Porter’s five forces analysis are three very useful tools for both identifying the threats and opportunities in general and competitive environment and setting up company’s marketing strategy. What are PEST, SOOT and Porter’s five forces and their usefulness. PEST is an acronym for political, economic, social and technological. 1. The political area has huge impact on the operation of the films(e. G. Tax, business law, political stability) 2.
The economic condition can also directly influence the general performance of the company(e. . Economy depression, interest rate, exchange rate, inflation rate) 3. As for social factors, by fundamentally determining the target market, it can also be essential for the success or failure of strategies. (e. G. Religion, culture, demographic issue) 4. Finally, the technological factors are becoming the majority for mostly organization, which can Increasing the benefit as well as decreasing the time and cost. (e. G. He pace of technologies change, incentive of technology) Usually prior to competing SOOT, PEST helps to spot the four elements or better understanding the nongovernmental faced by firms. After analyzing the four factors, It Is Important for company to Identify the key drivers for change, thus focus on that to shape its strategies. Meanwhile, by scanning the general environment, co. Can therefore also detect weak signals that make the discontinuity of the environment, which may fundamentally change the competitive environment Monsoons et al, 2011).
Ginger and Duncan (1990) argue that macro-environment analysis can act as an early-warning system by giving org. Time to anticipate opportunities and threats and develop appropriate response. SOOT is structured planned method used to evaluated strengths, weakness, opportunities and threats. By using matching and converting, company can either find or develop their competitive advantages. Matching Is used to find completive advantages by matching the strengths to opportunities.
Converting Is to apply conversion strategies to convert weaknesses or threats into strengths or opportunities. Porter’s five forces analysis is a framework for industry analysis and business strategy development formed by Michael E. Porter at 1979. More precise than PEST, it helps the industrial organization to illustrate the competition intensity in competitive environment (micromanagement) thus decide the attractiveness of specific market.
Combining three analysis In corporate strategies level, all three of them can be used to audit the marketing environment In order to get a systematic, critical and unbiased appraisal of Its operation. (where Is the co. Now, where does the co. Want to go and how should the co. Organize Its resources to get there) In business strategy level, It also Important hat because of the increasingly rate of change in market environment, three of the overcome by competitors. Example: PEST e. G. Construction firm: operating on narrow profit margin, react to change I interest rate.
Johnson &Johnson: baby-care product, react to change in birth rate, thus change the target market to adult female(being kind and gentle to woman’s skin as well as that of babies) SOOT A consultancy firm S: Reputation, expertise W: Unable to deal with multi-disciplinary assignments because of size or lack of ability O: Well established position with a well defined market niche T: Other small nationalities looking to invade the marketplace Five forces Coca-cola: Present a detailed analysis of the various positioning strategies that may be pursued 1 .
Positioning is to shape the org. To suits the preferences of customers and lead to high consumer loyalty thus building a powerful brand. 2. Market mix, perceptual map 3. There are two levels of positioning strategies: a. Business level strategies (Brand positioning) Business level strategies are positioning the org. Among other org. It is market oriented and can be either market-wide or directed at a particular market (niche approach). . Generic business strategies (Porter)? (competitive advantages) 4.
Key to successful market positioning a. A well-positioned brand should appeal to the particular needs of a customer segment because a differential advantage proposition is created. B. There are four key dimensions for a successful positioning: Clarity, Consistency (Affordability), Competitiveness (differentiation), Credibility (Explain….. ) c. In order to evaluate the effectiveness of brand-positioning strategies, there are three components we need to consider: intended position, actually position and perceived position.
Perceived position is the most important, which will lead to the above-normal performance of the corporate. According to research, benefit positioning and user position is more effective than feature positioning and direct benefit positioning is more effective than indirect benefit positioning (Fuchs et al, 2009). D. To keep the brand equity, repositioning is very important. We need to realize that positioning is a ongoing process. Competitive advantage is positioning of a single offering in relation to a unique set of potential customers and competitors.