A, A business strategy is the means by which it sets out to achieve its desired objectives. It can simply be described as a Long term business plan that typically covers a period of three to five years, however it can last longer. There are two main categories of strategy which are, Growth Strategy and Competitive Strategy.
The Ansoff growth matrix is a marketing planning tool that helps a business determine its product and market growth strategy. This involves a series of suggested growth strategies which set the direction for the business strategy. These are described below: http://www.edrawsoft.com/ansoff-matrix.php Market Penetration
Market penetration is the name given to a growth strategy where the business focusses on selling existing products into an existing market. Market penetration seeks to achieve four main objectives:
Maintain or increase the market share of current products, this can be done through a combination of competitive pricing strategies, advertising, sales promotion or personal selling.
Secure dominance of growth markets
Restructure a mature market by driving out competitors, this would involve an aggressive promotional campaign designed to make the market unattractive to competitors.
Increase usage by existing customers, for example by introducing loyalty schemes.
A market penetration strategy is focused on markets and products that the business knows well. It is unlikely that this strategy will require much investment in new market research, helping to keep costs down for the organisation.
For example, Kellogg’s use a market penetration strategy through advertising during the festive period, as it has been highlighted through market research that during this time, consumers become more quality conscious (see appendix A). Joshua Blatchford(2010)
Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. There are many possible ways of approaching this strategy, including:
New geographical markets, for example, exporting the product to a new country.
New product dimensions or packaging
New distribution channels such as ecommerce and mail order
Different pricing policies to attract different customers or create new market segments
Market development is a more risky strategy than market penetration as it involves targeting new markets, and this can carry higher costs.
For example, Tesco would have used a market development strategy when starting out with their new online shopping and home delivery.
Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new products and also develop modified products which could appeal to the already established markets.
A strategy of product development is particularly suitable for a business where the product needs to be differentiated in order to remain competitive. A successful product development strategy places the marketing emphasis on:
Research, development and innovation
Detailed insights into customer needs nd how they can change
Being first to market
For example, Apple has been successful with using a product development trategy and have managed to create a following of loyal customers, giving them the competitive edge over other competitors. (see appendix B)
Diversification is the name given to the growth strategy where a business introduces new products into new markets. This is substantially more risk involved in this strategy as the business is moving into markets in which it has little or no experience.
For a business to adopt a diversification strategy, it must have a clear idea about what it expects to gain from