8. Flashcards
What model is associated with choosing which market to compete in and which services to offer
Ansoff’s Matrix
What is Ansoff’s matrix used for
A strategic tool to help choose which market to operate in and what products they should sell
Name the 4 sections of Ansoff’s matrix
Market penetration
Market development
Product development
Diversification
Explain market penetration and give 1 pro and 1 con
• Aim is to increase market share in an existing market
• Eg. Promotion, build brand image, develop customer loyalty
+ Low risk as product and market are familiar
- Limited growth potential
Explain product development strategy and give 1 pro and 1 con
• Aim is to introduce new products and improve competitiveness
• Eg. market research to identify areas for improvement, use product portfolio tools
+ Familiar with customers
- Product development is expensive and takes time
Explain market development and give 1 pro and 1 con
• Aim is to enter a new market with an existing product
• Eg. penetrating the market, heavy promotion
+ Growth potential
- Competing against established businesses
Explain diversification and give 1 pro and 1 con
• Aim is to utilise core strengths to move to totally new areas
• eg. merge, takeover
+ Good growth potential
- Most risks
Define strategic decision
Looking into the long term future for long term success. It involves choosing what products to provide and which market to operate in
Name 2 pros and 1 con of Ansoff’s matrix
+ Helps illustrate risks involved in strategic decisions
+ Helps choose which strategy to choose for success
- The decision might not fit into one strategic option
Name 5 factors to consider when choosing a strategy
- Core competencies
- External environment
- Stakeholder needs
- The financial availability
- Anticipate returns
What does Ansoff’s matrix suggest about entering international markets
That the risk depends on how different the new market is from the business home market
What model would you use when discussing strategic direction
Ansoff’s Matrix
Name all of Porter’s strategies
Cost leadership
Differentiation
Market segmentation
Define cost leadership
Achieving an advantage by being the lowest cost operator in the market
Define differentiation
Competing by offering a unique product of service to the market or a niche
Define segmentation
Segmentation is achieved though ether cost leadership or differentiation. It involves targeting a specific group of customers and not the whole market
Name 4 ways you can achieve cost leadership
- Economies of scale by growing
- Control the supply of a product
- Operate a scale that keeps average costs low
- Have unique access to technology, skills or raw materials
Name 2 benefits and 1 drawback of cost leadership
+ Helps achieve high profit margins as cost per unit is kept low
+ It can help lower price and acquire market share
- Few businesses can operate as the cost leader means multiple businesses cannot directly compete on cost
Name 4 ways you can achieve differentiation
- Quality
- Customer service
- Speed and efficiency
- Meeting the unique needs of the specific market niche
Name 2 benefits and 1 drawback of differentiation
+ Helps develop a unique brand image
+ Adds value to the product and higher prices can be charged
- Other businesses can copy the strategy if the product isn’t defensible (eg copyright)
Name 2 benefits and 2 drawbacks of a narrow segmentation strategy
+ Communication and marketing can be focused on a narrow segment
+ You can understand customer needs better and the smaller segments mean narrower interests and needs and characteristics
- Customer loyalty is vital
- The market may disappear
What does Bowman’s strategic clock show
It outlines different strategies in terms of perceived benefits and price.
What are the different axis on Bowman’s strategic clock
Y - Perceived added value
X - Price
Name 1 pro and 1 con of Bowman’s strategic clock
+ Helps outline competitive strategies
- Too complex, too many strategies
