What is situational analysis in audience analysis?

1. Career Development
2. Situational Analysis: What Is It and How Do I Do It?

By Indeed Editorial Team

Published 26 May 2021

A situational analysis is a complex investigation into the strengths and weaknesses of a business that is performed by either a business owner or a manager.

A situational analysis covers a range of different business elements, as you consider the company from an internal and external perspective, looking at not only the strengths and weaknesses of the company but also any past, present, and future obstacles, as well as potential opportunities.

It can be a bit of a complicated process, but this article will demonstrate the best way to carry out a situational analysis.

What is a situational analysis?

A situational analysis is an overarching term for a detailed investigation into your business. When undertaking a situational analysis, you will use different methods to analyse particular aspects of your business and then bring them together to create one all-encompassing situational analysis.

What will a situational analysis allow you to do?

Using your situational analysis, you will be able to look at matters surrounding the business, such as:

• The target audience and whether the target audience could be further specified or better defined.

• Projected business growth over the next twelve months and further.

• Any external threats - for example, competitors, world events or national financial issues that could indirectly or directly impact your business.

• Business strengths, including the USP (unique selling proposition) and how you can use these strengths to increase business success.

• New target markets or business ideas that could improve the company's image, boost sales or generate new profits.

• Flaws in the business and how they can be eliminated.

Steps to completing a situational analysis

A situational analysis typically consists of the following:

• A 5C analysis

• A SWOT analysis

• A five forces analysis

• Any other specific analyses that apply to your business or industry

5C Analysis

A 5C analysis is commonly used in the marketing sphere to help marketers think about their efforts and assess potential growth.

The 5 C's are:

• Company

• Customers

• Competitors

• Collaborators

• Climate

When completing a situational analysis, you will ask yourself a few questions related to each 'C'. Answer these questions honestly, with as much detail as possible. Doing so will enable you to gain an insightful understanding of the situation of your business.

Let's take a look at the 5 C's in more detail:

Company

In this section, you will look at your company and its USP. The aim of this exercise is to make sure that you have an attractive USP that is appealing to potential customers.

The following questions are useful prompts:

1. What is the purpose of my company?

2. What is our USP? (What do we offer that is different from our competitors?)

3. Why do we do better than X business?

4. Why do we do worse than X business?

5. Where would I make cuts, if needed?

6. Where would I invest if I could?

7. What can I say is our business's competitive advantage?

Once you have answered these questions honestly, take another look at them and write down what you would answer if your business was running perfectly. Then, compare the two lists and try to set short-term and long-term goals for your company.

Collaborators

You should have a directory of everybody that works, however small, in your business. Ensure that this directory is up to date and contains details for people like your domain provider, your credit card company, and freelancers who work with you.

Customers

As a business owner or an employee in a customer-focused role, you need to have a good picture of who your main group of customers are. While you may attract customers of different cohorts, there will undoubtedly be some customers who are more appropriate to your brand than others. These are the customers who are more likely to use your company.

You can analyse your customer base by looking at these three aspects:

• Total available market (TAM) - every potential customer falls into this spectrum.

• Serviceable available market (SAM) - this includes everyone who sometimes uses your products and services.

• Serviceable obtainable market (SOM) - this refers to your main target audience, the group of people who are most likely to use your products or services.

In this exercise, you should make a list of people who fall into your SAM and SOM categories (in most cases, the whole population will fall into the TAM category). To do this, follow the following prompts, as well as any others that are suitable for your business.

1. Who is our target audience?

2. Who normally buys our products?

3. Who reviews our products?

4. How do people find our products?

5. Does my business rely on repeat purchases?

6. Do customers generally research before buying my product, or do they impulse buy?

7. What is the most common complaint about my product? And what is the most frequent positive feedback?

Once you have specified your SAM and SOM, you can tailor your marketing and future releases to that specific group. This can help you to boost your sales.

Competitors

Every business has competitors and understanding them is integral to your success. You should have a full awareness of your competitors and their similarities and differences to your business and have a solid argument for why customers should use your company rather than theirs.

Make a full list of direct and indirect competitors. Then, ask yourself questions such as:

1. What do my competitors offer that we don't? What do we offer that they don't?

2. What are their strengths? What are their weaknesses?

3. Do we target the same customers?

4. What are their marketing strategies?

Then, add your business into the analysis to see how you can draw on this knowledge to improve.

Climate

The economic and political climate is uncontrollable, but it is something that all businesses have to face at some point. Having a good idea of the current climate and any projected environments can help you be savvy when making business decisions.

Consider the following when analysing the current climate:

1. What is the current economy like? Is this projected to change?

2. Are any laws coming into place that might impact my business?

3. How are people consuming at present? Are they using new technology?

4. What is the general social consensus about products like ours?

You can use the information gathered from these prompts to ensure that your product constantly moves with the current times.

SWOT Analysis

A SWOT analysis is another way to look at the different aspects of your business. SWOT stands for strengths, weaknesses, opportunities and threats. While considering all of these aspects, you should think about your business's present and future.

Things to consider include:

• Strengths: what does our business do well? What are we working on now that will benefit in the future? What future events should strengthen our business?

• Weaknesses: what does our business do poorly? What might weaken its position in the future? How can we prevent this?

• Opportunities: what can we do that will help us reach new markets or demographics?

• Threats: what issues may our business face in the future? Will there be an increase in competitors? Could the climate change?

It's useful to cross-reference your SWOT analysis with your 5 Cs analysis to give you a multi-dimensional view of the business.

Five Forces Analysis

A five forces analysis focuses on your competitors. Competition is one of the biggest threats to businesses, so it's imperative to be completely honest about these kinds of threats and what they could mean.

The components of a five forces analysis are as follows.

Analyse your competitors

Firstly, think about how much competition you have, both direct and indirect. Make a list of every single competitor, their products and how they compare to you.

Analyse substitute products

Look at products that are similar to yours. Analyse the products, asking yourself these questions:

1. How easy is it to find substitute products?

2. Do they have the same features as our products?

3. Are they easier/ more difficult to use?

4. What is the difference in price?

Buyer power

Consider how much power buyers have in your products.

1. How many buyers do you have? A lot of buyers will enable you to charge more, whereas fewer buyers will drive your prices down.

2. Are your buyers faithful?

Supplier power

Think about the power that your suppliers have in your products.

1. Could they easily increase their prices?

2. Do you rely on just a few suppliers?

3. Do you have other potential suppliers that you could use?

The more potential suppliers that you have, the less power your suppliers hold.

New entries to your market

A new business entering the market could quickly threaten your position. Consider how saturated your market is and whether it's easy for new businesses to enter and succeed in it. Think about how quickly a new business would affect yours.

Is your situational analysis useful?

Once you have created your situational analysis, ensure that it is useful to anybody who may need it. It should:

• Be free of technical jargon, and people both outside and inside your company should be able to understand it.

• Clearly state the business's situation and how the situation could change, considering everything above.

• End with some clear business goals that focus on the current and projected climate.

A situational analysis is an excellent tool that will help you improve your business endeavours. If you run your own business or work in an analytical field, try completing a situational analysis at least once a year. If you do it right, you should find that it will help you boost your profits and continue to succeed as a business.