3.8.1 Strategic direction: choosing which markets to compete in and what products to offer

Question 1

what does strategic direction show?

Answer 1

Strategic direction sets out which markets a business will compete in and what products it will offer.

Question 2

what are strategic choices ?

Answer 2

Strategic choices involve deciding the direction in which a business should move and the methods by which it should pursue this plan.

Question 3

what is strategic direction informed by?

Answer 3

• the business’s SWOT
• Corporate objectives
• Core competences
• Competitive environment
• Leaders‘ attitudes to risk
• Local, national and global economic environment

Question 4

what is Ansoff’s Matrix?

Answer 4

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

Question 5

what is Ansoff’s Matrix used for?

Answer 5

It can be used to analyse the strategic direction of a business

Question 6

Draw out Ansoff’s Matrix

Answer 6

double check the word document

Question 7

what is market penetration?

Answer 7

A growth strategy where a business aims to sell existing products into existing markets

Question 8

what are the benefits of market penetration?

• aim?
• how?

Answer 8

• Aim is to increase market share
• By selling more of existing products to the same target customers
• Get existing customers to buy more
• Widen the range of existing products

Question 9

Evaluate market penetration

Answer 9

• businesses focuses on markets and products it knows well
• can exploit insights on what customers want (and competitors)
• unlikely to need significant new market research
• but will the strategy allow the business to achieve its growth objective

Question 10

what is product development?

Answer 10

A growth strategy where a business aims to introduce new products into existing markets

Question 11

what is the benefit of product development?

Answer 11

The business may respond to changes in customer requirements or anticipate future changes

Question 12

when is product development used for?

Answer 12

It is used when a business wants to broaden their product portfolio, and if sales of existing products is in decline.

Question 13

what are some examples of product development strategies?

Answer 13

• Brand extensions are common examples of product development strategies
• Technological innovation provides significant opportunities for product development strategies

Question 14

what are some examples of market penetration strategies?

Answer 14

• Rapid organic growth in the UK targeting the same customer base with new stores
• Effective use of e-commerce to encourage existing customers to buy more pizza!

Question 15

Evaluate product development

Answer 15

• A strategy that often plays to the strengths of an established business
• Strong emphasis on effective market research (insights into customer needs) and successful innovation
• A great way of exploiting the existing customer base
• Being first to market is usually important

Question 16

what is market development?

Answer 16

A growth strategy where the business seeks to sell its existing products into new markets

Question 17

what are some examples of some approaches to market development?

Answer 17

• New geographical markets; e.g. exporting to emerging markets
• New distribution channels (e.g. using e-commerce and mail order)
• Different pricing policies to attract new customers in different segments

Question 18

what are some examples of market development strategies?

Answer 18

• Starbucks expansion into China is a classic example of a successful market development strategy
• Tesco’s market development strategy to enter the US grocery supermarket sector was a disaster for shareholders

Question 19

Evaluate market development

Answer 19

• 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

Question 20

what is diversification?

Answer 20

The growth strategy where a business markets new products in new markets

Question 21

Evaluate diversification

Answer 21

+ Inherently risky strategy

• No direct experience of the product or market
• Few economies of scale (initially)
• However, if successful, overall risk of the business is spread

Question 22

What are some approaches to diversification?

Answer 22

• Innovation & R&D: develop new solutions
• Acquire an existing business in the market
• Extend an existing brand into the new market