Selecting Marketing Strategies

- Learning Outcomes To be able to describe a range of marketing strategies Explain the meaning and significance of Ansoff’s matrix Evaluate the suitability of Ansoff’s competitive strategies Analyse the risks and benefits involved in entering international markets

What evidence is there that Tesco are aiming to sell new products to its existing customers? Is there any evidence to suggest that Tesco is hoping to sell more of its current portfolio to new customers? Why might it be more risky to develop overseas business in new locations rather than in markets where Tesco already operate? Selecting Marketing Strategies

Marketing objectives come from corporate goals and they are influence by internal and external factors. It is essential to analyse the market before attempting to devise the marketing strategy. As well as niche and mass marketing we need to look at other strategies: Selecting Marketing Strategies Low cost strategy (to undercut rivals) Vs Product Differentiation (added value) 1 2Does the strategy have a national or international context

Low cost (applies to niche & Mass market): Offer products at lower price than competitors. Business must reduce its own costs using economies of scale, Finding low cost supplier Moving operations to a low cost location Selecting Marketing Strategies

Differentiation (applies to niche & Mass market): Make product appear different and ‘superior’ to others Encourages consumers to choose that particular model Involves all elements of marketing mix and includes: patenting Developing USP Building strong brand image Pricing reflects exclusivity/superiority Distribution is strictly controlled to maintain image Selecting Marketing Strategies

For the pictures, can you decide which businesses have adopted a low cost strategy and which have decided for a differentiation strategy. Ensure you are able to explain your choice. Selecting Marketing Strategies

National or International Growth of e-commerce means small to medium sized firms can attract customer from around the world Expansion of European Union encourages UK firms to trade abroad Selecting Marketing Strategies

Ansoff’s competitive strategies Igor Ansoff developed the Ansoff’s matrix- A way of classifying marketing strategies interims of existing and new products in existing and new markets. The degree of risk is involved in each strategy is an important element of the analysis Selecting Marketing Strategies

Ansoff’s Matrix Market Penetration: When a firm increases the sales of its current products to existing customers from its competitors in the market. Product development: Offering new and improved products to existing markets. Often used by confectionary manufacturers. Market development: Finding new markets for existing products either by selling abroad or by identifying a new segment of the domestic market Diversification: Offering a new product in a new market. This spreads the risk and increase safety. However this does take the business out of its area of expertise. Selecting Marketing Strategies

Ansoff’s Matrix Activity Using your knowledge of Coca-Cola explain where their products fit on the Ansoff’s matrix. Ext – Which is the best strategy to adopt for a business such as Coca-Cola? Justify your view. Selecting Marketing Strategies

Factors affecting marketing strategies The objectives of the business – Marketing Strategy must reflect objectives of the business ie A growing market for ethical customers means businesses may follow ethical principles Strategies of competitor business – one business may follow another Structure of the market – level of competition and degree of change within different markets. Dynamic markets need changing regularly. Size of the business – small businesses find strategic decision making more difficult Selecting Marketing Strategies

Entering international markets Usually appeals when: UK market is saturated UK market is competitive & drives prices down Opportunities to achieve economies of scale The firm has excess capacity The additional costs involved are relatively small Selecting Marketing Strategies

Rewards of entering international markets Profit – costs may be lower, sales and selling price may be higher Spreading the risk – less vulnerable to downturns in the economy Poor conditions in the domestic market – use it as an extension strategy Legal differences – developing countries have fewer restrictions Selecting Marketing Strategies

International Markets: Question Do you think businesses should be focusing on localisation or globalisation? Justify your views Selecting Marketing Strategies

Assessing the effectiveness of marketing strategies Has the strategy helped the business to achieve its marketing (and corporate) objectives. Assess in terms of Ansoff’s matrix. Has it achieved Market Penetration, Product development, Market development, Diversification? Selecting Marketing Strategies

Selecting Marketing Strategies - PORTER The most influential analytical model for assessing the nature of competition in an industry is Michael Porter's Five Forces Model, which is described below:

Selecting Marketing Strategies - PORTER Porter explains that there are five forces that determine industry attractiveness and long-run industry profitability. These five "competitive forces" are - The threat of entry of new competitors (new entrants) - The threat of substitutes - The bargaining power of buyers - The bargaining power of suppliers - The degree of rivalry between existing competitors

Selecting Marketing Strategies - PORTER Porters 5 Forces ACTIVITY For an industry of your choice, use Porter’s 5 Forces to analyse the market and recommend if it is worth a business to develop a product within that industry. (You must analyse each of the 5 forces)

HOMEWORK Please complete homework 3 from the homework booklet.