unit 8 Flashcards
whats a business strategy
refers to how the objectives will be achieved, firms may set corporate as well as functional strategies
what is ansoffs matrix
a marketing planning model that helps a business determine its product and market strategy
what do the ansoff matrix axis consist off
- new markets
- existing markets
- existing products
- new products
what’s market penetration
a growth where a business aims to sell existing products into existing market
examples of market penetration strategies
ALDI - rapid organic growth in the UK targeting the same customer base with new stores
market penetration evaluation
- business focuses in markets and products it knows well
- can exploit insights on what customers want
- unlikely to need significant new market research
whats product development
a growth strategy where a business aims to introduce new products into existing markets
product development evaluation
- a stratergy that often plays to the strengths of an established business
- strong emphasis on effective research
- a great way of exploiting the existing customer base
- being first to market is usually important
approaches to market development
- new geographical markets
- new distribution channels
- different pricing polices to attract new customers in diffferent segments
evaluating market development
- a logical strategy where existing markets are saturated or in decline
- often more risky than product developments
- existing products may not suit new markets
market development
a growth stratergy where the business seeks to sell its existing products into new markets
whats diversification
the growth strategy where a business markets new products in new markets
the challange facing business strategy
to find a way of achieving a sustainable competitive advantage over the other competing products and firms in a market
porters suggested approach to strategic positioning
- porter suggested two overall business strategies that could be followed in order to gain competitive advantage
- porter argued that differentiation and low cost are effective strategies for firms to gain competitive advantage
what is a competitive advantage
an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service than justifies higher prices
low cost strategy
with this strategy 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 low cost is a source of competitive advantage
why is cost leadership important
- if selling prices are broadly similar, the lowest cost operator will enjoy the highest profits
- lowest cost operator can also offer the lowest prices
suitable markets for this strategy
- standard production
- little product differentiation
- branding relatively unimportant
likely features of a low cost operators
- high levels of productivity and efficiency and capacity utilisation
- large, benefitting from economies of scale
- use bargaining power to negotiate lowest prices from suppliers
- lean production methods and culture
- access to the widest and most important distribution channels
strategy of focus and differentiation
with a differentiation strategy, aims to offer, a product that is distinctively different from the competition, with the customer valuing that differentiation
ways for a business to achieve differentiation
- superior product quality
- branding
- wide distribution
- sustained promotions
whats stuck in the middle
where firm has no clear stratergy eg morssions isn’t cheap or expensive
