Ansoff’s matrix: market penetration
selling more of an existing product to existing market
negatives of market penetration (3 points)
- high competition
- failure to penetrate market
- lower costs may lead to lower quality
Ansoff’s matrix: product development
selling a new and improved product to an existing market
negatives of product development (2 points)
- no demand
- faulty product…decreased brand loyalty cannibalising other sales
Ansoff’s matrix: market development
targeting a different market to sell the same product to
negatives of market development (3 points)
- unfamiliar with new market
- maybe a lack of demand
- alienate current customers
Ansoff’s matrix: diversification
selling a new product to a new market
negatives of diversification (2 points)
- cultural differences
- large investment may be needed
factors a business needs to consider when moving to international markets (5 points)
- GDP of country
- political state
- competition
- motivation of workers in country
- laws and legislation
Advantages of niche markets (4 points)
- high brand loyalty
- less competition
- can charge premiums
- low barriers to entry
advantages of mass market (5 points)
- larger audience
- economies of scale
- brand recognition
- better distribution networks
- increase returns due to large market
Differential advantage
firm can outcompete rivals because they produce higher quality products that are more highly differentiated e.g. Rolls Royce
cost advantage
- low operating costs allow a firm to cut its prices without losing profit margin
pros of competitive advantage (6 points)
increased:
- market share
- brand loyalty
- sales revenue
- profitability
- bargaining power over suppliers
- may attract highly skilled workers…improve efficiency
difficulties of maintaining a competitive advantage
firms dislike competition, rivals will copy what you do
strategic positioning definition
where a business wants to be in the market relative to other businesses
- based on consumers perception
how can strategic position be analysed (2 points)
- porters generic strategies
- Bowmans strategic clock
Porters generic strategies: mass market and lowest cost (3 points)
cost leadership
- a business operating in whole mass market trying to be the lowest cost provider
- efficiency is key
- trying to sell increased volume for economies of scale
Porters generic strategies: mass market and highest differentiation (3 points)
Differentiation
- trying to be unique in the mass market
- trying to differentiate their product from others
- potential competitive advantage through brand loyalty
Porters generic strategies: niche market and lowest cost
focused cost leadership
- providing the lowest prices in a niche market
Porters generic strategies: niche market and highest differentiation
focused differentiation:
premium products for higher prices in a very niche segment of the market
