8 - Choosing Strategic Direction🚀 Flashcards
The Ansoff Matrix
What is it called if it is an existing product in an existing market?
Market penetration
The Ansoff Matrix
What is it called if it is an existing product in a new market?
Market development
The Ansoff Matrix
What is it called if it is a new product in an existing market?
Product development
The Ansoff Matrix
What is it called if it is a new product in a new market?
Diversification
The Ansoff Matrix
What is the benefit for a business who is in market penetration?
Leads to increasing market share which will drive out competition
The Ansoff Matrix
What is the benefit for a business who is in product development?
They are the first to market and understand customer needs
The Ansoff Matrix
What is the benefit for a business who is in market development?
Selling via new channels to a new demographic leads to a change in pricing strategies
The Ansoff Matrix
What is the benefit for a business who is in diversification?
Can increase product portfolio but is the most risky
Porter’s strategies
What is the criteria for cost leadership?
Low cost, mass market
Porter’s strategies
What is the criteria for differentiation leadership?
Premium price, mass market
Porter’s strategies
What is the criteria for cost focus?
Low cost, niche market
Porter’s strategies
What is the criteria for differentiation focus?
Premium price, niche market
Porter’s strategies
What does cost leadership involve?
- high productivity
- high capacity utilisation
- bargaining power
- lean production
Porter’s strategies
What does differentiation leadership involve?
- high product quality
- strong branding
- industry-wide distribution
- consistent promotions
Porter’s strategies
Give an example of a cost leadership business
Aldi, Ryanair, Poundland
Porter’s strategies
Give an example of a differentiation leadership business
Apple, Nike
Porter’s strategies
What does cost focus involve?
- basic products
- acceptable to customers
- small
Porter’s strategies
Give an example of a cost focus business
local poundshop
Porter’s strategies
What does differentiation focus involve?
- very niche
- need to meet needs and wants of customer
Porter’s strategies
Give an example of a differentiation focus business?
Ferrari
Bowman’s Strategic Clock
What are the axis?
Perceived value to the consumer, price
Bowman’s Strategic Clock
What is strategy 1?
Low price & low added value
Bowman’s Strategic Clock
What is strategy 2?
low price
Bowman’s Strategic Clock
What is strategy 3?
Hybrid
Bowman’s Strategic Clock
What is strategy 4?
Differentiation
Bowman’s Strategic Clock
What is strategy 5?
Focused differentiation
Bowman’s Strategic Clock
What is strategy 6?
Risky high margins
Bowman’s Strategic Clock
What is strategy 7?
Monopoly pricing
Bowman’s Strategic Clock
What is strategy 8?
Loss of market share
Bowman’s Strategic Clock
What does low price and low value added 1 mean?
Not competitive position - only way to stay competitive is to market as “cheap as chips”
Bowman’s Strategic Clock
What does low price 2 mean?
Cost minimisation - profits from high volume sold
Bowman’s Strategic Clock
What does hybrid 3 mean?
Product differentiation - persuades consumers that there is good added value and a reasonable price
Bowman’s Strategic Clock
What does differentiation 4 mean?
Highest level of perceived added value - high quality combined with strong brand loyalty
Bowman’s Strategic Clock
What does focused differentiation 5 mean?
Highest price levels and high perceived value = luxury brands
Bowman’s Strategic Clock
What does risky high margins 6 mean?
High prices without offering anything extra in terms of perceived value
Bowman’s Strategic Clock
What does monopoly pricing 7 mean?
Only one business offering the product so no choice for customers
Bowman’s Strategic Clock
What does loss of market share mean?
Setting middle-range price for product with low perceived value
Bowman’s Strategic Clock
Which strategies should a business avoid because price is greater than perceived value?
6, 7 and 8
