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

Question 1

What is strategic direction?

Answer 1

Describes how a business plans to get to where it wants to be in the long term

Question 2

What is Ansoff’s matrix?

Answer 2

A strategic or marketing planning model that can be used to help a business decide its strategic direction in terms of its product portfolio and target markets

Question 3

What is marketing penetration?

Answer 3

A growth strategy where the business focuses on selling existing products into existing markets

Question 4

What are reasons for choosing market penetration?

Answer 4

• There is limited risk as the business is continuing with an existing product in an existing market
• Cost of implementation are likely to be low because the business is only slightly modifying its existing strategy

Question 5

What is market development?

Answer 5

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

Question 6

What are reasons for choosing market development?

Answer 6

• The popularity of a business’ product makes it easier to enter into new markets
• The business isn’t changing its core function but extending its marketing to different countries

Question 7

What is product development?

Answer 7

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

Question 8

What are reasons for choosing product development?

Answer 8

• Allows the business to stay highly competitive in a rapidly changing market
• It can allow a business to produce a product portfolio on the strength of its existing brands

Question 9

What is diversification?

Answer 9

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

Question 10

What are reasons for choosing diversification?

Answer 10

It can enable a business to grow if its market highly saturated