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Mooradian_sm1_ppt_note19.ppt© 2012 Pearson Education, Inc. publishing Prentice Hall.
Note 19
Generic Strategies—
Product-Market Growth
Strategies
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© 2012 Pearson Education, Inc. publishing Prentice Hall.
Figure Note 19-1 - The Ansoff Product/Market Growth Matrix
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© 2012 Pearson Education, Inc. publishing Prentice Hall.
Market Penetration
Options to grow via market penetration
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© 2012 Pearson Education, Inc. publishing Prentice Hall.
Product Development
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- Product improvements - Adding new product features or improving product performance is a typical strategy in a highly competitive market that came into its maturity phase of the product lifecycle.
- Product innovations - Synergies can be exploited when a company introduces a new product targeted to the existing customer base.
- Product line-extensions - When a company introduces under its successful brand name in a given product category, it intends to grow via line-extensions.
- Cross selling - Involves selling new products or services to its existing customers.
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© 2012 Pearson Education, Inc. publishing Prentice Hall.
Market Development
It is expanding sales of existing products to new geographic markets or to new segments
It requires:
Building brand awareness and brand image
Accessing new distribution channels
Confronting new competitors
Formulating new marketing strategies
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© 2012 Pearson Education, Inc. publishing Prentice Hall.
Diversification
Taking a new product to a new market is the strategy with the highest risk
It has the lowest probability of success
It needs the highest amount of resources
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© 2012 Pearson Education, Inc. publishing Prentice Hall.
Diversification
Ways of diversification
Related diversification
A company enters a new market with a new product attaining synergies by sharing assets or competencies across businesses
Unrelated diversification
A company enters a new market with a new product not related to the existing product markets
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© 2012 Pearson Education, Inc. publishing Prentice Hall.
Diversification
Forward and backward integration
Forward integration occurs when a company decides to move downstream the product flow
Backward integration means that a company moves upwards
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© 2012 Pearson Education, Inc. publishing Prentice Hall.
Figure Note 19-2 - Strategic Planning within the Ansoff Matrix
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- The risk of diversification can be reduced when a company plans its growth across time.
- Before entering a new market with a new product, a company can develop a new product for the existing market.
- Next, it can take the product that has been successfully introduced in the existing market to a new market.
- Alternatively, it could introduce an existing product to a new market to gain market knowledge, create brand awareness and brand image, get access to distribution channels, and then develop a new product for this market.
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© 2012 Pearson Education, Inc. publishing Prentice Hall.
Figure Note 19-3 - Building from the Core and Identifying Adjacencies
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- Strategy consultant and author Chris Zook has suggested that firms should identify their core - their essential, enduring, and defensible strengths.
- The first requirement in considering opportunities with regard to their relationship to the firm’s core is to define that core rigorously and accurately.
- Once the firm has clarified its core strengths it should look for opportunities that build upon those strengths.
- There are firms and situations for which growth is an unrealistic objective.
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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall
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- Product improvements - Adding new product features or improving product performance is a typical strategy in a highly competitive market that came into its maturity phase of the product lifecycle.
- Product innovations - Synergies can be exploited when a company introduces a new product targeted to the existing customer base.
- Product line-extensions - When a company introduces under its successful brand name in a given product category, it intends to grow via line-extensions.
- Cross selling - Involves selling new products or services to its existing customers.
*
- The risk of diversification can be reduced when a company plans its growth across time.
- Before entering a new market with a new product, a company can develop a new product for the existing market.
- Next, it can take the product that has been successfully introduced in the existing market to a new market.
- Alternatively, it could introduce an existing product to a new market to gain market knowledge, create brand awareness and brand image, get access to distribution channels, and then develop a new product for this market.
*
- Strategy consultant and author Chris Zook has suggested that firms should identify their core - their essential, enduring, and defensible strengths.
- The first requirement in considering opportunities with regard to their relationship to the firm’s core is to define that core rigorously and accurately.
- Once the firm has clarified its core strengths it should look for opportunities that build upon those strengths.
- There are firms and situations for which growth is an unrealistic objective.
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