Product Market Strategies Flashcards
Ansoff’s matrix
Define market penetration, giving aims
Market penetration - The firm seeks to do four things:
Maintain or to increase its share of current markets with current products, eg, through competitive pricing, advertising, sales promotion
Secure dominance of growth markets
Restructure a mature market by driving out competitors
Increase usage by existing customers (eg, airmiles, loyalty cards
Define Market development, giving approaches
Market development - present products and new markets
New geographical areas and export markets (eg, a radio station building a new transmitter to
reach a new audience)
Different package sizes for food and other domestic items so that both those who buy in bulk and those who buy in small quantities are catered for
New distribution channels to attract new customers (eg, organic food sold in supermarkets not just specialist shops, internet sales)
Differential pricing policies to attract different types of customer and create new market segments. For example, travel companies have developed a market for cheap long-stay winter
breaks in warmer countries for retired couples
Define product development, giving advantages
Product development: new products and present markets
The company can exploit its existing marketing arrangements such as promotional methods and distribution channels at low cost.
The company should already have good knowledge of its customers and their wants and habits.
Competitors will be forced to respond.
The cost of entry to the market will go up and newcomers may be discouraged
Define diversification, giving the strategies
Diversification occurs when a company decides to make new products for new markets. It should
have a clear idea about what it expects to gain from diversification. Diversification is the most risky of
the four strategies.
Growth: New products and new markets should be selected which offer prospects for growth
which the existing product-market mix does not.
Investing surplus funds not required for other expansion needs, bearing in mind that the funds could be returned to shareholders. Diversification is a high risk strategy, having many of the characteristics of a new business start-up. It is likely to require the deployment of new
competences
Lynch’s expansion matrix
