Strategy Flashcards
Ansoffs matrix segments
Market penetration strategy
Product development strategy
market development strategy
diversification strategy
Market penetration
Market penetration is the growth strategy that utilises core competencies of the existing value chain e.g., existing competitive advantage, to increase market share by selling more to existing customers, without sacrificing return on sales (Taylor, 2012)
Diversification
Diversification is the riskiest growth strategy and it is farthest removed from market penetration. The decision to implement diversification takes place at the corporate level of analysis and involves either the acquisition of a new value chain or the creation of a new value chain to serve new customers (Taylor, 2012)
what is ansoffs matrix
Ansoffs matrix is a marketing planning tool which usually aids a business in determining its product and market growth.
product development
Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets (Riley, nd)
product development is a business strategy made inevitable by reality of product life cycle. for an organisation to survive it must constantly renew its product portfolio to ensure that in the future is has a combination of older, cash generating and newer, profit growing products
Market development
growth strategy where the business seeks to sell its existing products into new markets (Riley, nd)
may include
- new geographical markets
- new product dimensions (packaging)
- new distribution channels
- Different pricing policies to attract different customers or create new market segments
arguably represents the greatest test of the marketers skill. the newer the market to the organisation, the greater the necessary investment needed in order to ….
understand the buying needs and behaviour of the market
establish effective channels of distribution
generate awareness and positive attitude towards your products and organisation
market penetration advantages
- most attractive strategy in Ansoffs matrix
offers advantage of quick implementation/low risk
for short-termist organisations, demanding fast payback, forces marketers to focus on promotion - increased spend per head through cross-selling or trading up
- increased purchase frequency
- more business from target market segments
(Harden, 2018)
Market penetration disadvantages
- resources spent will do little to grow customer base
this will not help spread risk - changes in economic conditions and/or customer tastes within core market will impact heavily on business
- ‘mature’ product portfolio selling to mature customers raises questions about where future profit growth may come from
(Harden, 2018)