Expansion Flashcards
expansion model
- ansoff matrix
ansoff matrix
- growth power and motivated by revenues
- summarized growth opportunities
- each quadrant increases risk
market penetration - description
- Sell more of existing product to existing target market = greater market share and/or greater purchase frequency
- Target market does not change → trying to get greater market share by capturing more customers in target market or getting customers to buy more
- Ex. arm and hammer selling baking soda as not only baking but cleaning product (still same target market and same product)
market penetration riskiness
low
market penetration
- why
- build on what you have and know -no change
- economies of scale in production and selling (not as much investment/cost needed)
market penetration
- challenges
- competitor reaction (taking market share from them)
- winning customers
market penetration
- tactics
Cut prices
Increases demand
Lower prices so they are cheaper than competitors
Increase advertising, loyalty schemes
Creates more awareness
Increase distribution channels
Increases purchase frequency
Volume incentives
Encourage customers to buy more of what you are making
Discounted prices if you buy a lot
Buy a competitor
Increase market share by buying out com
market penetration
- questions to ask
Return: If I decrease price will volume compensate for lower price? Will lower price affect brand image?
Lower price might make consumers think the product is less quality
market penetration
- diamond-e
- Capabilities: Can I persuade customers to consume more of my product?
If you already hold a large share of the market, the ability to persuade consumers to buy more might be difficult
Resources: Do I have to use new distribution channels? Should I? Can I?
Resources: Do I have the production capacity to meet the increased demand?
market penetration
- porters 5 forces
Buyers: Propensity to switch? Lock in/switching costs? Brand loyalty?
Rivalry: Fragmented vs concentrated, growing vs declining, aggressive vs passive competitor
Concentrated market → majority of market share is held by a small number of companies, trying to steal customers from a concentrated market → they have a big footprint in the industry (harder to compete)
Fragmented market → everybody has a small share, easier to steal from many small companies
How much share do I already have? Can it grow?
market development
- description
- Selling what you already produce to new target markets (market segments) or new geographic markets
Develop customer understanding (satisfying needs, understanding wants)
New target markets → ranges based on country
Some adjustments must be made, main components stay the same
Ex. selling protein powder to professional athletes, market development can be either selling to seniors (supplements) or selling to professional athletes overseas (both are market development)
market development
- risk
A little riskier then market penetration but still not the most risk
market development
- why
- Capitalize on production capabilities (not changing much)
- economies of scale (doesn’t cost much) Because they didn’t change their product that much
pursue less contested or larger market
diversification of customer base
market development
- challenges
customer access and awareness
market development
- tactics
Create awareness in new market – pitch benefits to new customers
(e.g. arm and hammer baking soda being marketed as sneaker balls for athletes)
Expand geographically (use international expansion knowledge!) Always have to have really strong marketing scheme (e.g. when Coke expanded to teens in Japan had to change message, had to appear as respectful to older people)
