SWOT analysis in marketing: importance and examples
By Indeed Editorial Team
Updated 16 January 2023
Published 9 May 2022
The Indeed Editorial Team comprises a diverse and talented team of writers, researchers and subject matter experts equipped with Indeed's data and insights to deliver useful tips to help guide your career journey.
Businesses benefit greatly from the use of SWOT analysis, especially when evaluating markets, designing new products and reviewing business performance. The SWOT acronym stands for strengths, weaknesses, opportunities and threats, and as a business tool, it can help your brand accomplish its goals. SWOT analysis is also vital if you plan to have your product penetrate competitive markets. In this article, we describe what SWOT analysis is, what its elements are, why it's important, how to conduct a SWOT analysis and give some examples of SWOT analysis in marketing.
What is a SWOT analysis in marketing?
A SWOT analysis in marketing is a business tool that helps you understand the differences between your brand and that of competitors. It helps you recognise the resources available to you and possible hindrances in taking up business opportunities. A SWOT analysis evaluates internal and external factors that are likely to affect your business. Internal factors are positive (strengths) and negative (weaknesses) found within your business environment, which are likely to change.
External factors include positive (opportunities) and negative (threats) found outside your business environment, which may not change. Aside from helping your brand stand out from its competitors and analysing markets, SWOT can also help organisations hire new employees, design new products, review team performance and channel resources effectively.
4 elements of SWOT analysis
The four elements of SWOT analysis include:
The strength of an organisation distinguishes it from other companies. Strengths are positive peculiarities of an organisation that make it stand out in a competitive market. These peculiarities include such factors as a loyal customer base and a strong brand image. The SWOT technique also helps organisations identify their unique selling proposition (USP).
Identifying the possible weaknesses of your business spurs its growth. Most organisations face challenges such as a lack of capital and low brand value, which can affect the general output of the business. Analysing these internal factors can help organisations find solutions to their problems and manage any weak points.
Opportunities are external factors that can benefit organisations when they use them. Therefore, it becomes the sole duty of organisations to identify these opportunities in the market and use them fully. Organisations skilled in identifying good business opportunities can also anticipate the strategies of market competitors.
Threats are external factors that can affect your business negatively. The different forms of threat in business include supply chain problems and financial downturns, which are usually beyond the control of organisations. As a growing business, it's important to look out for future threats and work towards averting them.
Importance of SWOT analysis
SWOT analysis is important to a business for multiple reasons, including:
Building business strength
Using SWOT as a business tool in marketing helps improve the general performance of a business. This is because beating competitors in diverse key areas gives your business a competitive advantage. Therefore, identifying your organisation's strengths and using them can help you build a business stay competitive.
A SWOT analysis helps businesses identify structural weaknesses. This, in turn, allows you to actively work against them. It also helps you be more realistic about the weaknesses that exist in your business, which lets you manage them within the means of your organisation.
Enhancing strategic planning and decision making
SWOT analysis can also aid a business in its strategic planning and decision making. This is because it encourages you to ask specific questions about your organisation's operations or specific strategies, such as those ascertaining to marketing. For example, you might ask if your current strategy can respond appropriately to new marketing trends and use your findings to take advantage of new business opportunities or invest in new technologies.
SWOT analysis allows you to identify business threats quickly. This helps you counteract any external factors that could negatively affect your business, such as new legislation and changes in the market. By identifying these threats and assessing them fully, you can change strategies as appropriate and keep your business safe from them.
Helping businesses seize opportunities
SWOT analysis can help businesses identify and seize fresh opportunities. Opportunities are external factors that help companies make better profits, such as new customer trends and changes in the market. SWOT analysis differentiates these factors from threats, therefore expanding your organisation's marketing potential.
How to conduct a SWOT analysis
Here are the basic steps for conducting a SWOT analysis:
1. Decide on who conducts the analysis
In small organisations, the manager usually performs the analysis, while external facilitators take up the analysis of large organisations. Small organisations can source external facilitators, provided the resources are available. SWOT facilitators consider each aspect of all four points without bias towards any department or process.
2. Know the strength of your company
Find out more about the strength of your company and keep records of all your findings and suggestions. The strength of a company can range from its leadership, innovations and productivity, including its products and brand image. Recording what your achievements are, what resources are available and what your positive qualities are as a company can help you build a summary of your organisation's strengths.
3. Clarify strength
When conducting a SWOT analysis, it's also important to merge similar strengths and remove extraneous ones for clarity. Draft a simple list of the strengths as they relate to your brand. This allows the analysis to remain balanced and simplifies the picture it builds of your operations, ensuring that stakeholders understand what these strengths entail.
4. Choose and focus on two or three basic strengths
After clarifying your organisation's strengths, choose two or three primary strengths to concentrate your efforts on. Choosing strengths to focus on sometimes may require casting votes. This can work better when you identify major strengths and can facilitate the selection procedures.
5. Define these strengths as a group
Call for a meeting and present these strengths to your group to deliberate on. Your group can use this to outline why the organisation is good at what it does best, creating a uniform understanding of the organisation and allowing you to develop further strategies in this strength area. Ensure that all team members have access to this information.
6. Repeat previous steps for weaknesses
To discover the weaknesses of your organisation, repeat the previous steps but focus on discussing weaknesses instead. Assess the overall weakness of your organisation, narrow this down and choose two or three factors to improve upon. Examples of weaknesses found within a business environment include efficiency, productivity, quality and leadership.
7. Repeat previous steps for opportunities
Repeat these steps to learn more about the opportunities available for your organisation. Examples of opportunities for most organisations include investing in advanced technology, instituting lower prices and expanding into new markets. Discussing the available products and services and how they might benefit from these opportunities can shape marketing strategies and develop brand imaging.
8. Repeat previous steps for threats
Repeat the previous steps with a focus on possible threats. Examples of common threats include new competitors, new regulations and declining markets. You can avoid some of these threats once you identify them early and work towards managing them.
9. Develop implementation strategies with your findings
By using your findings on your company's strengths, weaknesses, opportunities and threats, you can develop strategies for achieving your set goals. SWOT analysis helps you verify your ideas in relation to the external and internal factors that affect your business either positively or negatively. You can develop strategies throughout the process, but at this point, you can combine all of your findings to narrow down your potential solutions.
Examples of SWOT analysis in marketing
In relation to marketing, a SWOT analysis identifies how to support organisational strengths and alleviate weaknesses and threats by promoting your brand. Below are some examples of conducting a SWOT analysis specifically within a marketing context, to help you devise a similar procedure for your own organisation:
An online magazine brand aims to publish 5,000 marketing leads in three months. A basic SWOT analysis may look like this:
working with professional and result-oriented team members
using upgraded tools designed for the task
an audience of 2,000 and professional marketers
lack of engaging content
inability to explore big ideas within a short time
brand's real-time nature permits fast strategy changes
audience interested in unique content
promote new formats to present different information
competitors have more domain authority
competitors may attract more advertisers
Below is a basic SWOT analysis for a local restaurant:
special local dish menus that change occasionally
popular among locals
poor branding and limited advertising range
small staffing as a result of limited budget
local dishes have become popular and marketable
potential for cheaper local ingredients
seasonal decrease in sales
existence of competitors in the same location
Disclaimer: The model shown is for illustration purposes only, and may require additional formatting to meet accepted standards.
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