E 3.1.2 theories of corporate strategies*

Question 1

Ansoff’s Matrix

Answer 1

> market penetration
market development
product development
diversification

Question 2

market penetration definition

Answer 2

growth strategy where the business focuses on selling existing products into existing markets. (giving the same thing to the same people)

• about using the marketing mix to maintain/increase the market share of current products.

+ The business using market penetration is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. Doesn’t require investment in new market research= LOW RISK

Question 3

how market penetration can be achieved

Answer 3

• competitive pricing strategies
• advertising
• sales promotion
• more resources dedicated to personal selling

Question 4

market development definition

Answer 4

growth strategy where the business seeks to sell its existing products into new markets. ( same products different people)

• the aim is to increase the sales of its current product portfolio

Question 5

ways of approaching this strategy of Market development

Answer 5

• new geographical market (eg. exporting the product to a new country or a new location in the domestic market),
• new product dimensions (eg. multi packs) or packaging (eg. to appeal to children),
• new distribution channels (eg. e-commerce or m-commerce) and
• different pricing policies to attract different customers or create new market segments.

> this strat relies on adapting to local habits, tastes and needs. it is often necessary to make modifications to suit the new market- riskier than market penetration

 

Question 6

product development definition

Answer 6

growth strategy where a business aims to introduce new products into existing markets (new product to same people)

• this strategy may require the development of new competencies and requires the business to develop significantly modified products which can appeal to existing markets.–expensive research and development costs & high level of risk. also requires investment in promotion

Question 7

ways of approaching product development

Answer 7

• Developing related products or services which has been identified by market research (eg. A plumber also offering tiling or Apple developing the Airpods and Apple Watch)
• Introducing new models of existing products with significant modifications, new functions or services (eg. The iPhone 13 or new models of the VW Golf)

 
 

Question 8

diversification definition

Answer 8

growth strategy where a business aims to introduce new products into new markets. (new products to new people)

• most risky because they are moving into a market where they have limited experience
• For a business to adopt a diversification strategy, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks.

+The largest advantage of this strategy is that is spreads risk as a business is able to move away from reliance upon existing markets and products. If one product faces difficulty or fails, a successful product in a different market may prevent the business overall facing problems.

Question 9

related and unrelated diversification

Answer 9

Related means that a business is expanding into product lines that are similar to what it currently offers.

Unrelated means that the business has no experience or detailed knowledge of the market it is planning to enter and products offered have no relation to each other.