3.8 Choosing Strategic Direction

Question 1

Ansoff Matrix

Answer 1

a marketing planning model that helps a business determine its product and market strategy

Question 2

What are the 4 quadrants on the Ansoff matrix?

Answer 2

-market penetration
-product development
-market development
-diversification

Question 3

What is on the X and y axis of the Ansoff matrix?

Answer 3

X axis- products (existing and new)
increasing risk left to right (as expected)

Y Axis- markets (existing and new)
increasing risk from top to bottom

Question 4

Market penetration (Ansoff Matrix)

Answer 4

-selling existing products in an existing market
-ramp up marketing efforts
-increase market share
-drive out competition

eg. MacDonald’s advertising the big mac

Question 5

Product development (Ansoff Matrix)

Answer 5

-selling a new product in an existing market
-aim to be first to market
-requires research and development
-have to understand customer needs

eg. MacDonald’s selling mcplant

Question 6

Market development (Ansoff Matrix)

Answer 6

• selling an existing product in a new market
  -selling via new distribution channels
  -sell to new demographic
  -changing pricing scheme
  -new geographical area

eg. MacDonald’s partnering with uber eats to have products delivered

eg. Asda providing home delivery

Question 7

Diversification (Ansoff Matrix)

Answer 7

-selling a new product in a new market
-most risky

eg. Greggs selling clothing at Primark
eg. Yamaha selling motorbikes and electric keyboards

Question 8

What are the 5 areas of porter’s generic strategy?

Answer 8

-cost leadership
(low cost and broad target)
-differentiation leadership
(differentiation and broad market)
-cost focus
(low cost and narrow target)
-differentiation focus
(differentiation and narrow target)
-stuck in the middle

Question 9

What are on the X and Y axis of Porter’s generic strategy?

Answer 9

X axis- strategic advantage
(low cost and differentiation)

Y axis- strategic target (scope)
(broad target/mass market and narrow target/ niche market)

Question 10

stuck in the middle
(Porter’s generic strategy)

Answer 10

businesses which do not pick a clear strategic position and they tend to not be as successful as firms which do

eg. apple music, HMV, WHSmith

Question 11

Bowman’s strategic clock

Answer 11

model looks at strategic positions in relation to two variables:
price
perceived value

Question 12

What are the 5 strategies on Bowman’s strategic clock?

Answer 12

-low price, low added value
-low price
-hybrid
-differentiation
-focused differentiation

Question 13

What are the characteristics of low price low added value on Bowman’s strategic clock? (giving an example of a business)

Answer 13

-no frills
-low quality
-low cost
-requires volume sales
eg. Poundland, supermarket value range, £1 megabus

Question 14

What are the characteristics of low price low added value on Bowman’s strategic clock? (giving an example of a business)

Question 15

What are the characteristics of low price on Bowman’s strategic clock? (giving an example of a business)

Answer 15

-low cost but moderate perceived added value
-operate in mass market as profit margins are low

eg. Travelodge

Question 16

What are the characteristics of Hybrid on Bowman’s strategic clock? (giving an example of a business)

Answer 16

-low price but high perceived value
-reputation for fair prices and good quality products

eg. Aldi, Ikea, Lidl

Question 17

What are the characteristics of focused differentiation on Bowman’s strategic clock? (giving an example of a business)

Answer 17

-products with high price and high perceived added value
-targets niche market
-premium price
-tend to be price inelastic

eg. Mulberry, Rolls Royce