Published on September 4th, 2020 | by Bibhuranjan0
Technical Marketing Analysis Gives Online Businesses an Edge
When it comes to marketing analysis, those businesses that strategically tackled areas such as PEST tests, SWOT analysis, and competitor research were found to be more successful than businesses that struggle to compete in their respective online marketplaces.
One of the most basic components any digital marketing consultant will begin with is the SWOT analysis. What are your strengths, weaknesses, opportunities, and threats? You may have a lot of resources available to you which means that your eComm store could outwork the competition in areas such as content creation, email marketing, and customer services.
This is a strength that could be used to add value to a product that may be slightly more expensive than the competition.
While threats are usually competitors, new technology, or even other countries that can offer the same products to clients but for a cheaper price.
For example, you may be able to sell your product overseas using cross-border services, however, because your business is not a legal entity in the country you are targeting, you must charge your clients import taxes – while a direct competitor with a legal entity within that country can ship without any taxes.
An opportunity could be that there are companies that allow you to use their supply chain for a very small fee, and this means duty is already paid because the supply chain firm you use should already have an entity in that country you are targeting. The small fee you pay the supply chain firm will just be the small price of doing business in that country and adding it as another sales channel to increase sales volumes.
PEST analysis is becoming even more important than ever. It helps you briefly list possible political, economic, societal, and technological changes in the marketplace you are doing business. It can also tie into the SWOT analysis threats and opportunities too.
If something does happen to come in both your PEST and SWOT, then you know for sure this is a topic your business will need to plan to tackle.
For the most part, the points that you list in your PEST analysis can be out of your hands. For example, the many crypto exchanges that set up in China were hit by a political change to the laws regarding crypto chaining in the country. This had a detrimental effect on their business because these exchanges had to look for new countries to operate in or shut down completely.
Economic effects are easy to explain because we could all be affected by one major influence that has hit the world by surprise. That is the effects of the latest COVID-19 pandemic. With lockdowns in almost every country in the world, restaurants, cinemas, clubs, entertainment venues, and high street retail firms were all hit hard by the crisis.
Also, while now many are open for business, they may struggle to recover as people become more frugal with their spending due to people losing their jobs and not having any money to spend. The worst-hit industry of all is the travel sector where planes are grounded, hotels have no occupants, and staff have no work.
Societal issues are also quite easy to explain. All we need to do is look at fast-food restaurants and then look at how much more health-conscious people are. When people want to lose weight and are made more aware of the issues of obesity such as heart disease, this means fewer people will eat junk food. On the other hand, this is a great opportunity for health stores to take advantage of this societal change in attitude and start to advertise their healthy options.
It is surprising how many large corporations are guilty of not spotting technological changes and planning a move into markets using their brand name as the pivotal force to success. Kodak is probably the guiltiest because it failed to spot the emergence of digital cameras, printers that could print photos, and digital photo storage. Had the firm seen this coming, it could have already been involved in this market as a leader of the industry instead of reacting too late and now fighting for its place.
The PEST analysis can also be extended into the PESTLE analysis. These are the ‘Legal’ and ‘Environmental’ (or Ethical) add-ons. Going back to the example of cryptocurrency exchanges in China, well, cryptos were made illegal so legal can also mix with political influences on your marketplace.
While the ‘environmental’ factor has affected how companies focus on their ‘CSR’ (Corporate Social Responsibility). For example, oil companies now plough in millions to marine conservation projects to reduce the negative effects of underwater drilling operations.
Also, some infrastructure firms’ use forestry/eco companies to help plant as many trees in the world to suck up the same amount of harmful emissions the machinery on their projects produce in a year.
Economies of Scale
Also, you need to see if your business has the right economies of scale to survive in case one of your threats or negatives from your PESTLE analysis hits the way your firm does business. You need to be able to outlast your competitors – especially if a price war ensues which is exactly what has been happening in most countries around the globe within their domestic tourism businesses.
The larger hotels are now offering half and even quarter price luxury rooms. The prices are so low that for smaller hotels, it is almost impossible to drop their price to fight the larger hotels or they would not be able to cover the cost of electricity and cleaners.
For instance, a hotel may charge $20 a night versus a luxury hotel charging $100 in any normal season. Now the luxury hotel is offering $25 per night, while the smaller hotels can offer $15 at best. This covers the smaller hotel’s $10 per day cost of having a guest while making a tiny $5 per day profit (66.33% less than normal). However, most people would be happy to pay the additional $10 to book the luxury hotel they may never usually have the chance to stay in.
The small hotel ends up with no business or extraordinarily little and cannot drop the price much lower or they are just hosting guests for no profit – it is basically the same as working for free.
Now this same scenario could also spill over into the retail industry where larger firms start to offer huge discounts to reduce stock and bank their cash. Smaller shops will not be able to compete and could end up selling their stock at cost or a loss – effectively putting them out of business.
On top of this, it is worth noting that pricing wars are usually a ‘secret strategy’ used by large firms in times when the economy is bad. They know that if they push out smaller competitors now when the economy starts to recover, people will have no choice but to use their services.
Once you understand the environment your business is going to operate in, you then need to look at other company’s fighting for the same market share as your firm. The question is how are they conducting their business in harsh or favourable market conditions?
The SWOT analysis will become incredibly useful when breaking down competitors to see what their strengths and weaknesses are. For example, you may notice that their customer support services only offer email support and an FAQ section. You can then offer live chat for site visitors to give them a better customer experience via real-time support.
Alternatively, if live chat is not a viable option, then you can create chatbot windows for your site. This is an offline ‘live chat-style’ facility but instead of a human being answering questions, there is an AI robot. At the same time, the chatbot is also an enhanced FAQ tool that saves your customers or site visitors having to look through an FAQ section.
You will also need to look ar how your competitor’s sales channels work, check out their email newsletter by signing up so you can spot any new offers, and also look to which sales channels the company uses. You can simply send a support email asking for options on how to buy their products.
Any little details you can gather will help your business offer a better more streamlined service with added value without going over the top on investing too much to beat your competitors.
Take These 3 Components Into Consideration Right Now
Whatever you do with your online or even local business, make sure you take every one of the sections above into consideration. In this article, we just touched on each topic. There is a lot more work to be done here. You will need to expand on these points by learning more about SWOT, PESTLE, economies of scale, and competitor analysis!
Photo by Marvin Meyer on Unsplash