8.1 Strategic Decision Flashcards
strategic direction
- decisions made regarding the markets a business operates and the products it sells
- will be monitored over time
- may need to be altered or completely changed
what is Ansoff’s matrix?
- long term business strategy
- it represents the different options open to a marketing manager when considering new opportunities for sales growth
- provides a useful framework for analysing a range of strategic options in relation to risk and rewards
what are the two variables in strategic marketing decisions?
- the market in which the firm will operate
- the product intended for sale
market penetration
this is the objective of higher market share in existing markets
- increase brand loyalty
- encourage consumers to use product
- encourage consumers to use more
eg: In 2000 Mitsubishi announced a 10% reduction in prices in the UK in order to encourage purchases.
market penetration: how can you get more of the same customers?
- reduce prices
- promote product change
- sales force push
- altering products - i.e different sizes
- increase buying options online
market penetration: main aims
- maintain and increase the market share of current products
- secure dominance of growth markets
- restructure a mature market by driving out competitors
- increase usage by existing customers
market penetration: evaluation
- the business is focusing on markets and products it knows well
- likely to have good information on competitors and customer needs
- unlikely to need significant new research
- but will the strategy enable the firm to achieve its growth objectives
product development
this involves taking a new or modified product and developing it in existing markets
eg: coca-cola: vanilla and cherry flavour
product development: how might products be developed?
- new products to replace current products
- new innovative products
- product improvements
- product line extensions
- new products to complement existing products
- products at a different quality level to existing products
when is product development used?
- the firm has strong research and development capabilities
- the market is growing
- the firm can build on existing brands
- competitors have better products
product development: evaluation
- a strategy that often plays to the strengths of an established business
- strong emphasis on effective market research (customer needs) and successful innovation
- great way of exploiting existing customer base
- being first to market is important
market development
involves offering existing products but targeting new market segments, could be in terms of:
- Geographical area
- Demographic features (age, gender, income)
market development: evaluation
- needs to understand the new target market and their preferences
- it will need to understand the conditions of the new market (competitors)
- entering a new market can be dangerous (existing businesses may try to force out new competitors via low prices
Diversification:
offering new products to new customers
diversification: evaluation
- very high-level risk
- however, less vulnerable to changes in one of its market segments
- if a business is totally reliant on one range of products in one market, then it is vulnerable to change
