So What Does Your Market Research Mean? Try SWOT.
The SWOT Analysis
December 05 / January 06
Volume 3 Number 6
If you are a technology entrepreneur who is winding down the first phase of the market research effort, one of the most valuable tools you can use for the initial cut at interpreting your market research information is a SWOT analysis. SWOT (strengths, weaknesses, opportunities, threats) is a time-honored tool that allows you to effectively look at these four elements and determine your current product or company position. Not only that, but based on the information you glean from the exercise, you should have base information needed to begin strategic and market planning.
The first step is to go through your research and write down what you think is the most salient information on your market, your product category, competition, technology and potential customers. Be realistic and use your best judgment to figure out what's most important. Once this is done, you can begin the SWOT analysis.
Let's start with strengths and weaknesses. These are things that are internal to your company that help differentiate your company or product. Some examples of strengths for a startup technology company may be patents, technical team, innovative product, or small, nimble company. Patents create barriers to entry for competitors, so that is a big strength. These barriers to entry mean that you have some limited lead time to launch your product before your competitor has a chance to react to it. Technical teams can develop your innovative product, which is only a strength if it meets the needs of your potential customers.
Weaknesses, or areas in which you perceive that your product or company attributes do not match the best of what's in the marketplace, can include patents, management team, lack of clout or name recognition and manufacturing costs. Patents were just mentioned as a strength, so how can they also be a weakness? Well, if you have domestic patents only, but plan to sell overseas soon, the lack of international patents can mean lack of protection for your technology. Even domestically, your patent is published, so your competitors will know what you are working on and can even start figuring out ways around your patent. Most technical entrepreneurs are short on business or marketing experience, which is a disadvantage in trying to get your product to market quickly and effectively. As a new start-up, people in your industry may not recognize your name and this can lead to difficulty in getting into the distribution chain as well as hampering sales. Another weakness could be manufacturing costs. Larger companies may have better economies of scale, which gives them more leverage in lowering prices to counteract emerging competition.
Opportunities that are external to your company can enhance the likelihood of your product's success. Opportunities can include items such as unfulfilled customer needs (be careful and make sure there's a real need!) or a rapidly increasing market size. The increasing market size could be an aging population, leading perhaps to a need for faster drug discoveries or new drug delivery methods. It could also be the increasing threat of terrorism, which has led to needs for all manner of new technology products to help combat that threat. A regulatory environment favorable to your product or technology, maybe clean air products, may also be an opportunity. An improving or growing economy is always an opportunity, as companies and consumers have more discretionary income to spend on new products.
Some external threats to which you will want to pay attention may include an increasing regulatory landscape, something that was just discussed as a strength. As a threat, it may create a longer time to market for your product or create the need for features to be built into your products. Regulations may also change over time. For example, with many drugs being pulled off the market, it may mean more stringent and longer clinical trials and reporting, or your new automotive products may have to be redesigned and retooled to meet new standards. New competitors are always a threat, and having to pay increasingly expensive licensing royalties may also cause harm to small companies.
Based on your industry, you should be able to identify even more strengths, weaknesses, opportunities and threats. Once you've made your lists of the four elements, you should also try to do the same for your competitors, again trying to be realistic. Then, you should put them in some kind of format that makes sense to you. For example, you can build a simple chart with the attributes across the top, your company and competitors going down on the left. There should be a strong differentiator somewhere in the SWOT analysis that sets your company or product apart from the rest. If there isn't, you may need to rethink your product or your company strategy. Don't be afraid to do this; it's much less expensive to re-do now than later after you've invested a lot time, energy and money in going down the wrong path.
Use your SWOT analysis to start thinking about possible business and marketing strategies. Capitalize on your strengths and opportunities, but don't forget to find ways to overcome your weaknesses and mitigate threats. Do SWOT analyses periodically to make sure that you have the information you need to keep your strategies and positioning current. After all, the market is dynamic and you don't want it to pass you by.
Betsy Gillette is director of market planning for Technology Ventures Corp.
More
Copyright © 2012 | Innovation America