The Role of SWOT Analysis in Marketing

Introduction

Marketing strategies that businesses utilize to develop their products or services are aimed at the facilitation of the processes both within and outside a company. To assess the environment in which the company evolves, it is essential to apply some specifically developed methods and procedures capable of objective detection of the most influential factors and driving forces. One of the most effective approaches in this regard is the SWOT Analysis, which addresses the decisive issues constituting a company’s current achievements, perspectives, and threats caused by both inside and outside impacts.

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Therefore, the implementation of the SWOT analysis provides an opportunity to evaluate a business’ strengths, weaknesses, opportunities, and threats that demonstrate the current state of an enterprise and its prospects for future development.

SWOT Analysis Overview

The method of the SWOT analysis was designed to assess the ways how a company evolves, what kind of positive and harmful factors influence its operation process. This kind of analysis is applied by specialists as “a way of monitoring the external and internal marketing environment” (Kotler & Keller, 2016, p. 48). According to the criteria the method implies, there exist two dimensions within which a company’s performance is assessed.

These dimensions are illustrated in the matrix (see Appendix 1) and incorporate a type of environment (internal or external) and quality of influence of a factor (positive or negative). Thus, strengths and weaknesses constitute an internal environment, as well as opportunities and threats, represent the external environment (Kotler & Keller, 2016). Such a structured differentiation between the environmental impacts allows forming a concise and logical overview of the strategy a company utilizes in its work.

The information retrieved upon the analysis completion facilitates the strategic action of the leaders who seek better ways of development and goal achievement. According to Kotler and Keller (2016), high-quality marketing “is the art of finding, developing, and profiting from” the opportunities that are detected by macro-environment and microenvironment (p. 49). Analyzing the market trends allows marketers to use that information to improve the methods of product manufacturing or service delivery. Therefore, the SWOT analysis is a powerful tool that, when carried out appropriately, may present a range of promising opportunities for a company’s growth.

Amazon Company Analysis Applied with SWOT

Amazon is one of the leading enterprises in the world today. The application of the SWOT analysis to its environmental forces and factors provides an opportunity to detect positive and negative, internal and external factors. Amazon is the biggest online retail company that delivers goods and products in different countries and has an extensive network of distributors globally (Wiggington, 2018). It is essential to evaluate the crucial elements of the SWOT analysis to clarify the reasons for the company’s success and its possible ways of future progress.

Strengths

It is only logical to start the analysis with the strengths of Amazon. Firstly, its main powerful feature is its size that embraces a large volume of trade that results in growing revenues annually. The 2017 financial report confirmed a US$177,866 million profit that is a leading performance in the market (Wiggington, 2018). Thus, Amazon’s leading revenue position constitutes one of the main strong sides of the company. Secondly, Amazon presents a great variety of goods from different manufacturers and brands that enlarges the volume of products and the number of attracted customers (Simmons & Kang, 2018). Thirdly, the company has developed high-quality distribution logistics that enable timely delivery and customer satisfaction (Wiggington, 2018). This strength leads to the fourth one which is appraising customer ratings of the company’s performance.

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According to the survey conducted by the American Customer Satisfaction Index, eight years in a row, Amazon has been recognized as a number one company by customers ranking (2017 Letter to shareholders, 2018). Finally, IT technology advancement is the area in which Amazon reaches the highest level of development and upgrades its performance quality (2017 Letter to shareholders, 2018). All the listed advantages of Amazon show the internal factors influencing the success of the enterprise on the global internet retail market.

Weaknesses

Besides strong aspects, there are some weaknesses of the company that appear upon internal environmental causes. One of the main disadvantages of Amazon is its involvement in “patent infringement cases” that might “affect stakeholder confidence” (Wiggington, 2018, p.13). These issues mostly concern internet technology utilization and undermine the reputation of the company. Another weak side of Amazon is its declining liquidity that has been confirmed in the 2017 financial report (Wiggington, 2018). This fact is closely connected with the lack of cash funds caused by the sphere of the enterprise’s performance which is the Internet. This data provides insight on another weakness that lies in the company’s single dimension embracing online retail only. Such a limited sphere of development could be regarded as a factor preventing further development.

Opportunities

An overview of the outside forces that affect Amazon’s development allows detecting some main possibilities for the company’s future growth. One of the main opportunities for Amazon lies in its investment and job creation (2017 Letter to shareholders, 2018). The enterprise initiates corporate connections and investments in such companies as Ring Inc., Bonitasoft, and others broadening the scope of works and gaining new prospects for growth. Also, Amazon launches products from third parties, thus empowering the advancement of small businesses (2017 Letter to shareholders, 2018). Therefore, there are a lot of external opportunities for Amazon to achieve its long-term goals.

Threats

The macro-environmental forces present risks for Amazon, too. One of the possible primary harms is competition that is an acute problem in the market of online retail business (Wiggington, 2018). Internet technologies comprise a rapidly developing sphere where companies compete severely. Being a leader in the market, Amazon utilizes top technologies and systems. Therefore, it establishes competing relationships with other companies which use similar methods. Such enterprises include Google, Apple, e-Bay, all of which provide online retail services (Wiggington, 2018). Amazon needs to preserve its strengths, use its opportunities, and minimize its weaknesses to be able to withstand the occurring threats.

Conclusion

In conclusion, the SWOT analysis presents an excellent opportunity to carry out a logical and well-structured evaluation of a company’s strategy. It incorporates external and internal factors that have a positive and adverse influence on the company to detect its weak and strong sides, as well as outside opportunities and threats. The application of the SWOT analysis to one of the leading online retail companies, Amazon, showed that the company obtains profound annual revenue, employs a high-quality distribution network to deliver a wide range of goods.

Despite its official liquidity decline and the limitation to the online sphere only, it remains a successful growing enterprise. Because Amazon has a lot of opportunities provided by its investment policy, it can overcome the threats of high competition and continue its global growth.

References

Kotler, P. T., & Keller, K. L. (2016). Marketing management (15th ed.). New York, NY: Pearson Education.

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Simmons, A., & Kang, J. H. (2018). The strengths and weaknesses of Amazon.com and Macy’s as fashion retailers. International Textile and Apparel Association (ITAA) Annual Conference Proceedings, no. 78. Web.

2017 Letter to shareholders. (2018). Web.

Wiggington, D. K. (2018). Amazon: David becomes Goliath. Integrated Studies, no.180. Web.

Appendix 1. SWOT Matrix

SWOT Internal Environment External Environment
Positive Strengths Opportunities
Negative Weaknesses Threats
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