BU111 strategic expansion

List the 4 strategies in order from lowest risk to highest

market penetration, market development, product development, diversification

what is market penetration

Sell more of existing product to existing target market

why use market penetration

build on what you have, greater market share and purchase frequency

what are tactics for market penetration

cut prices, increase advertising and loyalty schemes, increase distribution channels, volume incentives, buy a competitor

market penetration - diamond e questions

can I persuade customers to buy more of my product (capabilities), do I use new distribution channels (resources), do I have the production capacity to meet increased demand (resources)

market penetration - porter's questions

buyers - do they have a propensity to switch/lock in/switching costs, rivalry - fragmented vs concentrated, growing vs declining, aggressive vs passive competitor

what is market development

selling what you already produce to new market segments

why use market development

capitalize on production capabilities, diversification of customer base, pursue less contested or larger market

what are tactics to use for market development

create awareness in new market by pitching benefits to new customers, expand geographically

market development diamond e q's

resources - will this affect brand image, capabilities - will the product need adjustments and are they possible, do I have the resources to go international?

market development porter's questions

can I access the distribution channels, are customers accessible, rivalry, barriers to entry

what is product development

new products (related or unrelated) for the same customer base

why use product development

build on customer knowledge and brand equity, distribution synergy and product bundling

what tactics are used for product development

extend product, repackage existing products, create bundles of complementary products

product development diamond e q's

can I leverage existing brand and distribution, will my facilities work, can I produce and sell profitably, how much new expertise is necessary

product development porter's questions

will customers be willing to switch, rivalry (aggression), barriers to entry

diversification

new products, new target market

concentric/horizontal diversification

expanding existing products and services

vertical diversification

expand into other areas of its manufacturing process

conglomerate diversification

new products and services unrelated to current market

why use diversification

diversify portfolio, capitalize on existing capabilities in higher growth areas

what tactics are used for diversification

acquire other business, use joint ventures and alliances

diversification - diamond e q's

what new resource will I need, how much will I have to change operations

diversification - porter's questions

are distribution channels and customers accessible, rivalry, barriers to entry