Unit 8 Flashcards
(16 cards)
What is strategic direction influenced by
Corporate objectives
Core competences
Competitive environment
Leaders‘ attitudes to risk
Local, national and global economic environment
What is market penetration
Trying to sell more of an existing product to the existing market
Low risk strategy but limited potential reward
Approaches of market penetration
Possible approaches include:
Gain share from competitors
Encourage customers to buy/consume more
Changes to marketing mix
Extension strategies
Potential dangers of market penetration
Potential dangers of this strategy include:
Competitors’ reactions
Relatively short term only
Market may already be saturated
Cannibalisation
What is market debelopment
Attracting new customers to buy existing products
Risk associated with lack of knowledge of customers
Approaches of market development
Possible approaches include:
Enter a new international market
Change promotional tactics
New distribution channels e.g. e-commerce
Dangers of market development
Potential dangers of this strategy include:
The product may not be accepted, desired or understood in a new market
The business may not understand the new market
Alienation of current customers
What is product development
Selling new and better products to existing customers
Risk comes from not knowing the products, high R&D costs and competitors’ reactions
Approaches of product development
Launch substantially improved version of existing products
Introduce complementary products
New product innovations
Dangers of product development
Risk of cannibalisation
May shorten product life cycle of existing products
Damage to brand
What is Diversification
Selling new products to new markets
High risk strategy as 2 elements are unknown - the market and the product
High risk but also greatest potential for reward
Approaches to diversification
R&D into new products and market research into new markets
Acquisitions of other businesses
Dangers of diversification
Relies on heavy investment
Cultural differences may exist
Brand name may be diluted
What models relate with strategic positioning
Porter’s low cost, differentiation and focus strategies
Bowman’s strategic clock
benefits of competitive advantage
Customer loyalty
Potential to charge a premium price
Market share
Reputation as low cost or highly differentiated therefore seen as higher added value
Create barriers to entry
Difficulties maintaining a competitive advantage
Competitors’ actions e.g. copying or responding to strategy
Inability to maintain barriers to entry
Changing external environment
