External Analysis of Marketing

External analysis of marketing is an important and first stage of the auditing process. It creates the information and analysis necessary to identify the key issues an organization needs to develop a successful strategy. Also marketing analysis explores the process of PEST analysis, competitor analysis, industry analysis and market analysis. Various approaches and strategic groups are used to facilitate this process.

The external environment is analyzed to find the opportunities and threats that are developing and need to be addressed by the organization.

The analysis of the external environment can be divided into three main steps that become more specific to each organization. The first step is to analyze the macro environmental influences facing the organization. This is followed by an examination of the competitive environment in which the organization operates. Finally a specific competitive analysis is done.

External analysis of marketing scanning

Environmental auditing depends on the monitoring activities undertaken by the organization. This process is commonly called scanning.

Undirected viewing

This activity is related to the viewer who is looking for information in general without having a specific agenda. The viewer is exposed to a wide variety of information but this is not an active search for a specific problem, just a broad effort to be aware of changed elements or areas.

Conditional viewing

Again this is not an organized search but the viewer is sensitive to information identifying changes in specific areas of activity.

Informal search

It is an organized but limited search for information to support a specific objective.

Formal search

This type of search is actively pursued and specifically designed to obtain specific information.

Of course there is unlimited information that can be scanned. External analysis of marketing Any organization can scan only a limited amount of this information. A balance must be maintained between the resources allocated to this activity and the potential benefits. Understanding the dynamics of the environment is an important aspect of this initiative.

Managers look for information in five broad areas.

> Market ingenuity

> Technical intelligence

> Acquisition Intelligence

> Broad issues

> Other intelligence

The study found that 58 percent of managers rated market intelligence as the most important area for obtaining external information. It was three times more important than the next most important area, technical intelligence at 18 percent. The emphasis placed on market intelligence held true across all functional areas. The most significant category of information in this area is market potential, accounting for only 30 percent and structural change, 10 percent. Another category that reached double figures was for the new products, processes and internal technology category of technological intelligence.

An important aspect of this activity, especially where it underlies futures forecasting, is the detection of weak signals. That is, identifying pieces of information that indicate significant changes, but whose potential impact is not generally understood. This is obviously difficult, especially as many organizations fail to recognize key signals in the environment.