It entered the telecom market in 1980 developing telephone switchboards, then later into telephones, fax machines, and mobile phones. This can only be possible when the company makes more sales to the present customers or by discovering new customers within the established market, without significantly changing the products. This article includes a , but its sources remain unclear because it has insufficient. It is the riskiest choice of the four because everything is new: the products and services as well as the market itself. It would also mean setting up other branches of the business in other areas that the business had not ventured yet. You need products in every quadrant in order to keep a healthy cash flow and have products that can secure your future. In addition, the investments and divestments need to be managed rigorously while carefully measuring and monitoring the portfolio economics of experimentation.
And the specific strategies that a company employs will differ depending on which of these goals it is pursuing. Backward diversification takes place when an organisation begins to encroach upon the role of the supplier. This strategy can be achieved through several different options including: new geographical markets, new distribution channels, different pricing policies, or new product dimensions Proctor, 2000. The technology would be the same but the marketing effort would need to change. Again, the company was able to take an existing product, namely oil, and increase its penetration in an existing market. Recently, the surgeon general announced that students who consume massive amounts of coffee the night before tan examination tended to perform better than students who do not drink coffee. Using the strategy of market development Arm and Hammer was able to attract a new customer set for its baking soda product Christensen et.
Hence, the further market research needs to be done to get a broader perspective on this study. The first quadrant in the Ansoff matrix is market penetration. Customers use these vouchers and specials when ordering in bulk or for everyday orders. This graph tells us how many families and those above 50 wish to go to Pizza Hut. Changes to any of the forces normally requires a company or business unit to re-assess the market given the overall change in industry information.
Here, the company seeks increased sales for its present products in its present markets through more aggressive promotion and distribution. Market penetration uses the marketing mix to push the product which is gaining as much as market share and as quickly as possible41. For instance: When the present market is completely saturated, it switch to new markets. Market penetration is considered to be a low risk strategy as it utilises existing products in existing markets. This can be made possible through further market segmentation to aid in identifying a new clientele base.
How would you rate Bruce's level of competency in the business model? It is unlikely, therefore, that this strategy will require much investment in new market research. At the business unit level, expansion is most likely into a new segment of an industry in which the business is already in. Analysis of pay back period. This would entail selling the products via e-commerce or mail order. If the price were higher than the regular coffee, they estimated only one out of 10 would request the new blend. For example, Coca-Cola has had little need to diversify relative to the Virgin brand which traditionally operates in uncertain markets such as the volatile airline industry, meaning diversification actually spreads risk.
This strategy is often used when a market has become saturated and profits are limited. The matrix helps companies decide which go-to-market course of action should be taken given current performance. Ansoff's Matrix, also sometimes referred to as the Ansoff product and market growth matrix, or simply, the product market matrix, is a strategic planning and marketing tool invented by mathematician H. Through interest and initiative, the Pizza Hut system was able to develop new territories in the United States and overseas. A good example of the unrelated diversification is Richard Branson. This is positive for the organization in terms of profit.
They consume a lot of cash but bring little in return. Once Pizza Hut overcomes these weaknesses, it will have a better chance to successfully market their new outlet, and at the same time increase the sales from their current outlet. He felt the national chains were focused on running the assemble line rather than on welcoming customers. The matrix is a decision making tool, and it does not necessarily take into account all the factors that a business ultimately must face. For opening the new outlet government factors are not important as it already has opened one outlet48. One advantage of choosing to use a strategy of market penetration is that there is little risk associated with such a strategy. An organization with a market for its current products might choose a strategy of developing other products catering to the same market— a strategy to sell new products with new or altered features, for example, to existing markets.
A company can choose to engage in product development for several reasons including: exploit new technology, use excess production capacity, and to protect market share Lynch, 2003. There exists a more robust factor of risk, however this can be balanced out through the understanding and make use of existing marketing as well as distribution channels. The growth strategy of market penetration aims to maintain or increase the market share of existing products, secure dominance, restructure a mature market, and increase usage by existing customers Mercer, 1996. If Pizza Hut increases their staff, then it would be in a better position to serve the customers and if they shift few of their trained staff and give training to the new staff to whom they are going to appoint then they would also be in the better position. General Electric started as a turbine maker, nevertheless its leasing activities expanded into a major financial solutions business. In addition, where a company previously had no presence, it seeks to increase profitability through greater sales volume obtained from new products and new markets. Advantages of choosing to engage in a strategy of market development include: gaining new customers, increased revenue, and company growth.
Diversification can enable a firm to achieve three main objectives: growth, stability, and flexibility. Product Development Product development is a strategy we're all familiar with as consumers: the introduction of new products into the marketplace. There are four main categories for selection. Pizza Hut is one of the flagship brands of Yum! Bruce was planning to open a coffee shop to compete with the national chains He wanted to be more personal than the national chains so he asked his employees to greet regular customers by name and ask them if they would like their usual drink. This diversification is in the same industry which is the food industry. The first one relates to the nature of the strategic objective: Diversification may be defensive or offensive. Following the opening of the first international restaurant in Canada in 1968, the Pizza Hut restaurants quickly appeared in Mexico, South America, Australia, Europe, the Far East and Africa.