potential areas of growth, is crucial to developing a marketing strat-
egy, as is establishing if any areas are in decline.
● Trends: Analysing general trends in the market identifies the changes
that have actually taken place. This can help to uncover the reasons for
these changes and expose the critical drivers underlying a market.
● Customers: The analysis needs to identify who the customer is and
what criteria they use to judge a product offering. Information on
where, when and how customers purchase the product, or service,
allows an organisation to begin to understand the needs of the cus-
tomer (Chapter 4 will look at consumer behaviour in more detail).
Identifying changing trends in consumer behaviour may begin to sig-
nal potential market developments and opportunities (see Chapter 6).
● Customer segments: Identifying current market segments and establish-
ing the benefits each group requires allows an organisation to detect if
it has the capability to serve particular consumer’s needs.
● Distribution channels: Identifying the changes of importance between
channels of distribution, based on growth, cost or effectiveness, per-
mits a company to evaluate its current arrangements. Establishing the
key decision makers in a channel of distribution also helps to inform
strategic decisions.■ Summary
The external auditing process creates the information and analysis neces-
sary for an organisation to begin to identify the key issues it will have to
address in order to develop a successful strategy. The PEST analysis
uncovered the critical areas in the external environment that the organisa-
tion needed to consider. The industry analysis revealed the structure and
strengths of players in the industry that any strategy will be required to
address. The competitor analysis disclosed the relative position of the
direct competitors in the strategic group. Finally the market analysis
began to explore current trends and areas of growth. More importantly it
began to build a picture of the consumer.
The external analysis is the initial step in the process of establishing the
key issues facing an organisation. The next stage is to examine the con-
sumer, before establishing methods for segmenting markets.■ References
Aguilar, J. A., Scanning the Business Environment, Macmillan, New York, 1967.
Diffenbach, J., Corporate environmental analysis in large US Corporations, Long
Range Planning, 16 (3), 1983, 107–116.
Kotler, P., Armstrong, G., Saunders, J. and Wong, V., Principles of Marketing:
The European Edition, Prentice Hall, Hemel Hempstead, 1996.34 Strategic Marketing: Planning and Control