theme 3 Flashcards
What is market mapping?
Way of firms analysing competing in the industry and identify gaps in the market
draw a market map
HIGH PRICE
LOW QUALITY HIGH QUALITY
LOW PRICE
What is market positing?
the area in the market businesses decide they want to go
What can businesses gain from identifying new gaps
new markets-new consumers-and be more competitive
how did ansoff say a business could be competitive 4 ways?
penetration
diversification
market development
product development
What is penetration? Which area?
existing products in existing firms
least risk
Why is penetration least risky?
because your not spending costs on creating a new product.
you already know consumers well
How is penetration risky?
If you don’t innovate like Nokia you will be pushed out the market with more innovative businesses (apple)
What is product development? Where is it?
new products and existing markets
How is it risky?
Innovating and creating new products/ideas is costly.
Your not guaranteed success
Which companies usually use product development?
phone companies - they usually target existing customers.
What is market development?
Selling existing products in new markets
What are the benefits of market development? Give an example of a company.
You need need to spend much on innovation because your using existing products.
E.g Lucazade- origanilly product was medicine they advertised it as a energy drink for atheletes to drink
What are the risks of market development?
costly to research new markets
What is diversification?
New products in new markets.
What are the risks of diversification?
Costly to develop new products and research them.
What are the benefits of diversification?
Can bring rapid growth and demand
enter new markets and new consumers
potential for growth is greater.
What is Porters generic matrix?
How producers are going to position themselves into a market so consumers choose them over rivals.
What are the 2 ways Porter said a businesses can gain competitive advantage?
Diversification
low cost producer
How can diversification achieve competitive advantage?
You differentiate yourself from other rivals in the market through:
quality
power of tech e.g
customer service
after care ( warranty )
distribution ( maybe your most convenient to them)
you tell them why they should pay more for your product.
What is a low cost producer?
Business produces cheapest - if not consumers will move to cheaper producer.
How can a business drive the costs of another business up?
Patent - e.g Dyson wireless vacuum
Barriers to entry- Costs of production are lower than new entrants.
What methods can a business carry out to be different?
Market segmentation
What are barriers to entry?
Costs that new entrants have to incur when joining a new market.
