Market Penetration:
Market Penetration is one of the objectives used in Ansoff's matrix. The potential gain of using this strategy is achieving higher market shares, possible increase in sales as well as improvements in marketing. This can be done by selling existing product in an existing market, which obviously lowers the risk. However, even though market penetration is the least risky of the four strategies, companies using this strategy should still be careful. Since low prices are a method used to penetrate a market, it could eventually lead to a damaging price war that reduces overall profit of all firms in the particular industry.
Product Development:
This strategy is a bit more risky than market penetration. In order to develop and sell new products or new developments of already existing products in existing markets, innovation of the product often must take place. This can be done by altering existing products to create something new and unique. Another possibility is to create completely new products. However, innovation of the product might lead to a distinctive identity of a business, which might be both positive and negative.
Market Development:
Market Development can be explained as a strategy used for selling existing products in new markets. This can be done by using geographic or demographic changes as well as by re-packaging for different market. To be more specific, this might include exporting goods to overseas markets. Even though that market development might be often a very successful strategy, it definitely contains a certain amount of risk too. Selling products in new markets might not always be appealing to a new range of customers. Therefore, it is recommended to do some research about a new market and its customers first.
Diversification:
Diversification is the process of selling different, unrelated goods or services in new markets by either looking for new markets for these new products or by diversifying into different products or services. This strategy is the most risky of the four strategies because it involves new challenges. A firm might later find out that it does not have enough competencies to survive in the particular industry. However, this strategy has several advantages too such as the possible reduction of overall business portfolio risk or the potential gain in an expanding industry.
Market Penetration is one of the objectives used in Ansoff's matrix. The potential gain of using this strategy is achieving higher market shares, possible increase in sales as well as improvements in marketing. This can be done by selling existing product in an existing market, which obviously lowers the risk. However, even though market penetration is the least risky of the four strategies, companies using this strategy should still be careful. Since low prices are a method used to penetrate a market, it could eventually lead to a damaging price war that reduces overall profit of all firms in the particular industry.
Product Development:
This strategy is a bit more risky than market penetration. In order to develop and sell new products or new developments of already existing products in existing markets, innovation of the product often must take place. This can be done by altering existing products to create something new and unique. Another possibility is to create completely new products. However, innovation of the product might lead to a distinctive identity of a business, which might be both positive and negative.
Market Development:
Market Development can be explained as a strategy used for selling existing products in new markets. This can be done by using geographic or demographic changes as well as by re-packaging for different market. To be more specific, this might include exporting goods to overseas markets. Even though that market development might be often a very successful strategy, it definitely contains a certain amount of risk too. Selling products in new markets might not always be appealing to a new range of customers. Therefore, it is recommended to do some research about a new market and its customers first.
Diversification:
Diversification is the process of selling different, unrelated goods or services in new markets by either looking for new markets for these new products or by diversifying into different products or services. This strategy is the most risky of the four strategies because it involves new challenges. A firm might later find out that it does not have enough competencies to survive in the particular industry. However, this strategy has several advantages too such as the possible reduction of overall business portfolio risk or the potential gain in an expanding industry.
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