2. GROWTH IN EXISTING PRODUCT MARKETS
Increasing Product Usage
• Increasing Usage in Existing Product Market
Approach Strategy give example(how?)
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Frequency of . Provide reminder
Use/consumption communications
. Position for frequent use .
. Position for regular use
. Make the use easier or
More convenient
. Provide incentives .
. Reduce undesirable
Consequence of
Frequent use
. Use at different .
occasion
. Use at different locations . Radio in shower
3. Increasing Product Usage…….
• Level of use/ . Provide reminder . Increased insurance coverage
Consumption communication
. Provide incentives . Special price for accessories
. Influence norms . Use of large containers
. Reduce undesirable . Low – calaoie cnady
Consequences of
Increased use level
Develop positives . Frito-Lay:’ But you can't eat
Associations with use just one.''
occasions
4. PRODUCT DEVELOPMENT FOR THE EIXSTING MARKET
• Product Features Addition
-For some candy firms, creation of novel
packages provides a key to sales; a clothing firm
could add accessories to its line of merchandise.
• Product – Line Expansion
- A book retailer could add children's book and a
''how –to section to its line.
5. The product line extension will be based on many factors, of
course, but will often involve consideration of the following
questions:
• Will customers benefit from a systems capability or device
convenience made possible by a broad product line?
• Do potential manufacturing, marketing, or distribution cons
efficiencies exist from an expanded product line?
• Can asses or skills be applied to a product line extension?
• Does a firm have the skill and needed resource in R& D,
manufacturing, and marketing to add the various product
proposed?
• Is the new product line compatible with the existing brand?
6. Develping New Genration Product
Such products can obsolete existing ones, thus
providing a source of sales.
• New Products for Existing Markets
7. MARKET DEVELOPMENT USING EXISITNG PRODUCT
Expanding Geograhically
• Geographic expansion may involve changing from a
regional operation to a national operation, moving into
another region, or expanding to another country
• With market expansion, the same expertise and
technology and sometime even the same plant and
operation facility can be used
Expanding into New Market Segment
• Usage.
• Distribution.
• Age.
• Attribute preference.
8. Evaluating Market Expansion Alternative
• Is the market attractive?
• Do the resource and will exist to make the
necessary commitment in the face of
uncertainties? Dose the move make strategic
sense?
• Can the business be adapted to the new market?
• Can the asset and the skills that are at the heart
of business success be transferred in to the new
business environment?
9. • VERTICAL INTEGRATION STRAREGIES
Benefits
Costs
Benefits
Costs
Operating costs Operating Economies
Access to supply or demand Management of different business
Control of the product system Increase in risk
Entry into profitable business Reduced flexibility
Enhanced technological innovation Cost of inward focus
10. Benefit:- Opeating Economies
This simple example illustrates the following
potential savings.
• Steps in the production process can be combined
• Economies of scale are possible.
• Substantial transaction costs are involved in
creating a contact between two separate firms
• Economies related to information gathering are
available.
11. • Benefit: Access to Supply or Demand
Access to Supply.
Access to Demand.
Idiosyncratic Products and Services.
Four types of specialization can be identified.
Brand name
Dedicated assets
Technological
Knowledge-based
12. Diversification
“This part of a Wiseman to keep himself
today for tomorrow, and not venture all his
eggs in one basket.”(Miguel de Cervantes)
“Put all your eggs in one basket and watch
that basket.”(Mark Twain)
13. Diversification
• Diversification is the strategy of entering product
markets different from those in which a firm is
currently engaged.
• Diversification can also involve both new
products and new markets.
• A diversification strategy can be implemented by
either an acquisition (or merger) or a new
business venture
• It is helpful to categorize diversification as
“related’ and ‘unrelated
14. RELATED DIVERSIFICAION
Exchange or share skills or
assets, thereby exploiting
Brand name
Marketing skills
Sales and distribution
capacity
Manufacturing skills
R&D and new product
capability
Economics of scale
UNRELATED DIVERSIFICAION
Managing and allocate cash
flow
Obtain high ROI
Obtain a “bargain “price
Restructure a firm
Reduce risk by operating in
multiple product markets
Tax benefits
Obtain liquid assets
Vertical integration
Defend against a takeover
Provide executive interest
15. Related Diversification
• In this alternative, a company expands into a related
industry, one having synergy with the company's
existing lines of business,
• The existing and new lines of business share and gain
special advantages from commonalities such as
technology, customers, distribution, location, product
or manufacturing similarities, and government access.
• This is often an appropriate corporate strategy when a
company has a strong competitive position and
distinctive competencies, but its existing industry is
not very attractive.
16. Unrelated Diversification
• This involves diversifying into a line of business which is
unrelated to the current ones.
• Advantage: seeking more attractive opportunities for growth
in which to invest available funds (in contrast to rather
unattractive opportunities in existing industries) ,risk
reduction, and/or preparing to exit an existing line of business
(for example, one in the decline stage of the product life
cycle).
• Further, this may be an appropriate strategy when, not only
the present industry is unattractive, but the company lacks
outstanding competencies that it could transfer to related
products or industries.
• Disadvantage: because it is difficult to manage and excel in
unrelated business units, it can be difficult to realize the
hoped-for value added. Cannot capture synergies -- no
strategic fit between SBUs
