3.8

• Choosing markets to compete in is mainly decided by by marketing department
• Benefits of developing new products

  Indicates progress

  Broadens target market

  Benefit from marketing EoS
• Strategic direction

  Where e are trying to get to

  Direction of travel

  Towards a particular proposition
• Proposition is what we have to offer and the impact we want to have. The businesses intentions.
• Influence on strategic direction

  Core competences

  Leaders attitudes to risk

  Competitive environment

  Corporate objectives
• Ansoffs matrix

  Helps determine market and product strategy

  • Existing product in existing market : market penetration : increase market share, secure dominance in market, driving out competition, customer loyalty
  • Existing product in new market : market development: new packaging, new distribution channels, different pricing
  • New product in existing market : product development : research and development, review customer needs, product needs to be different to be competitive
  • New product in new market : risk assessment, need clear idea of what they expect to gain
  • Ordered least to most risky
• Types of investment appraisal

  Payback - how quickly we pay back our investment

  ARR - % profit gained from that investment overtime

  Net present value - the value of money overtime
• Ways a business can spend money

  Invest in fixed assets

  Buy raw materials

  Pay overheads
• An investment is expenditure on a capital good that can be used in production process
• Investments are dependent on

  Whether it's worthwhile (return on investment)

  Whether the firm is optimistic about the future

  These are both quantitative methods
• Payback method

  Simplest method

  How quick the returns from investment will cover the cost of the investment

  Calculate time it takes for moneyfrom investment to be paid back

  Usually the shortest payback is the best payback

  Calculate by - money needed in that year in order to pay back divided by money we got in that year overall timesed by 52
• Elements of a business proposition

  Identifying and communicating what the business does

  Proposing to the customers

  Identify target market

  Research our specific value to our customers

  Customer connections

  Competitive analysis
• Porters generic strategies

  Source of competitive advantage either cost of differentiation

  Market either niche or mass

  Useful to us only for naming a strategy and considering the clarity of a proposition

  Those in the middle are those that do neither cost nor differentiation well and so this helps us to explain businesses with no clear proposition
• Why is it a problem to be in the middle of porters generic strategies

  Makes us forgettable

  Gives customers no reason to choose us

  We are doing nothing to get customers in the door
• Benefits of competitve advantage

  Differentiation

  Market leadership

  Increased and strengthened reputation

  Brand recognition

  Could take a while for competitors to keep up with you
• Difficulties of maintaining competitve advantage

  Reputation must be upkeeped

  May have new entrants to market that need to be surpressed so intensity of competition doesn't increase

  Advantage isn't permanent so you need to constantly adapt

  Our objectives and proposition
• Porters 5 forces

  Buyer power

  Supplier power

  Threat of new entrants

  Threat of substitution

  Intensity of competitive rivalry
• Factors influencing what market to compete in

  Demand

  Profitability

  Surrounding laws

  Current economy

  Current target audiences

  Logistics

  Brand strength