(Ninth in a series about fundamental marketing documents every business needs. The eighth was: Key messages: The prime communicators of your brand.)
SWOT is an acronym for “strengths, weaknesses, opportunities and threats,” and a SWOT analysis is one of the most important tools in the marketing toolkit. The analysis is often conducted in a group setting with managers, board members or an organization’s volunteers. You may be less familiar with the TOWS matrix, but it is related. In fact, you may recognize that “TOWS” is “SWOT” spelled backwards. Well talk about it in a few minutes.
To be productive, a SWOT analysis should also include research of customer and employee opinions; a survey of internal capabilities, resources and processes; secondary data about industry and environmental trends; and intelligence about your competition.
As you can see from the graphic above, strengths and weaknesses refer to internal aspects of the organization, while opportunities and threats refer to factors external to the organization. Obviously, strengths and opportunities are positive (or helpful to achieving the objective) and weaknesses and threats are negative (or harmful to achieving the objective).
Let’s look at each letter of the analysis a little closer to see what it means.
Strengths: This refers to resources that can be used to develop a competitive advantage over other businesses. Examples of this might be: great location, patents the business owns, a strong brand, a great reputation, good distribution networks.
Weaknesses: These are areas within your control that place you at a competitive disadvantage. Examples of this might be: high operating costs, high turnover, lack of differentiation, poor service, a bad website, lack of consistent marketing.
Opportunities: These are new areas for growth revealed through an external audit of your marketing environment. Examples of this might be: a newly discovered marketing niche, demand created by a competitor leaving the market, demand created by industry-level advertising, changes in trends.
Threats: These are external factors that you have no control over that could harm your business. Examples of this might be: new regulations or taxes that could seriously affect your costs, product liability lawsuits, bad press that hurts your reputation, a shift in consumer preference away from your product or service.
Completing the four quadrants will reveal a lot about your business and the market environment that you hadn’t previously known — or at least you’ll become more fully conscious of some facts that you may have been denying. Seeing it all in black and white is an eye-opener. But what do you do with it after that?
With the traditional SWOT analysis, often that’s as far as it goes. You’re then supposed to put two and two together, start minimizing your weaknesses, taking advantages of your strengths and opportunities, and avoiding your threats. But there’s a way to take your analysis to another, deeper level — it’s called a TOWS matrix.
The TOWS matrix goes a step further
The answer is a TOWS matrix. The video is a great resource, but here it is in a nutshell.
Unlike the SWOT analysis above, a TOWS matrix lines up the opportunities and threats down the side and the strengths and weaknesses across the top. Each item that is added to the matrix is both lettered and numbered. That is, if it is a strength, it is “S1, S2, S3, etc.” An opportunity would be, “O1, O2, O3.”
Once the entire grid is filled out, then you begin matching strengths to opportunities, by asking: How do we use our strengths to capitalize on our opportunities? Label the specific strength (S1) to the specific opportunity (O2) that capitalizes on that opportunity. For example, you might say, “We will use our great location in Phoenix (S1) to take advantage of the fact that our competitor has gone out of business on the west coast (O2).” That combination would be labeled on the matrix as S1O2.
In similar fashion, work through the grid, looking for ways to link points on the grid:
- How do we use our strengths to mitigate our threats?
- How do our weaknesses impact our opportunities?
- How are our weaknesses made worse by the threats?
If you would like a TOWS matrix template to help you with your planning, you can get a free download through the VolunteerHub, or you can easily make your own. When you have completed this process, you have a very strong list of strategies that you will use in your marketing plan. This makes writing your marketing plan a snap, and it’s based on tangible research and planning, not something you dreamed up in a vacuum.
So, when are you going to get your folks together to develop your own TOWS matrix?