But You Promised! Managing Consumers' Psychological Contracts SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
Sales & Marketing
Strategy / MBA Resources
Case Study SWOT Analysis Solution
Case Study Description of But You Promised! Managing Consumers' Psychological Contracts
In management literature, a psychological contract generally refers to an employee's beliefs about the reciprocal obligations that exist between him or her and an organization. Legal contracts, on the other hand, are agreements that create obligations between the parties that are enforceable by law. Psychological contracts are different from legal contracts in that they are characterized by the belief that both parties have entered into a set of mutual obligations. While marketing scholars and practitioners have largely overlooked the notion of psychological contracts, this article argues that a firm's customers might view the promises they believe a firm has made to them as psychological contracts. Psychological contracts are as relevant to marketing as they are to management. This article expands the notion of psychological contracts to marketing relationships and outlines internal and external strategies firms can employ to manage psychological contracts more effectively.
Authors :: David Hannah, Emily Treen, Leyland Pitt, Pierre R. Berthon
Swot Analysis of "But You Promised! Managing Consumers' Psychological Contracts" written by David Hannah, Emily Treen, Leyland Pitt, Pierre R. Berthon includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Psychological Contracts facing as an external strategic factors. Some of the topics covered in But You Promised! Managing Consumers' Psychological Contracts case study are - Strategic Management Strategies, Negotiations and Sales & Marketing.
Some of the macro environment factors that can be used to understand the But You Promised! Managing Consumers' Psychological Contracts casestudy better are - – geopolitical disruptions, increasing household debt because of falling income levels, supply chains are disrupted by pandemic , there is increasing trade war between United States & China, customer relationship management is fast transforming because of increasing concerns over data privacy, challanges to central banks by blockchain based private currencies, technology disruption,
competitive advantages are harder to sustain because of technology dispersion, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of But You Promised! Managing Consumers' Psychological Contracts
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in But You Promised! Managing Consumers' Psychological Contracts case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Psychological Contracts, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Psychological Contracts operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of But You Promised! Managing Consumers' Psychological Contracts can be done for the following purposes –
1. Strategic planning using facts provided in But You Promised! Managing Consumers' Psychological Contracts case study
2. Improving business portfolio management of Psychological Contracts
3. Assessing feasibility of the new initiative in Sales & Marketing field.
4. Making a Sales & Marketing topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Psychological Contracts
Strengths But You Promised! Managing Consumers' Psychological Contracts | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Psychological Contracts in But You Promised! Managing Consumers' Psychological Contracts Harvard Business Review case study are -
Ability to lead change in Sales & Marketing field
– Psychological Contracts is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Psychological Contracts in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Sustainable margins compare to other players in Sales & Marketing industry
– But You Promised! Managing Consumers' Psychological Contracts firm has clearly differentiated products in the market place. This has enabled Psychological Contracts to fetch slight price premium compare to the competitors in the Sales & Marketing industry. The sustainable margins have also helped Psychological Contracts to invest into research and development (R&D) and innovation.
Effective Research and Development (R&D)
– Psychological Contracts has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study But You Promised! Managing Consumers' Psychological Contracts - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Training and development
– Psychological Contracts has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in But You Promised! Managing Consumers' Psychological Contracts Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Highly skilled collaborators
– Psychological Contracts has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in But You Promised! Managing Consumers' Psychological Contracts HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Organizational Resilience of Psychological Contracts
– The covid-19 pandemic has put organizational resilience at the centre of everthing that Psychological Contracts does. Organizational resilience comprises - Financial Resilience, Operational Resilience, Technological Resilience, Organizational Resilience, Business Model Resilience, and Reputation Resilience.
Low bargaining power of suppliers
– Suppliers of Psychological Contracts in the sector have low bargaining power. But You Promised! Managing Consumers' Psychological Contracts has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Psychological Contracts to manage not only supply disruptions but also source products at highly competitive prices.
Analytics focus
– Psychological Contracts is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the industry. The technology infrastructure suggested by David Hannah, Emily Treen, Leyland Pitt, Pierre R. Berthon can also help it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Digital Transformation in Sales & Marketing segment
- digital transformation varies from industry to industry. For Psychological Contracts digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Psychological Contracts has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Successful track record of launching new products
– Psychological Contracts has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Psychological Contracts has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Innovation driven organization
– Psychological Contracts is one of the most innovative firm in sector. Manager in But You Promised! Managing Consumers' Psychological Contracts Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Operational resilience
– The operational resilience strategy in the But You Promised! Managing Consumers' Psychological Contracts Harvard Business Review case study comprises – understanding the underlying the factors in the industry, building diversified operations across different geographies so that disruption in one part of the world doesn’t impact the overall performance of the firm, and integrating the various business operations and processes through its digital transformation drive.
Weaknesses But You Promised! Managing Consumers' Psychological Contracts | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of But You Promised! Managing Consumers' Psychological Contracts are -
Capital Spending Reduction
– Even during the low interest decade, Psychological Contracts has not been able to do capital spending to the tune of the competition. This has resulted into fewer innovations and company facing stiff competition from both existing competitors and new entrants who are disrupting the industry using digital technology.
Employees’ incomplete understanding of strategy
– From the instances in the HBR case study But You Promised! Managing Consumers' Psychological Contracts, it seems that the employees of Psychological Contracts don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
Aligning sales with marketing
– It come across in the case study But You Promised! Managing Consumers' Psychological Contracts that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case But You Promised! Managing Consumers' Psychological Contracts can leverage the sales team experience to cultivate customer relationships as Psychological Contracts is planning to shift buying processes online.
No frontier risks strategy
– After analyzing the HBR case study But You Promised! Managing Consumers' Psychological Contracts, it seems that company is thinking about the frontier risks that can impact Sales & Marketing strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
High operating costs
– Compare to the competitors, firm in the HBR case study But You Promised! Managing Consumers' Psychological Contracts has high operating costs in the. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Psychological Contracts 's lucrative customers.
Interest costs
– Compare to the competition, Psychological Contracts has borrowed money from the capital market at higher rates. It needs to restructure the interest payment and costs so that it can compete better and improve profitability.
High cash cycle compare to competitors
Psychological Contracts has a high cash cycle compare to other players in the industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Psychological Contracts supply chain. Even after few cautionary changes mentioned in the HBR case study - But You Promised! Managing Consumers' Psychological Contracts, it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Psychological Contracts vulnerable to further global disruptions in South East Asia.
Skills based hiring
– The stress on hiring functional specialists at Psychological Contracts has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Lack of clear differentiation of Psychological Contracts products
– To increase the profitability and margins on the products, Psychological Contracts needs to provide more differentiated products than what it is currently offering in the marketplace.
Low market penetration in new markets
– Outside its home market of Psychological Contracts, firm in the HBR case study But You Promised! Managing Consumers' Psychological Contracts needs to spend more promotional, marketing, and advertising efforts to penetrate international markets.
Opportunities But You Promised! Managing Consumers' Psychological Contracts | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study But You Promised! Managing Consumers' Psychological Contracts are -
Better consumer reach
– The expansion of the 5G network will help Psychological Contracts to increase its market reach. Psychological Contracts will be able to reach out to new customers. Secondly 5G will also provide technology framework to build new tools and products that can help more immersive consumer experience and faster consumer journey.
Creating value in data economy
– The success of analytics program of Psychological Contracts has opened avenues for new revenue streams for the organization in the industry. This can help Psychological Contracts to build a more holistic ecosystem as suggested in the But You Promised! Managing Consumers' Psychological Contracts case study. Psychological Contracts can build new products and services such as - data insight services, data privacy related products, data based consulting services, etc.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Psychological Contracts to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Psychological Contracts to hire the very best people irrespective of their geographical location.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Psychological Contracts in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Sales & Marketing segment, and it will provide faster access to the consumers.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Psychological Contracts can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Using analytics as competitive advantage
– Psychological Contracts has spent a significant amount of money and effort to integrate analytics and machine learning into its operations in the sector. This continuous investment in analytics has enabled, as illustrated in the Harvard case study But You Promised! Managing Consumers' Psychological Contracts - to build a competitive advantage using analytics. The analytics driven competitive advantage can help Psychological Contracts to build faster Go To Market strategies, better consumer insights, developing relevant product features, and building a highly efficient supply chain.
Developing new processes and practices
– Psychological Contracts can develop new processes and procedures in Sales & Marketing industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Psychological Contracts to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Learning at scale
– Online learning technologies has now opened space for Psychological Contracts to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Increase in government spending
– As the United States and other governments are increasing social spending and infrastructure spending to build economies post Covid-19, Psychological Contracts can use these opportunities to build new business models that can help the communities that Psychological Contracts operates in. Secondly it can use opportunities from government spending in Sales & Marketing sector.
Low interest rates
– Even though inflation is raising its head in most developed economies, Psychological Contracts can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Psychological Contracts is facing challenges because of the dominance of functional experts in the organization. But You Promised! Managing Consumers' Psychological Contracts case study suggests that firm can utilize new technology to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Loyalty marketing
– Psychological Contracts has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats But You Promised! Managing Consumers' Psychological Contracts External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study But You Promised! Managing Consumers' Psychological Contracts are -
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Psychological Contracts will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Psychological Contracts needs to understand the core reasons impacting the Sales & Marketing industry. This will help it in building a better workplace.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study But You Promised! Managing Consumers' Psychological Contracts, Psychological Contracts may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Sales & Marketing .
Stagnating economy with rate increase
– Psychological Contracts can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the field.
Regulatory challenges
– Psychological Contracts needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Sales & Marketing industry regulations.
Increasing wage structure of Psychological Contracts
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Psychological Contracts.
High dependence on third party suppliers
– Psychological Contracts high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Psychological Contracts business can come under increasing regulations regarding data privacy, data security, etc.
Increasing international competition and downward pressure on margins
– Apart from technology driven competitive advantage dilution, Psychological Contracts can face downward pressure on margins from increasing competition from international players. The international players have stable revenue in their home market and can use those resources to penetrate prominent markets illustrated in HBR case study But You Promised! Managing Consumers' Psychological Contracts .
Easy access to finance
– Easy access to finance in Sales & Marketing field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Psychological Contracts can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Consumer confidence and its impact on Psychological Contracts demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Weighted SWOT Analysis of But You Promised! Managing Consumers' Psychological Contracts Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study But You Promised! Managing Consumers' Psychological Contracts needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study But You Promised! Managing Consumers' Psychological Contracts is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study But You Promised! Managing Consumers' Psychological Contracts is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of But You Promised! Managing Consumers' Psychological Contracts is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Psychological Contracts needs to make to build a sustainable competitive advantage.