is not much of a known market for it.  All of those factors can change quickly. Small companies doing interesting things can find capital, or capital will find them. Even if they are not the ones to become a potential threat, if the idea is good, someone else may “adopt” and run with it. Market sizes for new to the world products are often underestimated. New entrants seem to come “out of nowhere,” when in fact they were just overlooked. There is a long list of new entrants that were overlooked, to the incumbents peril e.g. Blockbuster and Netflix, Time Warner and AOL, eTrade and Merrill Lynch.  Ask yourself, what would happen if a seemingly innocuous company were to get capital, scale and strong leadership? Would we still dismiss them? 

Underestimating Changes in Customer Behavior

With the Internet, it was thought there would be a “digital divide” between those who had access to the Internet and those that didn’t.  At first it was not believed seniors would be active users of the Internet. However, almost all of these issues have gone away as consumer’s behavior has changed.  We discussed how changing consumer behavior creates new opportunities in a prior post entitled, “How to Identify Marketing Innovation Opportunities Based on Changing Changing Consumer Behavior.”  We are mostly likely to underestimate changing consumer behavior because we believe past behavior is a good predictor of future behavior.  In other words we look at changing consumer behavior as being linear, when it is often non-linear.

Take the history of counting, using fingers, then stones or shells. It is thought we used the technique for making tallies in wood, stone or bone for 40,000 years.  What has changed is technology is changing faster, so we move from counting boards such as an abacus to adding machines to slide rulers to calculators to Excel.  These products follow typical adoption curves and changing behavior is hard to predict as we never know when we will jump to the next curve as opposed to continuing on the existing one. Ask yourself, what are the “early adopters” using to solve the problem that our products solve? What new ways or solutions are companies trying as alternatives to our product? 

Underestimating New Processes and Experiences

Unlike new products, new processes are much harder to analyze. When Japanese automakers adopted TQM type processes as a way to improve their product quality, the changes were often so subtle, they were missed by competitors.  Now it is much harder to compare and contrast how one company builds community, engages with customers or provides better customer experiences. Ask yourself; is there a technology that could provide a superior consumer experience than what exists today?  Who is doing something interesting and would we buy them or the technology if money were not an issue? 

Using strategic planning in general and situational analysis in particular is a great tool to identify potential marketing innovation opportunities. It would be easy to start incorporating this tool into the next strategic or marketing planning process. Companies might also want to start incorporating it in their marketing strategy.