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How to analyze your business effectively


Using sound business analysis as the key to unlocking good business strategy and plans


Business analysis has always been a dreaded activity—especially among marketing practitioners. This is not surprising considering that a lot of marketers are right brained people. Being creative and artistic, they would more intuitively spend their time brainstorming and creating innovative ideas to entice consumers to use their brand. However, as marketers and sales people develop plans, a constant underlying question on their mind is: “Will this idea work and build the business?”. This is an important question to ask—even more so now that the market is so volatile due to the pandemic and businesses just cannot afford to waste resources on plans that do not work.


The key to developing good business strategy and plans are anchored on sound business analysis. While a few businesses might get lucky to come up with an enticing consumer plan without the benefit of doing any business analysis, this type of risk-taking usually does not work. Businesses that take this kind of risk tend to end up wasting valuable resources, stagnate, and eventually start losing revenue and market share. Conversely, businesses that take a more informed and strategic approach to these plans through business analysis are able to uncover and capture better opportunities.


What is Business Analysis?

Business analysis is:

  • the fact-based understanding of the business…

  • to uncover the real reasons behind its performance…

  • in order to develop plans to grow the business


These 3 parts guide how one should approach business analysis.


In Acumen, we use the W8 framework as a guide in doing business analysis. The W8 framework is also divided into 3 sections, namely:

  1. What is happening?

  2. Why this is happening?

  3. What now?

How to do sound Business Analysis?

1. What is happening?


SITUATIONAL ANALYSIS

To define what is happening, one does a situational analysis by asking the key questions on WHAT, WHEN, WHERE, and WHO using available business and consumer data.


In this section, it always starts with the main business metrics of revenue, market share and profit. Using revenue as an example for our WHAT, one can assess its performance by understanding what drives it, such as:

  • WHEN: revenue performance over a time period

  • WHERE: revenue performance within an area, channel, segment, and category

  • WHO: revenue performance within a consumer segment


It is quite important to do the analysis all the way to the WHO as they are the brand’s source of revenue. Throughout the analysis, it is also important to explore the performance across all available segments in the WHEN, WHERE, and WHO as this helps in identifying segments where the business is growing or declining.


OVERALL ASSESSMENT OF THE KEY METRIC

Once the situational analysis is complete, one should do an overall assessment of the identified business metric by:

  • Describing its overall performance (e.g., growing, stagnating, declining)

  • Identifying the reasons behind this performance

  • Capturing key findings on what are and are not working


DEVELOPING THE PROBLEM STATEMENT

The key output of determining what is happening is an IDENTIFIED PROBLEM STATEMENT that captures what the business should prioritize by understanding further and then acting upon. The problem statement should be targeting to address the metrics that have the biggest potential to impact and grow the business.


It is important to remember that in crafting the problem statement related to revenue and market share, it should always include the WHO (or the consumer), as they are the ones that need to be influenced and convinced to use the brand. In addition, a problem statement can either be a good problem or a bad problem.


A good problem harnesses one’s strength or capitalizes on an opportunity, such as: “How can the brand sustain or even accelerate its growth in consumer segment A.”


A bad problem necessitates the need to fix a current business issue, such as: “How can the brand arrest the decline of its user base in consumer segment A.”


Once you have an identified problem statement, you are ready to move on to the next section of the W8 framework.



2. Why this is happening?


In this section, one does a root cause analysis by unearthing the MANY WHYs, the DEEPER WHYs, and the REAL WHYs. To be efficient in the analysis, the IDENTIFIED PROBLEM STATEMENT is what will be subjected to the root cause analysis.


UNDERSTANDING THE KEY DRIVERS THAT INFLUENCE CONSUMER BEHAVIOR

In Acumen, we have a tool that facilitates the WHY analysis called the Business Drivers Map. The business drivers map helps to form a comprehensive understanding of the consumer by determining the key drivers that influence their behavior in using the brand. Hence, what one should do is to assess the brand performance across the identified consumer behavior drivers.


ANALYZING MARKETING MIX EFFECTIVENESS AND UNDERSTANDING MARKET FACTORS

The next step is to assess the effectiveness of the brand’s marketing mix or its controllable factors (7Ps) in delivering the desired consumer behavior drivers. It is also important to see the impact of market factors that affect performance or the brand’s uncontrollable factors (5Cs). The result of this analysis is a list of issues and opportunities across the consumer behavior drivers, the brand’s marketing mix and its market factors.


In Acumen, we use a clustering technique which enables one to group issues and opportunities together to formulate key strategic themes. The key output of this section is a list of strategic themes which enables one to have a deep and insightful understanding of the identified problem statement.



3. What now?


IDENTIFY AND PRIORITIZE STRATEGIC IMPERATIVES

To determine the actions that the business must take, it is important to identify the key strategic imperatives that would address the identified problem statement. Using the strategic themes as inputs, imperatives which can address one or more of the strategic themes can be carefully identified.


Once the imperatives have been identified, these are then subject to prioritization by using criteria that scores each imperative by its the commercial potential, consumer impact, and resources required to implement.


Once this section is complete, teams can confidently move to develop each of these ideas into something that is creative and relevant—knowing that they are anchored on important consumer needs and are likely to make a significant impact in building the business.


Acumen have successfully used this business analysis process in helping our clients develop their short, mid, as well as long-term strategies, identify new marketing innovation, turn-around a declining brand, successfully enter new categories, transform their business, and build their organizational capability. You, too, can grow your business effectively, efficiently, and with confidence amidst a challenging market environment by starting with sound business analysis.



 

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