alevel business 3.8

• Define Ansoff's matrix


  Method of analysing the risks associated with different market positioning strategies

  
• Define market penetration


  The strategy of achieving growth through targeting existing customers with existing products
• Examples of market penetration strategies x2

  Product - slight alterations (size,colour etc.)

  price - sales /special offers
• Reasons for market penetration x2

  Least risky option - know customers and products

  If there has been an increase in market size
• The value of market penetration x2

  Relatively cheap option for growth

  Is focused on building on established core comptences
• Define market development


  The strategy of achieving growth through targeting new customers with existing products
• Example of market development strategies x2

  Product - changing packaging

  Promotion - emphasising different benefits of the product
• Reasons for market development x2

  Have a successful product and model that is replicable in new markets

  fall in the size of target market
• Value of market development x2

  Little need for expensive product development

  Build on business reputation
• Drawbacks of market development x2

  Need for market research - new customers and competitors

  may face cultural difficulties
• Define product development


  The strategy of achieving growth through targeting existing customers with new products
• Example of product development strategies x2

  Product - updates , new releases , changing colour and innovation

  price - releasing a cheaper , basic version
• Reasons for product development x2

  Replace products at the end of their lifecycle

  Maintain demand and customer loyalty
• Value of product development x2

  Maintain customer loyalty

  Create new revenue streams
• Drawbacks of product development x2

  Can be very expensive , may require extensive investment in R&D

  Risk of failure
• Define diversification


  The strategy of achieving growth through targeting new customers with new products
• Example of diversification strategies x2

  Product - market research , R&D , 'copy cat' products , transferring core competence into new use

  price - will depend on objectives
• Reasons for diversification x3

  Organisation has trusted brand image that is transferrable

  Lack of growth opportunities

  high levels of competition in the current market
• Value of diversification x2

  Create opportunities for growth

  enhance brand image
• Drawbacks of diversification x2

  Highest risk strategy - Don't know product or consumers

  Likely to be very expensive, may require extensive investment in market research, R&D and promotion
• Poter's genetic strategies graph

  
• Define cost-leadership


  A strategy of selling a low cost product aimed at a mass market
• Requirements for cost- leadership x2

  Organisations are able to take advantage of EOS - technical , managerial , bulk buying

  Focus on cost minimisation - materials , labour
• Benefits of cost - leadership x2

  Appeals to price sensitive consumers

  effective in a recession (selling 'inferior goods')
• Costs of cost-leadership x2

  Product quite 'basic' - risk of new entrants

  Products are price elastic - difficult to raise prices
• Define differentation focus


  A strategy of selling a highly differentiated product to a niche market
• Requirements of differentation focus x2

  Strong brand image

  Highly differentiated product - the actual product itself, or through brand image etc
• Benefits of differentation focus x2

  •Maybe little competition in the market niche

  •Ability to make high profit margins
• Costs of differentation focus x2

  •Relatively few sales

  •Incurs high costs - branding, market research, staff training etc.
• Define cost focus


  A strategy of selling a basic product to a niche market
• Requirements of cost focus x2

  •A product that is similar to the market leader, but can be sold at a lower price

  •A clear target market
• Benefits of cost focus x2

  •Target a niche market - maybe less competitive

  •Allows smaller businesses to compete
• Cost of cost focus x2

  •Relatively few sales

  •Difficult to change brand image / limited scope for growth
• Define differentiation leadership


  A strategy of providing a differentiated product to a mass market
• Requirements of differentation leadership x2

  •Strong brand image

  •A large group of consumers willing to pay a premium price
• Benefits of differentiation leadership x2

  •High sales possible at a premium price

  •Money for reinvestment and further development
• Costs of differentiation leadership x2

  •High costs incurred - market research, development and promotion

  •Markets likely to be highly competitive
• Define Bowman's strategic clock


  A model that considers the different strategic positions businesses could use to compete by assesing percieved value of selling price

  
• Define position one: low price/ low value

  Target low price customers - similar to cost focus
• Evaluate position one


  + successful during a recession

  - may lose sales in a recovery/boom