Overview

This guide describes the purpose of the Situation Assessment (SA) exercise and documents.

The key messages are that Situation Assessments:

In this guide, you learn:

What is the Situation Assessment Exercise?

An Important Step in the Planning Process

The Situation Assessment (SA) exercise provides the opportunity for the marketing functions and regional organizations to systematically communicate relevant information that sets the context for the Annual Brand Planning process. This provides an opportunity for informing the subsequent parts of the process of the needs, realities and critical drivers of the markets.

SAs can be used to systematically collect, analyze and present critical issues, trends and opportunities related to various aspects of a market or function. The objective of the SA exercise is not just to inform the brand teams but to create awareness of the right set of information at every level such that the functions and regional groups are better informed of issues that are relevant to them as they set out on developing their following year’s plans.

The SA process is especially useful as a method of identifying a wide array of interconnected issues and underlying trends that can impact the business. The SAs provide a high level view of the in-depth analysis and work done on a regular basis in every area of the business. This allows the markets, regions, functions and the brand teams to clearly understand the subsequent directions taken in the planning process. Every SA report has the potential to add value to other SA reports. SA reports are like a giant jigsaw puzzle. The overall picture is not clear until all the pieces are put together.

Example: Better teamwork with Situation Assessments

A financial analyst for the Oral Care category in Europe has been asked for a Finance SA report for UK, France and Germany. One of the major issues the analyst has to deal with is a new high-speed production line for large sizes of the product.

The ROI analysis for this line looks weak at first because it requires the brand to increase its large size volume as a percentage of the total brand from 18% of all units to 25% of all units. Only then will the throughput justify a proper rate of return on the new line.

After receiving SAs of the other functional areas, the financial analyst has a clearer picture of the requirement. For instance, the merchandising group reported early acceptance by Carrefour of the Mega Set for oral care. This set eliminates smaller sizes and according to their success model, causes a significant change in the size mix such that large sizes like those produced on the high-speed line comprise over 30% of the unit volume for all brands.

The Customer Management group reported that the top three drug accounts and the top two food accounts were embracing ABC accounting that paints a very negative picture of small size profitability. Lastly, the Market Research group has discovered new insights about the consumer group called oral “compulsives”. These target consumers are the heaviest users of oral products and buy nearly 75% or their dentifrice in larger sizes.

With this new information in hand, the Finance Manager can see that the financial concerns over the throughput in the new line were much less serious than previously believed. Attention can now be diverted to:

• The positive margin implications for the brand from the new line.
• The identification of some unanticipated savings that could be used to improve the overall ‘Germ Fighter’

introduction.

Why is the Situation Assessment Important?

Insights and Implications

A major value of the SA is to hear the expert’s outlook on the future assessed with the two I’s:

• Insights

New and deeper understandings of consumer needs and behavior that lead to competitive advantage. Experts definitely understand their own areas better than other members of the planning process. The team depends on the experts to provide insights.

• Implications

Experts report the implications of the facts and trends occurring in their area of expertise on the SA. For example: the proliferation of cable television channels means media is fragmenting. This makes it more difficult to build adequate impressions through consolidated Network TV buying and the brand needs to reach the consumer through some “non-traditional” ways.

Key Issues

The Key Issues offer a summary of the items that each area believe are of most importance in setting the strategic direction for the business. The Key Issues are designed to identify those elements preventing brand growth and to suggest alternatives for handling them. Each SA identifies those issues which are key to that area. These issues will be rolled up separately for presentation as part of the Key Issues identification process in SGP developments.