3.8 Flashcards
1
Q
What is Ansoffs matrix
A
A marketing planning model that helps a business determine its products and marketing strategy
2
Q
Ansoffs matrix concept links
A
- Organic growth
- External growth
- Diversification
- International expansion
- Corporate objectives
3
Q
Market penetration
A
- A growth strategy where a business aims to sell existing products into existing markets
- Aim is to increase market share
- By selling more existing products to the same target customers
- Get existing customers to buy more
- Widen the range of existing products
4
Q
Market penetration evaluation
A
- Business focuses on markets and products it knows well
- Can exploit insights on what customers want (and competitors)
- Unlikely to need significant new market research
5
Q
Product development
A
- A growth strategy where a business aims to introduce new products into existing markets
6
Q
Product development evaluation
A
- A strategy that often plays to the strengths of an established business
- Strong emphasis on effective market research
- A great way of exploiting the existing customer base
- Being first to market is usually important
7
Q
Market development
A
- A growth strategy where the business seeks to sell its exiting products into new markets
8
Q
Market development approaches
A
- New geographical markets e.g. exporting to emerging markets
- New distribution channels
- Different pricing policies to attract new customers in different segments
9
Q
Market development evaluation
A
- A logical strategy where existing markets are saturated or in decline
- Often more risky than product development - particularly expansion into international markets
- Existing products may not suite new markets: depends on customer needs
10
Q
Diversification
A
- A growth strategy where a business markets new products in new markets
11
Q
Diversification Evaluation
A
- Inherently risky strategy
- No direct experience of the product market
- Few economies of scale
- However if successful overall risk of the businesses is spread
- Approaches to diversification
> Innovation and R&D
> Acquire existing businesses in the market
> Extend an existing brand into the new market
12
Q
Porters generic strategy
A
- Analytical tool to help managers strategically position the business in the market
- Aim is to give firms a sustainable competitive advantage
- Resulting in above average industry profitability
- Three options
1. Low cost
2. Differentiation
3. Focus
13
Q
Porters approach to strategic positioning
A
- The key to above average profitability in the long run is sustainable competitive advantage
- There are two basic types of competitive advantage a firm can possess: low cost or differentiation
- The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to three generic strategies: cost leadership, differentiation and focus. The focus strategy has two variants, cost focus and differentiation focus
14
Q
Competitive advantage
A
- An advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices
15
Q
Low cost strategy
A
- Cost leadership
> In cost leadership a firm sets out to become the low cost producers in its industry
> the sources of cost may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors.
> A low cost producer must find and exploit all sources of cost advantages
> If a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average
16
Q
Why low cost is a source of competitive advantage
A
- If selling prices are broadly similar, the lowest cost operator will enjoy the highest profits
- Low cost operators can also offer the lowest prices
17
Q
Features of low cost operators
A
- High levels of productivity & efficiency
- High capacity utilization
- Large scale = economies
- Use bargaining power to negotiate lowest prices from suppliers
- Lead production methods and culture
- Access to the widest and most important distribution channels
18
Q
Differentiation
A
- In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that a widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and unequal positions itself yo meet those needs. It is rewarded for its uniqueness with a premium price
19
Q
Ways for Business to achieve differentiation
A
- Superior product quality
- Branding
- Wide distribution
- Sustained promotion
20
Q
Focus
A
- The generic strategy of focus rests on the choice of narrow competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others
21
Q
Stuck in the middle
A
- Porter stressed the idea that only one strategy should be adopted by a firm and failure to do so will result in “stuck in the middle” scenario
- Porter believed that differentiation would incur costs to the firm which clearly contradicts with the basis of low-cost strategy and on the other hand relatively standardized products with features acceptable to many customers will not carry out any differentiation
