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3) Ansoff: Market Development Strategies - Coggle Diagram
3) Ansoff: Market Development Strategies
MAIN
WHY use market development strategy?
Top-line growth
is important for an organisation to
survive
.
Large organisation whose revenue
increased less than GDP
were
5 times
more likely to
go out of business
OR
acquired by faster growing organisations
3 Market Development Strategies are:
New market segments
New marketing channels
New geographic markets
2) NEW MARKETING CHANELS
WHAT is a marketing channel?
'A set of activities & processes involved in the transfer of title & the movement of goods and services from the point of production to the point of consumption''
Getting the
right product
to the
right customers
in the
right place
at the
right time
.
Digital age, WHAT channel should you consider?
Online
&
Offline
channel
Offline
Multi-level structure of intermediaries
Direct Marketing (M to C)
1 Intermediary Level (M to R to C)
2 Intermediaries Level (M to W to R to C)
3 Intermediaries level (M to A to W to R to C)
M= Manufacturer/ Producer , A = Agent. W = Wholesaler,
R = Retailer, C = Consumer
Online
Online activities:
Informational
,
transactional
& those that provide a platform for
managing customer relationships
.
WHY digital channel important?? (PROS)
It provides more opportunities to organisations.
Expanded reach
. Selling online allows you reach more people anytime, day or night, across the country or even around the world. It may even help you connect with people in your own backyard who are unable to go out to shop or who simply prefer to shop online.
New services
: With an eCommerce website, you can provide your customers with additional conveniences. For example, you can offer Click and Collect/ Buy Online Pickup In Store (BOPIS), enabling your customers to browse your inventory online and then order for convenient in-store pickup.
Greater insights into your customer base
: eCommerce websites can provide you with a wealth of information on customer browsing and buying habits, which, when combined with in-store data from your point of sale (POS) system or other technologies, will give you a 360-degree view of individual shoppers. This insight enables you to personalize service, tailor promotions, and target offers for greatest effectiveness and greatest return.
CONS of using digital channel
Software integration issues
: If your eCommerce solution doesn’t seamlessly integrate with your enterprise resource planning (ERP), customer databases, point of sale (POS) and other business systems, you’ll waste time with double data entry and an increased chance for errors.
Many consumers still prefer the personal touch and relationships formed at a brick-and-mortar shop
. This can be especially valuable to customers shopping for specialized products, as they may want to consult an expert about the best product for their needs. A solid customer service hotline can't replace face-to-face interaction with a specialized sales rep. Additionally, many customers want to experience the product before purchase, like when shopping for clothes.
HOW to choose a marketing channel?
It will change when market change.
Need to identify the needs for the new target market only you can select a channel.
For exp: a B2B organisation that has targeted large businesses may decide to use an agent or a specialised distributor to service the SME market.
1) NEW MARKET SEGMENTS
Examples:
Gillette
reduce the price, but continuing the marketing for its Mach 3 razor when they introduced the Fusion razor.
After introduction of
iPhone 5
in September 2012 by continuing to market the iPhone 4 at a lower price. But this strategy is unsuccessful and was abandoned after the introduction of the iPhone 5S and IPhone 5C just 12 months later.
Apple Ipad
- successful in marketing the iPad as a replacement for notepads and menus etc
PepsiCo
developed an in-house app for delivery and merchandising personnel to track deliveries, check stock levels and fleet scheduling updates.
Durr Dental
developed an iPad-based imaging app for dentists to display patient X-rays and camera images, amongst a number of other applications.
HOW to stay ahead / have an early warning system for disruptive innovation in the industry?
3 potential strategies:
Create a new organisational structure within existing corporate boundaries in which the new processes, values and capabilities can be developed.
By spinning out an independent organisation.
By acquiring a different organisation that has the capabilities & processes that closely match the task.
When entering in low-end market segments, there is a potential of disruptive innovation happens.
Disruptive innovation definition
Lead to the creation of an entirely NEW MARKET through the introduction of a new kind of product / service.
The products are designed to be simplier, more convenient and less expensive (not designed to be as good or as better than existing products in the market).
Designed to appeal to non-customers of the existing product category (laggards).
Sustaining innovation definition
incremental year-by-year product
development of a breakthrough new product for an EXISTING MARKET.
makes a product / service perform better compared to marketed products.
HOW to find new market segments?
Develop a deep understand of your customers needs and behaviour at the intersection of segments, channels & product categories
identify and prioritise clusters of the highest-value, fastest-growing customer cells in the market
establish an ongoing and systematic research process (to get customer attitude & behavioural information).
Assess the current & future attractiveness of the market segment & to arrive a Go/No decision concerning to market entry
.
If the decision is
Go
, then the next step is to
develop
appropriate
customer value creation mix strategies
(Chp 6).
WHY New Market Segments? - Understand will do
Markets do not stand still.
Because of digital revolution, market fragmentation occurs due to the changing nature of customer buying behaviour.
Because of digital revolution, market fragmentation occurs due to the changing nature of customer buying behaviour.- Then, it causes danger of being stuck in the middle between low-frills and high-end competitors.
- SO, strategies must look for the emergence of potential new market segments.
3) GEOGRAPHIC EXPANSION
WHAT is geographic expansion?
A strategy to extend an organisation's market coverage
domestically
or
internationally
.
WHAT geographic area(s) should we target?
Local (exp: Local deli, butcher, or chiropractor)
Regional - state only (exp: restaurant chain)
National (exp: Coles, Giant supermarket)
International (exp: QANTAS, Mcdonalds, Ramly)
HOW to do INTERNATIONAL MARKET EXPANSION?
Exporting
Licensing agreement
Joint venture
Mergers and acquisition (M&A) strategy
Wholly owned subsidiary
WHY do International Market Expansion?
Take advantage of the opportunity that has arisen / alternatively to 'test the waters' for a later more concerted effort to develop the market.
Example
Volkswagen's re-entry into the Australian market.
In 1991, Inchcape Distributors Australia acquired the Australian franchise for Volkswagen.
In 1993, they relaunched the brand for the Australian market.
In 2001, Volswager AG cut off its ties with Inchcape and establish Volswagen Group Australia Pty Ltd to take charge of the Australian operations.
WHO & HOW to make decision whether should enter an international market.
Decision is made by the
highest level of corporate management
.
The process begins with a study called
Foreign-Market Opportunity Analysis
.
HOW to conduct Foreign-Market Opportunity Analysis?
Conducted in three stages:
1) Broad-brush preliminary study
2) Short-list of potential market
3) Detailed market analysis
WHAT tool can be used to conduct this analysis?
Market Potential Index (MPI) for emerging markets
this can help to access countries based on 8 dimensions:
Market size
Market growth rate
Market intensity (competition)
Market consumption capacity (Trading of consumer goods)
Commercial infrastructure (Resources use to produce goods)
Economic freedom
Market receptivity
Country risk
-
WHAT are the predictors of success in market entry?
Size of entry relevant to minimum efficient scale.
Relatedness of the market entered
Complementary assets
Order of entry
Industry life cycle
Degree of technological innovation