unit 4 - chapter 2 Flashcards
What are four broad product/market strategies according to Ansoff?
- Market penetration (existing products in existing markets)
- Product development (new products in existing markets)
- Market development (existing products in new markets)
- Diversification (new products in new markets) (new/existing market/product)
How can the marketing mix be adapted to achieve marketing penetration?
least risky option since this involves products and markets with which the organisation is already familiar
- Product :Minor changes to product – features, colours, designs; improved attractiveness of packaging; increased packaging sizes.
- Price: Lower prices; price promotions (e.g., buy one get one free); reward/frequent user schemes.
- Place (Convenience and ease of distribution; create internet sites and home delivery schemes; increase promotion and incentives to distributors.)
- Promotion Increase advertising aimed at product awareness and/or benefits over competitors through television, print media, internet, etc.; increase sales-force activity.
- People: Training and rewards to offer superior customer service.
What are the issues related to product development?
- Risks are increased as the rate of new product failure can be high, as can the costs involved in new product development (NPD)
- The stage-gate model: clearly defined stages from idea generation through to pilot testing, launch and review are separated by ‘gates’.
- The gates are intended to focus NPD teams on the financial and strategic considerations of progressing to the next stage
What is the critique of NPD model?
- The model tends to portray a sequence of discrete and apparently finite activities, which in practice are more likely to be iterative and ‘messy’.
- Information gathering and analysis will be ongoing, reflecting both internal and external environmental changes,
- Studies of the NPD process for both banking and health services (Smith and Fischbacher, 2002, 2005) have shown that NPD can be a very messy process, with various stakeholders
What are the advantages of NPD model?
- Benefits of this type of structured, tightly managed approach include an apparently rational, sequential process with emphasis on analysis of the product’s ‘fit’ with organisational objectives and resources.
- provides a common focus and language for various departments/teams implicit multifunctional coordination since the various stages (e.g., testing, business analysis, etc.) would be conducted within different organisational areas, requiring shared information.
How is product development achieved through external growth?
- Product development may also be achieved through external growth (mergers, acquisitions, joint ventures, strategic alliances, etc.) as an alternative to engaging in the NPD process.
- Benefits will include speed to market and, potentially, elimination of a competitor.
- Comparative disadvantages include the many problems of managing external growth, such as working with differing organisational and, possibly, national cultures.
What are popularly cited market attractiveness factors according to Dibb and Simkin? (market factors)
- Market factors
- Segment size
- Segment growth rate
- Product life-cycle stage
- Predictability of demand
- Price sensitivity and demand elasticity
- Customer bargaining power
- Seasonality issues
- Customer needs and expectations
- Ability to satisfy customer needs
What are popularly cited market attractiveness factors according to Dibb and Simkin? (competitive factors)
- Competitive factors –
- Number of competitors and competition level of –
- Quality of competition –
- Threat of substitution –
- Degree of differentiation
What are popularly cited market attractiveness factors according to Dibb and Simkin? (Economic and technological factors)
- Economic and technological factors –
- Barriers to entry –
- Barriers to exit –
- Bargaining power of suppliers –
- Level of technology utilisation –
- Required investment –
- Margins available –
- Degree of technological change –
- Scale economies
What are popularly cited market attractiveness factors according to Dibb and Simkin? (Environmental factors)
- Environmental factors
- Exposure to economic fluctuation
- Exposure to political and legal factors
- Degree of regulation
- Social acceptability and physical environment impact
- Natural forces
what are the key issues in the globalisation/ localisation debate? (Levitt)
. Levitt (1983 p. 92) argued that
- markets were becoming more and more similar because of the increasing amount of world travel, the nature of products, and global communications, which drive customers’ preferences.
- Technology, as ‘the powerful force that drives the world toward a converging commonality’.
- Companies must learn to operate as if the world were one large market;
- ignore superficial differences;
- benefit of economies of scale, resulting in lower prices and higher value for customers.
- standardisation,-
- benefits of lower production distribution and communications costs
- increased potential for learning between markets a consistency of image,
- brand/product recognition and the potential for global communications.
what are the key issues in the globalisation/ localisation debate? (Douglas and Wind)
globalisation as a ‘myth’. They argue that consumers are not becoming homogenised and that preferences differ between markets.
three assumptions that they dispute
- customer needs and interests are becoming increasingly homogeneous worldwide. differences exist, not only between nations but also within them
- dispute the assumption that there is a universal preference for low price at acceptable quality (watches etc)
- economies of scale in production and marketing cannot necessarily be achieved through supplying global markets (communication and distribution approaches are unlikely to be standardised).
They suggest a standardisation– differentiation continuum
What are issues related to diversification?
Related vs conglomerate
Riskiest of the product/market strategies in Ansoff’s model, as the organisation is simultaneously involved in new businesses that have little or no relationship to the company’s current technologies, products or markets
potential benefits include
- the spreading of risk;
- entry into more profitable markets;
- avoidance of monopoly legislation and the exploitation of under-utilised resources.
disadvantages
- lack of expertise and experience in the new business area will be a problem.
- control may be difficult to maintain due to the size and diversity of operations.
What is the product lifecycle?
introduction, growth, maturity and decline
What is the introduction stage for PLC?
- Investment is high as development costs continue and promotion/communication is needed to make potential customers aware of the new product and its benefits.
- Price may be high (market-skimming pricing) to take advantage of those consumers who are keen to acquire the product and are willing to pay high prices, or prices may be low (market-penetration pricing) to gain market share ahead of competitors who may be ready to move into the market.
- High costs and relatively little revenue typically result in financial losses at this stage.
What is the growth stage for PLC?
Customers are aware of the product and sales increase
- Marketing activity is likely to focus on potential customers who do not as yet purchase the product at all (as opposed to purchasing those of competitors).
- Minor modifications and additional features may be added to the product in response to customer feedback.
- New distributors will be approached and promotion aims to reach a wider audience, particularly beginning to emphasise the benefits over competitors.
- Profits grow as revenue increases and scale economies begin to reduce costs.
What is the maturity stage for PLC?
- Mature markets are typified by intense competition, and eventually the market becomes saturated.
- Market share can only be increased through encouraging existing customers to purchase more or by attracting customers away from competitors, possibly through intense price competition.
- Product modifications may include new styles, features and models aiming to satisfy customer needs for improved products.
- New approaches to distribution – for example, through the internet – may be adopted as suppliers attempt to add value to their offerings
What is the decline stage for PLC?
- Here demand for the product declines as customers find alternative products to satisfy their needs (video players)
- Competitors may now begin to leave the market looking for opportunities elsewhere.
- Prices may fall as suppliers seek to exploit the remaining demand in the market.
- Alternatively, there may still be profitable niches.
- However, the typical scenario at this stage is that profitability will decline and losses may occur.
What are the benefits/usefulness of the PLC model
The PLC model offers a number of benefits as an analytical tool. The model: .
- highlights that the organisation must have a portfolio of products at various stages;
- it therefore emphasises the importance of lead times and that investment in NPD is necessary .
- emphasises how marketing strategies (with respect to markets and products) and tactics (marketing mix) should change at each stage of a product’s life
- can make an important contribution to financial planning, for example, the evaluation of investment decisions, cash-flow planning and forecasting .
- helps to identify the nature of information required by decision-makers at each stage – for example, research with respect to customers’ evaluations of competing alternatives .
- helps in the development of appropriate performance measures, such as with respect to market share and product profitability
What are the limitations of the PLC model
The limitations/problems of the PLC model -
- difficult to identify stages at any point in time
- The PLC refers to product forms. Organisations generally focus on brands, which may be more erratic.
- Some products do not follow the traditional PLC – for example, fashions and fads (such as the Rubik’s cube) may have steep growth, short maturity and rapid decline.
- Additionally, products may have several life cycles. . Products may fail and never enter growth or maturity.
- The model assumes effective product management. .
- Many external factors will affect the PLC, and these must be taken into account. Examples of such factors include competitor activity and the development of new technologies. .
- There is no indication as to how long the stages will be.
- Additionally, PLCs are becoming shorter due to technological change etc. .
- The model assumes that mature products are profitable, which may not be the case – for example, it is often expensive to defend market share. .
- Use of the model could result in a self-fulfilling prophecy in that organisations may allow products to continue into decline or drop them altogether rather than regenerate, for example, by increased advertising or product modification.
- . Finally, the PLC focuses on individual products and not the product portfolio as a whole.
- Consequently, important relationships between products – for example, where a major customer buys a number of products – must also be considered.
what are the stages of competitor analysis?
- Identifying competitors – actual and potential competition (McDonald’s and Burger King; Boeing and Airbus; Coca-Cola and Pepsi also vs. evening to cinema)
- Identifying sources of competitive advantage and analysing comparative strengths and weaknesses (competitiveness)
- Analysing competitors’ assumptions; past, current and future strategies; and goals (market leaders/challengers)
- Assessing potential reactions
- Collecting competitor intelligence
- Developing a competitive strategy
can you provide an example of competitor analysis (Identifying the competition for a social marketing programme – reducing obesity)
- Direct competition
- Competing behaviours
- Competing benefits and motivation
- Personal influences
- Wider influences
- Indirect competition
- Other social marketing messages
- Everyday life
- Wider environmental forces
what examples are there of competitor response profiles (Kotler)?
- The ‘laidback’ competitor fails to react strongly or swiftly, little immediate impact on the organisation’s objectives;
- the selective competitor will react to some strategies but not others (for example, reacting to price reductions but not increased advertising);
- the tiger competitor will fiercely react to any competitor activity aimed at its products and markets;
- The stochastic competitor does not exhibit any predictable pattern, and its actions and potential impact on objectives are largely unknown (perhaps most difficult of all)
what is product positoning?
It refers to how the organisation wants the target market (and other stakeholders) to interpret the product or brand in relation to others (particularly competing brands).
This is about
- image,
- associations
- and the values and beliefs that customers (and others)
will associate with the brand




