The purpose of the situation analysis, also known as the strategic audit, is to answer the question: Where are we now? This involves the detailed analysis of the organization and its environment. A comprehensive analysis commonly involves the following elements:

The macro-environmental audit: general external factors such as political, economic, sociocultural and technological trends must be analyzed in order to identify current and future developments that are likely to affect the organization.

The micro-environmental audit: this examines external factors that are more localized, directly affecting the organization and its market. The micro-environmental audit will review issues relating to intermediaries and other channel partners, as well as assess competitors.

The customer audit: clearly, an analysis of current and future customers will form the central part of any marketing analysis. The customer audit is commonly concerned with establishing the state of the organization’s current customer base, as well as identifying opportunities for customer acquisition (see for example Wilson and Gillighan 1997).

The company audit: the final dimension of the situation analysis is an assessment of the organization’s strengths and weaknesses. Here, tangible and intangible resources are reviewed and core skills or competences are assessed, usually in relation to competitors’ strengths and weaknesses.

These analyses will provide information on the opportunities and threats facing the organization, as well its strengths and weaknesses relative to competitors. The internal and external issues are commonly brought together in the Strengths, Weaknesses, Opportunities and Threats (SWOT) analysis. By identifying the convergence of threats and weaknesses, or opportunities and strengths, the planner can prioritize the issues facing the organization and so develop the aims or general direction of its strategy.


The RM audit

It should be stressed that, in most cases, the scope of the analysis will not be limited to these questions; rather they will sit within a broader analysis. The importance of the RM-specific questions will depend on where the organization’s approach to marketing lies on the RM-transaction continuum. Hence a useful starting point is to ascertain the degree to which RM is appropriate to the organization, product category and market conditions.

Is relationship marketing appropriate?

Which customers should we invest in? Which should we ‘neglect’?

How well-suited is our organization to the servicing of relationships?

How well do we compare to our competitors?