Doing a market analysis. PESTLE and TOWS analytical frameworks
Launching a successful business in any industry requires doing a market analysis. The latter refers to the process of studying the dynamics, attractiveness and trends of a particular industry of economy. Market analysis is an integral component of an industry analysis. In practice, the majority of all market analyses facilitate in strategic planning and tactical execution of the strategy, supply chain management, designing and implementing marketing strategies and identifying the most appropriate targeting and positioning schemes. This entry analyzes the most essential components of a market analysis and provides basic insights into how to carry out them in tourism industry of the United Kingdom.
Finding relevant sources and collecting information
Depending on a particular industry, different methods of data collection are available (Lenskold, 2003). In some cases, the information is openly available on the web-platforms of different agencies like the UK Office for National Statistics or the British Chamber of Commerce. In other cases, the data has not been previously collected by any agency, and there is no other option for a company, but completing a market research using its own resources only (Patterson & Pauwels, 2009).
As far as the companies, which works in the UK tourism segment are concerned, the following methods of data collection appear to be applicable:
Industry reports. Different agencies, e.g. Tourism Industry Council, regularly publish various reports, which aggregate and analyze many types of useful and credible data, which can be used in future planning. This data is comparatively reliable and openly available, though some research skills are necessary to identify and retrieve it successfully.
First-hand qualitative data. Although open statistical data remains the most important type of research data, for some cases the data may not be openly available, or it may not be as accurate as the research team may needs it to be. In such cases, the only way to overcome the difficulty is to conduct a specialized research. The most common methods include surveys, focus groups and interviews.
PESTLE and TOWS Analyses
A comprehensive and informative market report should reveal major PESTLE and TOWS frameworks, which purpose it to provide descriptions of the internal and external environments. These frameworks are used to provide the following information to the marketers:
Political environment – any industry in today’s economy is susceptible to various political processes.
Economic environment – the practice shows that today’s economy is extremely turbulent. As a result, macroeconomic changes in one industry may have dramatic impacts on the others.
Social, Technological and Legal environments serve to describe the impacts of the societies and communities, technological inventions and new laws and regulations on a particular industry.
The purpose of TOWS is to provide a comprehensive description of threats, opportunities, weaknesses and strengths of an organization (Mejia, Balkin & Cardy, 2008). The use of this research solution is helpful for understanding how a company should adapt its strategies and navigate its advantages to achieve its goals, while developing comprehensive frameworks for minimizing the impacts of the weaknesses and vulnerability of the organization to different threats (Kotler & Keller, 2006).
Deriving Critical Success Factors
Management science defines critical success factor as an element, which is essential for achievement of the goals of the organization. Ensuring success of the organization without such factors, which may take the form of activities or assets, is not possible. At the same time, it is important not to confuse critical success factors with criteria, which is used to measure successfulness of the organization (Joshi, 2005). While the second ones help to understand whether performance on an organization is effective or not, the first ones serve as the prerequisites for achievement of the positive results.
As far tourism market in the United Kingdom is concerned, market analysis can help in the following areas:
Understanding whether there is enough demand in a specific industry niches.
Successfulness of a particular business venture in tourism primarily depends on attractiveness for potential tourists. It is important to highlight that the demand for tourism services is particularly volatile and that international events and political processes are the main determinants of such volatility, e.g. during different sports competitions the number of visitors to a country increases, while the episodes of political instability may scare away potential visitors.
Revealing new tourism destinations
Tourism industry heavily relies on availability of the new destinations (Joshi, 2005). Hackneyed tourism attractions attract less and less visitors, not to mention that the competition in such niches is strikingly high. Therefore, one of the most important factors critical success factors in this regard is regular discovery of the new tourism destinations and comprehensive marketing of such destinations to the customers.
Research is helpful in identifying the places, which were previously not popular among the tourists. Furthermore, business research often helps to develop and popularize a newly discovered tourism destination, because it helps to understand what methods of ‘popularizing’ a particular destination are the most effective ones.
Developing the right offer to the customers
Once the researchers identify the new tourism destinations, the next task is to wrap them and to present to the customers. Research studies are helpful in understanding what type of market proposals the clients like, and how the
Identifying the most effective approaches to marketing and advertising.
One of the most critical factors in business development is effective marketing strategies. Tourism business is marked with intense competition, which increases every year. As a result, successful marketing becomes the critical aspect for succeeding in tourism. It is business research, which reveals the methods effective in stimulating the clients.
Helping to establish a brand name for the company
The practice demonstrates that developing and establishing a recognizable brand is tremendously important in tourism and hospitality industry. Because competition between different service providers is unprecedentedly rising, the only way to stay for many companies to stay competitive is to increase their brand coverage. Business research is particularly effective in identifying what elements of a brand-building campaign are the most important ones, and how to leverage branding effectively.
The importance and value of conducting a market analysis for short, medium and long-term goals of the organization
The practice demonstrates that not only market research is important for the development of the different critical success factors, but also it is an important underlying aspect in long, short and medium term planning of a company.
Long-term planning
Long-term planning refers to scheduling of activities and allocating company resources for the five years and more. The practice demonstrates that in the majority of cases long term planning is limited to identification of the major financial and development milestones (Lenskold, 2003). Establishing precise goals is not often possible because many internal and external variables are involved and predicting everything with precision is virtually impossible, especially in today’s highly volatile economy.
However, market the use of market analysis findings is indispensable in long-term planning because it helps to receive general understanding of the market, its capacities and opportunities. Thus, evaluation of the market will help to understand what ROI will be possible to get, and how much resources is required of this.
Moreover, market analysis will help to develop the best market offer in the long-term perspective, i.e. market data will help the company managers to understand what products and services the company should specialize in.
Medium-term planning
Medium term planning involves scheduling different activities and operations for the period between one and five years. Although it is not as fundamental and long-term planning is, yet it is a very important part of company planning. One of the key features of medium term planning is that the planned activities should be flexible, i.e. there should be always a possibility to introduce changes to the plan (Patterson & Pauwels, 2009).
The use of market research is indispensable in this type of market planning. Firstly, market data helps to understand what the role of economic externalities, which may positively and negatively affect plan execution. For example, the market data can alert a company that the competitors developed a new product or started offering a new service. In such situation, the company will be become capable of developing appropriate response measures and developing a counter-strategy (Kotler & Keller, 2006).
Short-term planning
Shorting term planning refers to planning and execution of the company operations and activities in the period between one day and one year. The practice shows that this approach to planning is one of the most dynamic and changeable, because it is short-term planning, which should respond to the daily challenges and unforeseen situations, which appear on the company daily landscape.
The role of research in coping with such daily challenges can hardly be overestimated by the company executives. Firstly, the research data helps to understand which solutions are the most effective for the particular working scenarios. Secondly, the research data is helpful for predicting potential outcomes of such actions. Finally, the research findings are likely to reveal the impact of immediate company activities on its customers and their behavior on the market.
Applying the Solutions for Savannah Coffee House and Bakery
Savannah Coffee House and Bakery is a typical example of a small-sized business. The solutions and the methods described above may be applied for improving operational performance of the company, increasing its quality standards, enhancing its strategic planning and management.
Firstly, PESTLE and TOWS solutions will be helpful for understanding whether the company works in a favorable external environment, and which changes may be necessary to offset its weak points and to mitigate potential threats. In particular, if any new technology in coffee making or baking appeared on the global business horizon, the use of these solutions will amplify how to implement them.
Secondly, understanding its critical success factors will help Savannah Coffee House and Bakery to reduce vulnerability of its critical areas. For instance, effective advertising is one of the primary factors, which assures steady revenues. By determining the most effective advertising approaches and reinforcing them, the company can maximize profits. Another critical success factor for Savannah Coffee House and Bakery is reliable suppliers, who provide high quality coffee beans to the company. This industry is extremely competitive nowadays, and quality factor becomes of paramount importance for attracting and retaining the clients.
Overall, it can be concluded that by making these analyses Savannah Coffee House and Bakery can become more productive in terms of revenue increase and market resilience.
Works Cited
Mejia, Luis R., David B. Balkin, and Robert L. Cardy. Management: people, performance, change. Boston: McGraw-Hill Irwin, 2008. Print
Kotler, Philip, and Kevin L. Keller. Marketing management. Upper Saddle River, NJ: Pearson Prentice Hall, 2006. Print.
Joshi, Rakesh M. International marketing. New Delhi New York: Oxford University Press, 2005. Print.
Patterson, Laura, and Koen Pauwels. Marketing metrics in action: creating a performance-driven marketing organization. Chicago, IL: Racom Books/Racom Communications, 2009. Print.
Lenskold, James. Marketing ROI: the path to campaign, customer, and corporate profitability. New York: McGraw-Hill, 2003. Print.
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