8. Choosing strategic direction Flashcards
Strategic direction
Route a firm chose to follow in order to achieve corporate objectives
Ansoff’s matrix definition
Looks at degree of risk and potential for reward from different strategic options
Ansoff matrix 4 strategies
Market penetration
Market development
New product development
Diversification
Ansoff - market penetration
Trying to sell more of existing product to existing market
Ansoff - market development
Attracting new customers to buy existing products
Ansoff - product development
Selling new and better products to existing customers
Ansoff - diversification
Selling new products to new markets
Strategic positioning
Where business wants to be in the market relative to other firms
Michael Porter strategic mix definition
Categorises marketing strategies a firm can adopt to try and achieve competitive advantage
Michael Porter strategic mix
Low cost vs differentiation
Porter’s strategy - low cost
Strategy of low cost can be successful in either mass or niche market
Porter’s strategy - differentiation
Strategy of differentiation can be successful in either mass or niche market
Bowman’s strategic clock definition
Model highlights a range of potentially competitive strategies where combination of price and added value is seen to be fait
Model outlines 8 competitive positions based on 2 dimensions
Bowman strategy 1
Low price, low added value - added value/quality is low
Bowman strategy 2
Low price - low cost/moderate added value
Bowman strategy 3
Hybrid - low price/high added value
Bowman strategy 4
Differentiation - USP/moderate/high price/ good quality
Bowman strategy 5
Focused differentiation - high price/high added value
Bowman strategy 6
Risky, high margins - high price/moderate added value
Bowman strategy 7
Monopoly pricing - high price/low added value
Bowman strategy 8
Loss of market share - standard price/low added value
Influences on choice of positioning strategy
Strategic direction
Corporate objectives
Core competences of firm
Market conditions
SWOT analysis
Competitive nature of firm
Benefits of competitive advantage
Customer loyalty
Market share
Potential to charge premium price
Creates barriers to entry
Drawbacks of competitive advantage
Inability to maintain barriers to entry
Changing external environment
Competitors actions e.g. copying
