CICD Analysis: this article explains the CICD analysis (ABCD analysis in Dutch) in a practical way. After reading you will have a basic understanding of this marketing tool.
What is the CICD analysis?
The CICD analysis is a method for analyzing the external environment of a company. The model is mainly used for marketing purposes. Its use reveals insights into the opportunities and threats in an organization’s market environment, and is thus linked to Porter’s SWOT or Five Forces Model. The output of the CICD analysis serves as input for the aforementioned tools.
CICD is an acronym for:
- Customer Analysis
- Industry Analysis
- Competitive Analysis
- Distribution Analysis
There is a lot of competition and a lot of change in the market environment. The term market environment is used to denote anything that affects the performance of a market. This mainly concerns factors on three levels.
Analyzing market environment
A company’s micro environment includes everything that the company itself has direct control over. Examples include finance, marketing activities, customers and the entire value chain. This microenvironment is studied with an internal analysis.
The meso environment of an organization encompasses the entire industry or branch. The organization does not directly control the most important factors of the meso environment, but often indirectly. The meso environment of a company is analyzed with an external analysis.
The macro environment of a company covers the entire market. This includes a variety of factors, such as political, economic or legal factors. The macro environment is also analyzed with an external analysis, such as the PESTEL analysis.
The CICD analysis is especially effective in analyzing the industry, i.e. the meso environment of a company. Another name for this method is the meso analysis.
Disadvantage of the CICD analysis
The CICD method originated from practice. A common drawback of using this model is that it ignores a company’s partners. This is an actor that can have a powerful influence on the marketing strategy and the overall strategy of an organization.
The customer should always be central, that is the marketing standard in many organizations. The aim is to respond as much as possible to the wishes and needs of the customer. A customer analysis is therefore the ideal way to understand the customer and to tailor the marketing strategy to them.
A good and effective method to perform a customer analysis is Ferrel’s 6W’s method.
The 6Ws are:
- Who – are our current and potential customers?
- What – do our current customers do with our products?
- Where – do our customers buy our products?
- When – do our customers buy our products?
- Why – do our customers buy our products?
- Why – don’t our customers buy our products?
Conclusion customer analysis
Use the answers to the questions above to enumerate the threats and opportunities of a product or company in relation to its customers. This provides good insight into how the customer can be served as well as possible. This can ultimately provide a competitive advantage.
The industry analysis is performed to identify threats and opportunities within the industry in which the company operates. An industry analysis is a situation analysis, or external analysis.
DESTEP analysis / PESTEL analysis.
As indicated, this concerns an analysis of the macro environment of a company. An important tool for this is the DESTEP analysis. This tool is effective in mapping the macro environment of a company. Complete this step before moving on to the next analyses.
DESTEP is an acronym of the following 6 topics:
- Demographic factors
- Economic factors
- Socio-cultural factors
- Technology factors
- Ecological factors
- Political-legal factors
It is also possible to apply the PESTEL analysis. PESTEL stands for
- Political factors
- Economic factors
- Social factors
- Technology factors
- Ecological factors
- Legal factors
The purpose of both types of analysis is to identify industry trends and development that affect a company.
Market factors and competition
The second step in the industry analysis is to establish aggregated market factors. These are the general factors within a market that determine the attractiveness of the market. Examples of elements that fall under this are:
- Market size – how big is the market?
- Business cycle – are there products that are only sold in certain seasons? Or only when the economy is in an expansion phase?
- Life cycle – what stage is the market in? Is it a new market in development or a mature market?
- Trends and developments
Finally, we look at the level of competition in the industry. This is covered in more detail in the next element of the CICD analysis, to describe the competition on a general level. In this section, use tools such as Porter’s Five Forces Model.
The competitive analysis component focuses on an organization’s main competitors. The competitive environment was already described in the previous step, but the competitors are further examined in this step, on an individual level. The competitor analysis is important because it helps to determine the strength of one’s own position.
An example of a conclusion that can be drawn after its execution is that the company has the same strategy as a competitor and is therefore less distinctive. It may also turn out that the competitor responds more quickly to trends and developments. As a result, the company’s own market share can be reduced.
Elements to be looked at on the competitive level are:
- Competitor’s objectives
- Competitor’s strategy
- Competitor’s supply
- Competitor’s prices
- Competitor’s strengths and weaknesses
- Competitor’s marketing strategy
Summarize the data released by performing this analysis in a simple 2-column table. This serves as input for a follow-up analysis, for example a SWOT analysis.
The distribution analysis goes deeper into the distribution network of an organization and where possible opportunities and threats are present. Distribution analysis is an important part of many marketing plans. It is about the entire route that a product travels before it is on the customer’s mat.
When distribution is not properly aligned with other processes in the company, the survival of a successful organization can be jeopardized. For example, think of supermarkets. As soon as they experience problems with the daily distribution of food, they will experience great inconvenience and customers will move to the competition more quickly.
Several parts that need to be analyzed with regard to the distribution are:
- Distribution method
- Distribution function
Describe how the product or service reaches the customer. Do this using a method such as Business Process Mapping (BPM). Is there a short distribution process? Or are many different actors involved in the process?
Also check where the buyers expect the products. Are the products and services offered through the right channels? Also include this in the marketing mix of the marketing plan.
The distribution function includes the physical distribution of goods. How can value be added by optimizing this process? Consider using Business Process Re-engineering (BPR).
The CICD analysis is a versatile method for examining a company’s external environment. After examining the four facets, the user has a clear picture of the most important elements of an industry. You know what opportunities and threats are present for a company and you approximately know what the future may bring.
The data that is released when performing this analysis is very valuable as input for a strategic analysis, such as the SWOT analysis. In this way you work on an effective marketing plan step by step, in which a clear marketing vision is set out on the basis of thorough research.
In this way you enable yourself and the company to achieve key SMART goals and objectives and grow the company.
Now It’s Your Turn
What do you think? Do you recognize the explanation about the CICD analysis? Have you ever used the CICD analysis? Or a similar model? What do you think is important when analyzing a company’s external environment? What kinds of challenges in the external environment do you face in your work environment? Do you have any tips or comments?
Share your experience and knowledge in the comments box below.
- Baron, D. P., & Baron, D. P. (2003). Business and its environment (p. 2). Upper Saddle River, NJ: Prentice Hall.
- Grundy, T. (2006). Rethinking and reinventing Michael Porter’s five forces model. Strategic change, 15(5), 213-229.
- Becherer, R. C., Halstead, D., & Haynes, P. (2001). Marketing orientation in SMEs: effects of the internal environment. Journal of Research in Marketing and Entrepreneurship.
- Massey, P. (2000). Market definition and market power in competition analysis: some practical issues. Economic and Social Review, 31(4), 309-328.
How to cite this article:
Janse, B. (2022). CICD Analysis. Retrieved [insert date] from Toolshero: https://www.toolshero.com/marketing/cicd-analysis/
Published on: 07/17/2022 | Last update: 07/17/2022
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