Topic 8: Strategic Direction

• Ansoff Matrix

  is a marketing planning model that helps to determine its product and market strategy and the level of risk involved.
• Market Penetration

  is achieving growth through targeting existing market (customers) with existing products.
• New Product Development

  is achieving growth through targeting existing market (customers) with new products.
• Market Development

  is achieving growth through targeting new market (customers) with existing products.
• Diversification

  is achieving growth through targeting new market (customers) with new products.
• Unrelated Diversification

  is where a business adds new and unrelated products or services to its existing business. E.g. Coke manufactures beverages but started selling clothing's
• Related diversification

  is where a business adds or expands its existing product lines or markets. The new products or markets are somehow related to the existing ones, either through similar technologies, skills, or target customers. E.g. Car manufacturing started producing motorcycles
• Porter's Generic Strategies

  is a model that helps a business choose its positioning strategy based on its competitive advantage and its market scope. In other words, it tells you how to compete in the industry with the competitive advantage you have gained.
• Bowman's Strategic Clock

  is a model that shows different combination of price and perceived added value from low to high.
• Competitive Advantage

  is a special strength that helps a company outperform its competitors.
• Strategic Direction

  is the course of action that leads a company towards its goals. It outlines where a company sees itself in the future, and the steps it plans to take to get there.
• Characteristics of market penetration

  ㆍleast risky

  ㆍgaining more market shares

  ㆍonly work if the demand is there

  ㆍaims to capture a larger customer base
• Characteristics of market development


  ㆍrisk is the business not having the same knowledge of this in new segment

  ㆍadapting the product or marketing approach to suit the needs and preferences of the new market.
• Diversification spread risks, if demand falls in one market, it can rely on the other one in where it is selling
• What are the 4 growth strategies on ansoff matrix?


  Market penetration

  New Product Development

  Market Development

  Diversification
• What are the 4 strategies on Porter's Generic Strategies? 


  Cost leadership

  Differentiation

  Cost focus

  Differentiation Focus
• What do the Porter's Generic strategies, measure in?


  Competitive Advantage = cost or differentiation

  Competitive scope = narrow or broad target (niche/mass)