Marketing Strategies Selecting Marketing Strategies BUSS3.9 Selecting Marketing Strategies

Selecting Marketing Strategies In this topic you will learn about: Low cost versus differentiation Market penetration Product development and market development strategies Diversification Assessing effectiveness of marketing strategies BUSS3.9 Selecting Marketing Strategies

How the business will go about achieving its marketing objectives Marketing strategy Corporate objectives Marketing objectives Market analysis BUSS3.9 Selecting Marketing Strategies Marketing strategy How the business will go about achieving its marketing objectives

Using a matrix to analyse Marketing strategy Strategies Low cost v. Differentiation Market penetration Product development and market development strategies Diversification BUSS3.9 Selecting Marketing Strategies

Michael Porter’s Strategic matrix Analyses low cost v. differentiation Porter’s basic premise is to be one thing or the other and not stuck in the middle. Marketing messages must be clear and non contradictory Tesco “ Good food that costs less” M&S “ Its not just food its M&S food” BUSS3.9 Selecting Marketing Strategies PRIMARK

Porter’s Generic Strategy Lowest Cost Highest Differentiation Cost Leadership Differentiation Focused Cost Focused Mass Market BUSS3.9 Selecting Marketing Strategies Niche Market

JJB – Why did it Fail? Most obvious problems included expanding too fast, overtrading and excessive gearing. However JJB’s CEO described them as being ‘stuck in the middle’ – Lack of Retail Focus Never found a proper point of difference Sports Direct focused on value for money. JD sports is at the fashion end of the sportswear market. Therefore no reason for consumers to go there. BUSS3.9 Selecting Marketing Strategies

Activity – Porter Select an industry in which there are several competitors e.g. Clothing, supermarkets, cars List all the firms that compete in this industry and try to place them in Porter’s matrix Low cost Differentiated Mass Niche BUSS3.9 Selecting Marketing Strategies

Igor Ansoff’s Matrix Ansoff looked at the degree of risk and potential for reward from different strategic options However trying to just sell more of an existing product in an existing market is unlikely to bring about substantial growth opportunities BUSS3.9 Selecting Marketing Strategies

Igor Ansoff’s Matrix Market Penetration Product Development PRODUCTS Existing New Market Penetration Product Development Market Development Diversification Existing MARKETS New

Ansoff’s Matrix – Market Penetration Trying to sell more of an existing product to the existing market Low risk strategy but limited potential reward Volvic BUSS3.9 Selecting Marketing Strategies Innocent McDonalds

Ansoff’s Matrix – Market Development Attracting new customers to buy existing products Risk associated with lack of knowledge of customers (may be new customer type or new location). BUSS3.9 Selecting Marketing Strategies Tescos Wii

Ansoff’s Matrix – product development Selling new and better products to existing customers Risk comes from not knowing the products, high R&D costs and competitors’ reactions BUSS3.9 Selecting Marketing Strategies IHG

Ansoff’s Matrix - 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 BUSS3.9 Selecting Marketing Strategies

National & International Contexts Market Penetration A business already operating internationally has wider potential Product Development May tap into expertise for R&D Identify country leading in product development Market Development Identify rising star countries Easier if new areas have similar expectations and cultures Diversification Continues to be highest risk strategy especially in an international context BUSS3.9 Selecting Marketing Strategies Fresh ‘n’ Easy

Entering international markets Methods Export products to already established distribution outlets Set up an overseas operation Export from UK base (easier with internet sales) Risks Cultural differences Greater use of intermediaries Language barriers Benefits Wider target market Expertise from around the world Global branding BUSS3.9 Selecting Marketing Strategies

Assessing the effectiveness of marketing strategies Did it help achieve marketing objectives? Has it contributed towards corporate objectives? What has impact been on other functional objectives? How has decision impacted upon stakeholders? BUSS3.9 Selecting Marketing Strategies

Activity Draw a blank Ansoff’s matrix on A4 paper Place each of the following strategic decisions in the correct quadrant Coca Cola launch bottled milkshake Tesco open stores in Saudi Arabia Sainsbury take over Costcutter convenience stores British Gas launch Goldfish credit card Mercedes introduce the A class small car Apple introduces the iPad mini 2 M and S introduce the ‘2 Dine for £10’ this weekend Research the history of the “Easy” brand and track this using Ansoff’s matrix. Using both Porter and Ansoff assess the effectiveness of marketing strategies adopted by the Easy group of brands. BUSS3.9 Selecting Marketing Strategies