Situation analysis is the process of looking at various aspects of your business, customers, and competitive market in order to better understand the capabilities and weaknesses of your business. It's similar to a health checkup for your business - by identifying what's working well and what isn't, you'll be able to make more informed marketing decisions, which will mean more profitability. You should run a situational analysis at least once per year - it will help you keep an up-to-date view of the large factors affecting your business.
There are several ways to conduct a marketing situation analysis, including the basic but effective SWOT (Strengths, Weaknesses, Opportunities, Threats) model. Today, we'll be looking at another situation analysis strategy that goes into a little bit more depth - the 5 C's of Marketing. We'll break down what this model entails, how to perform one for your own online business, and look at an example 5c analysis.
The 5c Marketing Analysis Model
As the name implies, the 5c model focuses around 5 key "C's". Each C represents a major element that relates to your overall business model.
The 5c's of Marketing
By evaluating these aspects of your business, you'll have a good commander-level view of your business Whenever it comes time to make decisions about your marketing, you'll have a cheat sheet that will help you make more informed decisions faster.
An in-depth look into the 5 C's of Marketing model
Begin by asking yourself questions related to your own business:
- What does my company sell?
- Do our products vary from competitors' products? If so, in what ways?
- What competitive advantage does my company have?
- What makes my brand unique or memorable?
- What does my business do better than others?
- What does my business do worse than others?
- How do customers view my business?
- If I suddenly gained $10,000 to invest in my business, where would I invest it?
- If I suddenly had to cut my budget by 10%, where would I make those cuts?
- What are my 1, 3, and 5-year goals for this company?
If you find some of these questions difficult to answer, backing up and doing a quick SWOT analysis can help you get better insights into your company. It's also very important to be upfront and honest during this process, especially about your weaknesses and where your competitors are outperforming you. Finally, once you've answered these questions, spend a moment and ask yourself how the answers to these questions make you feel. Are there any where you wish you'd been able to answer differently? If so, make a note of what your ideal answer would be - this is a great way to create goals for your company.
In this section, list out any person or service that your company works with in order to operate. Here are some of the collaborators that businesses work with most commonly:
- Who runs the daily operations of the company?
- Do I have a partner that helps run the company?
- Do I have investors or stakeholders?
- Who creates or supplies the products I sell?
- Who is my shipping provider?
- Who processes my credit card payments?
- Who provides my ecommerce platform?
- Who handles my inventory or warehouse operations?
- Who did I register my domain with?
- Do I have anyone helping me create my website?
- Do I have anyone writing copy for me?
- Do I have anyone helping me with marketing or advertising?
- Do I work with a photographer on an ongoing basis?
- Do I have anyone distributing or selling my products for me?
- Do I have someone running my social media accounts?
- Do I work with any freelancers or contractors?
- Is there anyone else that I work with on a regular basis?
After filling out the collaborators section, you'll likely realize that it takes more people (or services) to run your business than you initially realized. Listing all of your collaborators here will help you keep track of who is responsible for what. It also gives you a place to start when you're looking to make your business more productive or efficient.
One of the most important parts of any business is the customers that purchase your products. By getting a strong sense of who your customers are, what they want, and how well your product meets their needs, you'll be much more effective in delivering products that your customers want to buy (and keep buying). You'll also be better prepared when it comes to your marketing efforts - not only will you be promoting your products to the right audience, you'll also know what language and imagery resonates with your potential customers. Finally, customer analysis is one of the best ways to learn about your products and business - by figuring out what customers like and dislike about your products and business, you'll be gaining firsthand insight into what matters most. Begin your customer analysis by asking the following questions. If you're targeting multiple market segments, you may want to answer these questions for each segment:
- What does the ideal customer(s) look like for my products?
- Who is my target audience?
- Who is currently purchasing my products?
- What sorts of products are sold most/least frequently?
- Which of my products have very good reviews? Poor reviews? No reviews?
- How do my customers behave on my website? Which pages do they visit most often?
- How are my customers finding my site or products?
- Is my overall audience growing or shrinking?
- How many repeat purchases do my customers make? How important are repeat purchases to my business model?
- What promotions or campaigns have been most effective in driving sales in the past?
- Is there seasonality or trends in customer purchases?
- Do customers do careful research before purchasing, or do they impulse buy?
- What motivates my customers to purchase? (Price, quality, convenience, unique product benefit, etc.)
- Where does my customer go to get more information about my products?
- What are my channels of communication with my customers?
- What sources of customer feedback do I have available?
- What is the most common customer complaint or issue?
- What is the most common praise or positive feedback?
- What sorts of things do my customers find most interesting? Least interesting?
- If I could only tell my customers one thing about my business, what would it be?
The goal of these questions is to understand your customers, their behaviors, and their underlying motivations. The most difficult and important part of marketing is truly understanding the customer - if you crack that puzzle, you've obtained a competitor advantage that will be hard for competitors to beat. Use every source of customer feedback at your disposal to help you form your answers to these questions.
Understanding your competitors is as important as understanding your own business. Check out our guide to competitor analysis for ecommerce, and then answer the following questions about your competitors:
- Who are your direct competitors?
- Which are my established competitors? Which are new or emerging competitors?
- What do my competitors offer that I don't?
- What are each of my competitors' biggest strengths?
- What are each of my competitors' biggest weaknesses? (Hint - check their product and company reviews)
- What strategies are my competitors using to gain customers?
- Is there anything that my competitors are doing that I cannot?
- Is there anything that my business can do that my competitors cannot?
- What audiences are my competitors targeting?
- What sort of content is each competitor producing?
- What sort of social media presence does each competitor have?
Knowing your competitor's overall market position, strengths, and weaknesses will give you a huge advantage - after all, you can't compete effectively if you don't know who your opponents are. It's OK if your competitors are larger or better-established than you - while it might not seem that way at first, smaller companies have a number of advantages over larger companies. Since they aren't run by committee or beholden to stakeholders, small companies can be much more agile and inventive in their marketing, which can more than make up for a giant advertising budget. As Sun Tzu says, "If you know the enemy and you know yourself, you need not fear the result of a hundred battles."
When looking at the climate, focus on factors external to your own business that may affect how your operate. This will include industry trends, societal trends, legal trends, and new or developing technologies. Ask yourself the following questions:
- Are there any new or proposed laws or regulations that may affect my business? If so, how do I plan to address them?
- Are there any social trends that may affect the things that people buy or the way people buy them?
- Are there any economic trends that might affect customer shopping behaviors?
- Are there any new or emerging technolgies that may change the way my customers act or the way my business operates?
- What sorts of things or opinions are becoming popular or unpopular?
With these questions, you're not trying to predict the future, but you are trying to get a general sense of where the market is headed. For example, when looking into societal trends, consider how people think or feel, and what sorts of things are important to them. For example, if your target audience is becoming increasingly concerned with eco-friendliness, fair trade practices, or country of manufacture, you'll need to be aware of these feelings. Not only will this help you guide your company towards success, it will also help you avoid potential disasters. A great example of a company failing to predict technological trends is Blockbuster, who famously declined to purchase Netflix in 2000 for $50 million dollars - Blockbuster is now defunct, and Netflix is worth almost 4 billion dollars.
5c Marketing Analysis ExampleTo wrap things up, here's a brief 5c analysis example using UK retail giant Tesco. The point of a 5c analysis is to summarize your findings into short, digestible paragraphs, so after you've asked yourself the questions above it's time to condense that information down into the most important takeaways:
Tesco 5c Analysis Example
- Company: Tesco offers primarily groceries, but has diversified into multiple other product categories. Tesco has been in operation for over 100 years, and for many people in the U.K. the Tesco name is synonymous with grocery stores. Tesco has been an early adopter of new technologies, and has been active in expansion of its physical stores. Tesco seeks to improve its presence in non-grocery markets, as well as strengthen its online presence.
- Collaborators: Tesco collaborates with a huge range of food providers and product manufacturers across the world, as well as managing a full internal staff and external freelancers and contractors.
- Customers: Tesco's customers are primarily based in England and the U.K., but serves customers from around the globe. Tesco's customers expect convenience, value, and quality service.
- Competitors: Tesco's primary competitors are Asda, Sainsbury, and Morrisons, all of which compete for Tesco's spot as the U.K.'s largest grocery chain. Asda is a WalMart subsidiary, and benefits from penetrative pricing. Sainsbury has a larger number of stores than many competitors, but operates primarily in the convenience store market instead of the full-sized grocery market. Morrison's benefits from a vertically-integrated supply chain, and manufactures many of the products it sells through its retail stores.
- Climate: With shopping trends heading towards online shopping, Tesco is working to expand its presence in online retail and diversify into other product offerings. The increased use of apps to purchase groceries and the introduction of 'cashierless' retail is also pressuring Tesco to be an early adopter of new technologies.
5c analysis: An annual business health check-up
By this point, the benefits of a 5c analysis for your own business should be obvious. Not only is it a great way to perform a holistic checkup of the overall health and positioning of your business, it will be an invaluable tool when making marketing decisions in the future. Its value is in its simplicity, summarizing the 'big' issues facing your business in a way that makes them easily conceptualized. By completing a 5c or other situation analysis at least once per year, you'll stay up to date on your business and competitive environment.
If you're just getting started with selling online, a 5c analysis can still be very useful. Filling out the external elements (like competitors) will help you understand the competitive environment, which will help you design and position your upcoming store more strategically. After you've completed a situational analysis for your own business, it's time to put your learnings into practice with your own online store. Try a free 14-day trial of Volusion's all-in-one ecommerce software, and see for yourself why Volusion merchants sell an average of 2.8x more than merchants using other platforms.
Have questions about how to perform a 5C analysis for your own online store? Ask us in the comments below!