topic 8 (strategic direction) Flashcards
Ansoff’s matrix
market penetration, product devlopment, market devlopment and diverfication
market penertration is
same market, same product
how to achieve market penertration
- Reduce prices
- Brand repositioning
- Promotion
- Loyalty schemes
evaluation of market penertration
- Least risky as business has experience
- Unlikely to need significant new market research
market development is
new market, same market
methods of market development
- Exploring foreign markets
- Using e-commerce
Evaluation market development
- Logical strategy
- Often more risky then product development
- Existing products may not suit new market
product development is
same market , new product
evaluation of product delvelopment
- Whether there is spare capacity
- Being first to the market is important
- A good way of exploiting existing customer base
diversification is
new prodcut new market
Evaluation of diversification
- Risky strategy
- No direct experience of the product or market
- Few economies of scale (initially)
Approaches to diversification could be
- Innovation: develop new solutions
- Acquire an existing business in the market
- Extend an existing brand into the new market
poters geneic strategies
Finding a way of achieving a sustainable competitive advantage over the other competing products and firms in the market. this can be achieved through one of 3 generic strategies
- cost leadership
- differentiation
- focus
a low cost strategy is
a strategy where the objective is to become the lowest-cost operator. This typically involves production on a large scale which enables the business to exploit economies of scale
why is low cost a competitive advantage
- Leadership cost
Lowest-cost operator can also offer the lowest prices - Sustainable markets
Standard products
Little product differentiation
Branding relatively unimportant
a strategy of differntation aims to
offer a product that is distinctively different from the competition, with the customer valuing that differentiation
ways to achive differentation are
- Superior product quality
- Branding
- Wide distribution
- Sustained promotion
bowman’s strategic clock
- low price and low added value
- low price
- hybrid
- differentiation
- focused differentiation
- risky high margins
- monopoly pricing
- loss of market share
bowman’s strategic clock (1)
low price low added value
not very competitive position
very little precived value
bargain basement strategy
bowman’s strategic clock (2)
low price
cost minimization stratagem required to be successful
intense competition
low profit margins
bowman’s strategic clock (3)
hybrid
- involves some element of low price
- also product differentiation
- aim to convince consumers there is good added value price
bowman’s strategic clock (4)
differentiation
- offer highest level of precived added value
- branding is key
- as well as product quality
bowman’s strategic clock (5)
focused differentiation
- aims to position a product at highest price levels
- positioning strategy adopted by luxury brands
- aim to achieve premium prices by highly targeted segmentation, promotion and distribution
- can lead to high profit margins
bowman’s strategic clock(6)
risky high margins
- high risk strategy
- sets high prices without offering anything extra in terms of perceived value
- other than in the short-term this is an uncompetitive strategy
bowman’s strategic clock(7)
monopoly pricing
- only one business offering the product
- doesn’t need to care bout value perceived
- tightly regulated
bowman’s strategic clock (8)
loss of market share
- position is recipe for disaster in any competitive market
- middle range or standard price for a product with low perceived value
- unlikely to win over customers as will be much better options
