SWOT analysis is a basic, straightforward model that provides
direction and serves as a basis for the development of marketing
plans. It accomplishes this by assessing an organizations
strengths (what an organization can do) and weaknesses (what
an organization cannot do) in addition to opportunities (potential
favorable conditions for an organization) and threats (potential
unfavorable conditions for an organization). SWOT analysis is an
important step in planning and its value is often underestimated
despite the simplicity in creation. The role of SWOT analysis is to
take the information from the environmental analysis and
separate it into internal issues (strengths and weaknesses) and
external issues (opportunities and threats). Once this is
completed, SWOT analysis determines if the information indicates
something that will assist the firm in accomplishing its objectives
(a strength or opportunity), or if it indicates an obstacle that must
be overcome or minimized to achieve desired results (weakness
or threat) (Marketing Strategy, 1998).
The internal and external situation analysis can produce a large
amount of information, much of which may not be highly relevant.
The SWOT analysis can serve as an interpretative filter to reduce
the information to a manageable quantity of key issues. The
SWOT analysis classifies the internal aspects of the company as
strengths or weaknesses and the external situational factors as
opportunities or threats. Strengths can serve as a foundation for
building a competitive advantage, and weaknesses may hinder it.
By understanding these four aspects of its situation, a firm can
better leverage its strengths, correct its weaknesses, capitalize on
golden opportunities, and deter potentially devastating threats.
Internal Analysis - The internal analysis is a comprehensive
evaluation of the internal environment's potential strengths and
weaknesses. Factors should be evaluated across the organization
in areas such as:
Company culture, image
Organizational structure
Key staff
Access to natural resources
Position on the experience curve
Operational efficiency, capacity
Brand awareness
Market share
Financial resources
Exclusive contracts
Patents and trade secrets
The SWOT analysis summarizes the internal factors of the firm as
a list of strengths and weaknesses.
External Analysis - An opportunity is the chance to introduce a
new product or service that can generate superior returns.
Opportunities can arise when changes occur in the external
environment. Many of these changes can be perceived as threats
to the market position of existing products and may necessitate a
change in product specifications or the development of new
products in order for the firm to remain competitive. Changes in
the external environment may be related to:
Customers
Competitors
Market trends
Suppliers
Partners
Social changes
New technology
Economic / Political environment
The SWOT analysis summarizes the external environmental
factors as a list of opportunities and threats.
SWOT PROFILE OF LUX
STRENGTHS WEAKNESSES
1.Strong Market Research (door to 1.Lux is mainly positioned as beauty
door sampling is done once a year in soap targeted towards women, hence it
Urban and Rural areas) lacks unisex appeal
2.Many variants (Almond Oil, Orchid 2.Usage rate/ wear rate is high and is
Extracts, Milk Cream, Fruit Extracts, generally mushy and soggy
Saffron, Sandalwood Oil, and Honey to 3.Some variants like the sunscreen,
name a few) International variant did not do well in
3.Strong sales and distribution network the market
backed by HLL 4.Certain advertisements like the
4.Strong brand image recent one with Shah Rukh Khan
5.Positioning focuses on the attractive resulted in controversial interpretations
beauty segment of the message of the advertisement
6.Dynamically continuous innovation of and lead to some loss of focus (of
the product and brand rejuvenation – message of the advertisements)
new variants (Aromatic Glow and Chocolate 5.Stock out problems - replenishment
Seduction and Lux White Spa body wash) and time is high in semi-urban/rural areas
innovative promotions (22 carat gold
coin promotion – ‘Chance Hai’)
7.Perceived to have high value for
money (strong brand promotion but
relatively lower price which is a winning
combination in the popular segment)
8.Though it is in popular segment, it is
having mass appeal/market presence
across all segments (15% of the soap
market captured by Lux (sales /
volume)
9.Unique advantage of having access
to resources and assets of HLL
OPPORTUNITIES THREATS
1.Soap industry growing by 4% in India 1.New entrants/local
2.Beauty segment’s Compounded competitors/MNCs would increase the
Annual Growth Rate (CAGR) is very competition (Camay, P&G)
high. An indication of this is that Fair 2.High internal competition – Pears
and Lovely’s segment is increasing at a also catering the beauty segment (also
fast rate - Lux must reinforce its from HLL stable)
presence in the beauty segment 3.Excessive dependence on beauty
3.More promotions like price-offs and segment makes Lux vulnerable to
samples changing customer tastes
4.Retentive strategy required as the 4.Technological change makes the
soap segment is in the mature stage of existing products obsolete – Lux should
its product life cycle focus on technological innovations like
5.Line extension – probably with more Body Wash
variants catering to the beauty segment
like natural, herbal soap etc
6.Liquid body wash is currently in the
growth stage – Lux should come out
with more variants in this segment
7.Level of servicing is high during sales
promotion schemes – this could be
brought down
