Situational analysis

Market and demand analysis

1. Situational Analysis

2. collection of methods that managers use to analyze an organization's internal and external environment to understand the organization's capabilities, customers, and business environment

3. It clearly identifies a business's capabilities, customers, potential customers and business environment, and their impact on the company. A situation analysis is an essential part of any business plan and should be reviewed periodically to ensure that it is current.

4. Various techniques utilized in the evaluation of the micro and macro environments of the firm to understand all the factors affecting the company in the two settings. These factors include customers and competitors.

5. Situational analysis can also be defined as systematic collection and assessment of past and present data of factors that affect the firm.

6. Methods 5 C’s SWOT Porter Five forces model

7. 5 C’s Company assessment of the vision and mission of the organization Customers Competitors Collaborators Climate/Context

8. Example To develop multi grain flour based on a new principle that appears to offer several advantages over the ordinary wheat flour. The chief executive of the firm needs information about where and how to market the multigrain flour.

9. Who are the buyers ? What is the total current demand for ordinary wheat flour? How is the demand distributed temporally (pattern of sales over the year) and geographically? What is the break – up of demand for multigrain flour of different proportions? What price will the customers be willing to pay for the multigrain flour? How can potential customers be convinced about the superiority of the multigrain flour? What price will ensure its acceptance? What channels of distribution are most suited for the multigrain flour? What trade margins will induce distributors to carry it? What are the prospects of immediate sales?

10. Suppose that a small but technologically competent firm has developed an improved air cooler based on a new principle. Objectives of market and demand analysis to answer the following question:-

11. Who are the buyers of air cooler? What is the total current demand for air coolers? What price will the customer be willing to pay for the improved cooler? What price and warranty will ensure its acceptance? What are the prospects of immediate sales?

12. Importance of Situational Analysis Enables the firm to know its strengths and weaknesses. Enables the firm to determine how the stakeholders view it with regards to its operation Situational analysis makes it possible for the business to identify opportunities arising thus leading to sustainable profitability and competitive advantage. It is a significant step in the planning process to enable the firm select strategies that will enable it achieve its objectives.

13. Conduct of Market Survey

14. Characteristics of Market Effective demand in the past and present Breakdown of demand Price Methods of distribution and sales promotion Consumers Supply and competition Government Policy

15. Effective Demand in the Past and Present Consumption=Production +Imports-Exports-Changes in stock level

16. Breakdown of demand Nature of Product Consumer groups Geographical Division

17. Price Free on Board price CIF price Landed price for imported goods Average wholesale price Average retail price

18. Demand Forecasting Methods Qualitative methods Time series Projection methods Causal Methods

19. Qualitative Methods Jury of Executive Opinions Delphi method