SOOT analysis Is a strategic planning method used by business to determine their strengths, weaknesses, opportunities and threats Businesses need to consider the financial and practical implications of any marketing mix that they want to implement. Very few businesses are able to operate a marketing mix without considering the costs involved. Typically costs can limit a business’s marketing mix in several ways. Promotion The first internal constraint that will affect my product will be price.
A business may to be able to set a really competitive price and still make a profit. As my product will be new I will have very limited funds to start off with to help launch my product compared with well established brands that can afford a lot more than me. For example one of my competitors Is Ribbed they are able to advertise their productions on television and can pay millions of pounds to worth of sponsors to help them raise brand awareness. However when I asked my target audience they stated that advertising through radio would be the best way for me advertise.
This is perfect for e as radio play is costly but not as costly as a television ad would be, therefore I would be about to have more radio play for my money then for example paying for one Television ad. This is a strength to my business as this way I would be able to afford more advertising therefore be able to create more brand awareness thus gaining more customers equaling more profit. Price Some businesses are unable to develop the products they would like to sell because research, development and production costs are too high.
In this situation, a business might find that It could only recoup Its costs by setting a price that would be o high for many customers and much higher than all their competitors’ products, therefore customers may just stick to the competitors’ products there used to. This factor my not affect my business as when surveyed my target audience stated that they would be willing to pay more than they usually do for their fizzy drinks is they were getting a healthier alternative.
Product Advertising, public relations and other promotional activities can be very expensive. Some businesses are unable to run expensive promotional campaigns because they are unable to afford the high costs involved. Strength Strengths of a business are the positive elements and parts of a business that put you ahead of another business and competitors. My product Is a healthy fruit drink made as an alternative to fizzy drinks. To put a product head of another It would usually have a unique selling point to give it that little advantage over there’s.
My competitors, as they cannot offer this. With this unique selling point and the fact that my product is a new product, I will be likely to attract new customers and make an impact in shops and the fizzy drink market. People will become curious about a new rink on the shelf offering something different to the current fizzy drinks on the market. There will likely be a buzz over my product and customers will hopefully be curious enough to purchase it.
Current customers will then hopefully be seen drinking it buy their friends and other people and this will hopefully lead them to ask questions and try to find out about this new product, leading them to purchase it and try it for themselves, therefore using customers word of mouth to my advantage. However my product can only be a new product for a certain amount of time Hereford I will try to make as big of an impact as I can in the short term.
My other main strength is that my product offers great health benefits to you, in particular my product offers you one of your five a day this is its unique selling point, unique selling points are used to help product sell much better putting you at an and advantage over your competitors. There are not many drinks on the market that offer you one of your five a day, Ribbed plus offers your some health benefits with added vitamins but do not offer on one of your five a day, therefore this will put me slightly ahead of hem making this defiantly a big strength to get me more sales and more awareness.
From my primary research I found that the majority of people were interested in an healthy alternative drink coming to the market to rival the current fizzy drink market, which most stated they would purchase a healthy alternative other the fizzy drinks. The advantage to this is that people will be forced into buying my product as there are very little other dinky similar to mine on the market, therefore giving me the majority of sales.
Along with this once people try it they will create demand in homeless as not only is my product healthy but it has a great taste too so unknowingly they will be marketing my product my spreading the word so even those not interested in the health benefits will be interested in buying my product for its great taste. Weaknesses Weaknesses are the bad points of the business that need some sort of improvement. One of the main weaknesses that will affect my product and business is customer loyalty.
Many people will be currently purchasing and have been purchasing my competitors’ products such as Coca-Cola and Ribbed for many years, this means they ill have built up a loyalty to that product, I will be the first product they think of when going to purchase a fizzy drink. People will be comfortable and content with the drink they are currently buying they are happy with the price, flavor and branding of the product therefore will be very reluctant to change their product they are used to.
This means I will have to try harder to attract my customers by possibly offering them and extra incentive, like a special deal or reduce prices, I could also try heavily advertising my product to get customer attention however doing this may alp me to get customers but will cause me to have less revenue as I am spending more and offering deals to attract customers but this will only be for the short term as once customers buy my product they will become used to it and comfortable with Opportunities price place promotion product Opportunities can help a business to progress and improve.
An opportunity that my business could use to its advantage is the face that there has been a surge in health products recently people are trying to take care of their health when I surveyed my target audience I asked them ‘do you take into consideration owe healthy the product is when you purchase it’ the results from this were 60% of people saying yes they do take their health into consideration, therefore I could use this to an advantage and target there customers more and make sure that my advertising is specifically targeted to gain them customers, also to try and convince those who said no and try to gain them as customers too.
Another opportunity I could take advantage of to improve my business would be considering moving my product to a health food shop, this way I would constantly have my specific market hose interested in heath looking at my product, this would also give me the chance to get those customer that only shop in healthy shops and not local shops and corner shops, helping me to gain more customers, giving me more off profit.
Another opportunity I could go with would be expanding my product to multi pack of bottles and more sizes of my healthy fruit drink, this would mean I have more variety of my product on the market helping me to gain more market share and more of a profit Threats Threats are elements that could potentially harm my business in a negative way. My equines has a few threats one of my main threats is my business going bust.
As I will be investing my own money into the bushiness I can never be sure that I will get it back, my product could come out at the wrong time of the year and customers are just not interested therefore it will not sell at all. If my product doesn’t sell and I go bust then I would of then lost all the money I out into my business, possibly causing me to have to liquidate some of my assets if I have suppliers to pay, it could also cause me to go bankrupt.
My business going bust could be the effect of another wreath, one of my big name competitors coming out with a product Just like my product. As customers already have a brand loyalty to some big name brands on the market, if they bring out a product Just like mine then it is likely that they will go for there product instead of mine as they know the brand and trust the brand, they would likely have more confidence in there products then my healthy drink as it is new to the product from a new company they are not familiar with.
Therefore this factor could tie into my business going bankrupt and failing. The economy could also e a threat to my business for example inflation could affect me, if prices for good go up then making my product may become more expensive, therefore I would have to raise the price of my product to help try and brake even within my business. However doing so my not keep customers happy and they may think my prices are too high therefore change to my competitors products as they may be able to afford to keep lower prices.
Along with this recession could be a factor that threatens my business. In a recession people generally have less money to spend therefore there would be a crease in in the amount of spending as customers will have less deplorable income and would likely only spend there money on essential necessary products and not on luxuries like my healthy fruit drink. External constraints PESTLE Political Currently the political part of PESTLE doesn’t really affect my business as the conservative party are currently in power.
However one day the green party may come to power so this may change. For example, they have certain policies concerning recycling; therefore this may mean I have to alter my packaging of my product. My packaging is an important factor of my product as it’s targeted at teens and young adults therefore a lot of money will be spent on it to make sure its perfect. So changing it could result in them not being attacked to the product anymore and then deciding against it and not purchasing it.
Also having to fully change all my packaging to a more environmentally friendly packaging, could be potentially costly for my business, for example I may have to change it to a product that cost more then the one I am currently using making the price of product slightly higher this may hen result in me not breaking even with the set price of my product therefore I may have to rise the prices of my fruit drink, however this may upset customers and force them to my competitors products as they can afford to keep there prices the same as they are more established and have more money then I do.
Economical As discussed before in threats the recession will contribute to the success of my business. The recessions will, mean that there is less money in circulation therefore people are spending less on luxuries and only buying essentials therefore my product y be classed as a luxury and cheaper unhealthy drinks my be purchased instead. Another economical factor that will affect my business will be interest rates. As my product will be a brand new product, I will have very little money to start off with, so will most likely have to borrow money in order to launch my product.
This means that interest rates will be crucial for me and my business. The higher the interest rates the less money I will be able to borrow, therefore my marketing will be less effective and my product may not be to the quality and standard it should be at. This is because the more money I borrow the more money I will have to pay back as the rates will be a lot higher, and it is important when starting a new business and bringing out a new product not to get into too much debt.
These factors may mean that instead of advertising on local radio as my target audience requested in my questionnaire stating it would be the most effective, I may have to rely on cheaper alternative methods such as local paper, flyers or posters intend, the ways my target know about my product, most importantly my target audience wouldn’t know about y product, or they Just would not have enough persuasion on buy my product, therefore it would Just not make enough or any sales, possibly causing my business to go bust.
However currently in the I-J the interest rates are extremely low at a low of 0. 5 meaning they couldn’t really get any lower this is due to the current economic climate, the interest rates should have gone up but they haven’t as people can’t afford for them to go up. This factor works in my favor as this way I will be available to borrow a lot more money as it will be very affordable to pay back this mean that I ay even be able to afford to have more radio adverts for advertising as I will have more money to fund my product.
Social From secondary research I found that children are become more obese than ever and the figures are ever increasing, this is because children Just do not eat what they are required to within a day to stay healthy. My product is a healthy alternative to fizzy drinks containing one of your 5 a day, but if obesity is on the rid then this may mean children Just do not cares about healthy products or there health the fore they would most likely Just stick to their well knee brand drinks such a Coca-Cola and
Ribbed. However from my primary research I found that teens and young adults are starting to care about their health and want to make a change, therefore I have targeted theses ages instead of slightly younger years. But however to keep my target audience interested in their health my marketing will have to up to a great standard if I’m going to make sales and keep them up. As well as stating the health benefits I will state the health risks of continuing to drink unhealthy sugary fizzy drinks.
Also I will have to appeal to teens and young adults and I will have to make sure creating rand awareness is achieved if I am going to make any sales. Technological For my product technological wise the main factor that will affect my business is the internet. More and more teens and young adults are now using the internet on a everyday regular basis, therefore this could be something that I look into using the target more and gain more customers. As well as advertising through the local radio I could think about setting up a website for my product when I have a little more funding.
This is relatively cheap which will keep costs low and should make me a lot f extra revenue as it will be directly aimed at my target market. Another form of internet that I would benefit from would be using social media sites. Social media websites are free to sign up to therefore would be free advertising for my business. Websites like Backbone and Twitter would be sites that I would think about using as these websites are very popular with teens and young adults so it would be directly targeting to them.
I could post information on my product that my target would see and are then able to repost and tell others about creating a buzz for my product and causing me to gain more customers. This will create extra awareness for my product as not all young adults and teens listen the radio, which is obviously my main way of advertising. Also when I start selling my product in large supermarkets such as Tests internet. More and more people do their shopping on the internet, so having my product sold on the internet will again let the most amount of people possible be able to buy my product.
Legislation Health and safety, consumer laws As a business I must ensue that I follow and abide by the law and regulations that will apple to me. With concern he making under the authority of the advertising standards agency I must ensure that I consult the regulations of the trading standards so that customers are protected. My advertising must be checked so that they cannot include offensive or perceived in such a way by the public.
My adverts cannot include include any form of discrimination; if I were to break these rules if I could be very damaging for my company. If I break these rules, I may have to pay fines and it would cost me to launch a new advertising campaign. I may also lose customers if they were offended by any of the content of my adverts. An example of a law that applies to my business is the trade description act: this means that that it is unlawful to provide a false description or make false claims about my product. His is called the unsubstantiated Claims, while advertising my product, to make sure I get the most amount of sales possible. I need to show my market how good my product is, and this will involve trying to outdo my competitors. However this legislation means that everything that goes into any adverts must be 100% true. In terms of my fruit drinks, I can not make a statement such as ‘this is the best drink you will ever asset’, because I Just do not have the evidence to back up my statement. The actual facts about my product must also be correct.
I cannot say that my health drink is ‘sugar free’ if in actual fact there is actually sugar in my product. This constraint may harm my marketing because I may nit be able it make my product as appealing to my target market as I would of been able to, which means that I could potentially make less revenue my me and my business. This also mean I cannot slack on the quality of my product if I claiming and marketing my product as containing one of your 5 a day, hen it actually has to, which mean there will be no ways of me saving on costs. He higher the quality I want me product to be, there more expensive it will be to make, so having a very expensive product at the beginning could mean that I am only able to produce a few units, meaning me sales are not being maximizes. Environment Environmental factors could affect my product. For example I could choose the package my product in environmentally friendly boxes; this could help me to attract more customers as they feel they are helping the planet. Not many environmental factors factors effect my business directly. T one main factor that effects my business is the fruit used for my fruit drinks, if I choose to use fruits from abroad this would be worse for the environment and may upset customer that my fruits are not home grown and sourced in the UK this may cause them to find a product that does therefore they may have to be sourced from abroad, therefore I may want to make sure that my products are from fair triad farmers that are treated fairly, this may be slightly more expensive for me but may please my customers and give my business and product a good name, the fore causing me to gain more customers.
