Why Every Marketer Should Know The Five Forces And Value Chain Model Final

How strategy frameworks can help your brand stay relevant

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As a marketer, you likely deal with a lot of granular questions weekly as you decide what to share with the world.

What content is our audience consuming? What current events are defining online conversations? What are competitors posting? What channels and creative seem to be really popular?

These are all good questions and certainly ones that will make you great at your job.

But once in a while, it can help to think of an even bigger, more abstract and somewhat morbid question: What could destroy us?

While it’s not necessarily fun, it can be healthy to think through success as an uncertainty.

We don’t have to look too far. In 1980, seven of the top ten companies in the S&P 500 were oil and gas companies. IBM, which saw an extremely profitable run in the 1980s, was leapfrogged by companies like Microsoft and Proctor and Gamble. Microsoft took less than a decade to become one of the world’s most valuable companies.

Can you guess how many of the top ten valued companies in 1980 were still in the top ten in 2020?

Zero.

Even in just twenty years, it’s fascinating to think about how the world has changed. Oil and gas stocks, which once represented more than a quarter of the market, now represent less than 5%. Kodak, one of the darlings of the 1980s, is barely recognized today. Mergers, recessions, bankruptcies and latent innovation could continue to change the course of today’s giants. Many of the companies we think could be popular in the next twenty years may not even exist today. Certainly, nobody in 1985 could have predicted the future of Apple.

But what can you do as a marketer to prepare for the future?

3 frameworks to spot the big picture for your brand

By learning simple, strategic frameworks, you can start thinking through the trends that could define your company’s future and give you a leg up on areas and conversations to research. These frameworks can help you reinforce why you exist and how to analyze other competitors in the space to better chalk up your position.

Five Forces Framework

The brainchild of academic Michael Porter (essentially to modern strategy what Lebron James is to basketball), the Five Forces Framework is one of the most popular frameworks to understand what’s happening outside of your business.

Consisting of five components, Porter’s Five Forces essentially helps you answer the broader question of how attractive it is to be in a specific industry.

A Diagram Depicting Porter'S Five Forces Model With Inputs For: Threat Of New Entry, Buyer Power, Threat Of Substitution, Supplier Power And Competitive Rivalry.

Porter’s Five Forces can help you address how power is distributed in an industry, the nature of how easy it is to enter and the likelihood of survival.

For example, look at the airline industry. There are only two significant suppliers: Airbus and Boeing. If they decide to raise prices or go on strike, it can create shockwaves throughout and likely impact every airline in the industry. In addition, since it costs a lot to build planes and market websites, it’s much harder to enter the industry.

In contrast, the real estate industry has more power in the hands of buyers, who have many options (brokers, websites) for price comparison. For sectors like food and beverage, there is a lot of competition, including healthier options at relatively low costs to the average person who wants to switch.

While not every company may have a traditional supplier or buyer framework (i.e., modern internet companies), every company is impacted by trends that influence buyers.

How to use the framework:

To start thinking through the five forces, the first step is to zoom out and look at the industry or space your brand is in, which can be clarified by a simple Google Search or look at Yahoo Finance. Use the image above to guide your template, with rivalry in the center and the corresponding forces surrounding it.

Start with your users or customers and think through some questions: What else are they using? If you disappeared tomorrow, what would they be doing? Then, think through the industry as a whole. Is it easy for new companies to come in? Does loyalty play a role? All the criteria in the above image can help you learn. What you do next depends on the output. If customer loyalty isn’t very strong or switching costs are low, it might be good to pay attention to what competitors are doing to combat that.

PESTELE Analysis

Another common framework is the PESTELE Analysis, which considers many factors like economic, political, social and legal factors that can influence your product or brand. Take a look at modern apps–it would’ve been impossible for an app like Uber to exist twenty years ago. It needed a few factors in its favor: Smartphones to become normalized, Apple to offer its app store platform, society to accept people getting into strangers’ cars and a confused regulatory atmosphere that couldn’t figure out how to govern ridesharing.

Similarly, PESTELE factors essentially created what the airline industry is today. The recession and airline deregulation of the 1980s forced many airlines into total collapse. American, Southwest, Delta and others were able to weather the storm and survive to continue their success today.

A Diagram Of The Pestel Framework Including Inputs From Driving Forces Like Politics, Legal Regulations, The Economy, Social And Evironmental Factors.

 

While understanding the environment and industry can help build a longer-term strategy, some tools are more helpful for internal analysis and more nuanced to the capabilities of your brand.

How to use this framework:

Unlike the Five Forces, which can largely be filled in through some level of intuition and understanding of business models, PESTELE requires a lot more research to understand the different trends impacting your brand.

Start with each driver of the PESTELE analysis above and dive into each separately. Politically, have any laws been passed that could impact your business? Any new laws that might be passed? Are there any new social trends that might make your business appetizing? Any new technology (i.e. generative AI) that could dramatically change the way people use your service?

What counts as a notable factor is entirely up to you, but PESTELE will open your brain up to think creatively about the business world around you.

SWOT Analysis

A SWOT Analysis is a popular framework used to categorize how you’re doing as a company. With the acronyms standing for Strengths, Weaknesses, Opportunities and Threats, SWOT essentially looks at how the present and future can coexist within a single framework. Take a look at an example SWOT of Nike–while you can see the workings of a strong company in the present, the opportunities and threats section of the SWOT can help Nike assess how it moves forward. Does it jump into better PR? New categories? VR?

Like the other frameworks, SWOT only benefits from the amount of detail you put into it and the creative ways you think about existing trends plus how they impact the work you do.

 

A Diagram Of An Example Swot Analysis Including Inputs For: Strengths, Weaknesses, Threats And Opportunities

How to use this framework:

The great thing about the SWOT analysis is not only that it’s fairly easy to put together but that it is mostly internal and can be a good crux for reflecting on your current brand.

You likely have the knowledge to do a SWOT without much external research. The best part is that SWOT can also be done at a functional level–your social media alone can benefit from a SWOT analysis. This involves thinking through strengths (which platforms are you strongest on), weaknesses (struggling content), opportunities (new platforms and competitor advantages) as well as threats (market conditions, algorithm changes, etc.)

Don’t underestimate your role in zooming out

While not many jobs require you to build and populate these models as a function of your daily duties, understanding how the world is changing around you and how your company is positioned to benefit or fail is a muscle you can use for any job.

While it’s constructive if you’re a newer company or an upstart in the industry, it can also be a beneficial way to build influence within a larger or existing company. If you’re in a customer-facing role like social media, your eyes and ears are constantly listening to conversations customers, governments and competitors are having.

It’s not likely that you alone can fix the state of the company. After all, some of the brightest executives in the world couldn’t help Blackberry predict the business model that would spark iPhone adoption to skyrocket. But even if you’re not the one making the decision, a single input in a PESTELE or SWOT can be the catalyst to surviving the next twenty years.

Once you’ve used strategy frameworks to find opportunities for your brand, these three prioritization frameworks will help you define projects and next steps.

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