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Growth Strategies: Ansoff Model

Growth Strategies: Ansoff Model. Growth in Existing Product Markets. Increase market share Can do this tactically (price reductions, increase advertising, etc.) or strategically, which involves finding a sustainable competitive advantage Attract competitors’ customers Attract non-users

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Growth Strategies: Ansoff Model

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  1. Growth Strategies: Ansoff Model

  2. Growth in Existing Product Markets • Increase market share Can do this tactically (price reductions, increase advertising, etc.) or strategically, which involves finding a sustainable competitive advantage • Attract competitors’ customers • Attract non-users • Increase product usage • Increase the frequency used • Increase the quantity used • Find new application for current users

  3. provide reminder communications position for frequent use position for regular use provide incentives reduce undesirable consequences of frequent use use in different situations Jell-O pudding Dispensers, portable packaging frequent flier plan gentle shampoo low fat versions of food cereal as snack versus breakfast Market Penetration Strategies

  4. Typology Of New Products • New presentation • Packaging • Positioning • Product improvement and reformulation • Line extensions • Category extensions • New to the category • New to the world

  5. The New Product Development Process Marketing Premises • Each Brand Must Fill a Real Gap in the Marketplace. • Product Must Meet a Consumer Need, Based on Emerging Trends • Must Execute Flawlessly: • Positioning • Packaging • Marketing

  6. Achieving New Product Development Success • A Defined New Product Process • Form Dedicated Cross-Functional • Teams • Fact-Based Decision-Making • Top Management Commitment • Encourage Entrepreneurial Behavior • Learn From Your Mistakes

  7. Shortening New Product Development Cycle Times • Concurrent Development (of Product, Package, Production Equipment) • Close Partnership With Suppliers, Equipment Manufacturers, Customers • Support From Top Management • Adequate Resourcing • Use of Cross-Functional Teams

  8. Market Development • New segments • Johnson & Johnson Baby Shampoo • New distribution channels • Restaurant products to retail • OEM to retail • New geographical territories • Regional expansion: Tasty Baking • International expansion

  9. Diversification • Related vs. Unrelated • Technology, processes • Markets

  10. Portfolio Analysis • Assessment of Business Position • Evaluation of Market Attractiveness • Generation of Cash versus Demand for Cash • Treat SBU’S, Product Lines, Markets As Investment Units (Need for Balance) • Recommendations for Investment Strategies Based on Business Position and Market Attractiveness

  11. Portfolio Models • Useful at Different Levels • of Decision Making: • Corporate • SBU • Product Line • Treats Different SBU’S, Product Lines, • SKU’s as Investment Units

  12. Portfolio Models Used for Guiding Decisions Related to: A. Achieving a Balanced Portfolio Over Time 1). Short vs. Long Term Returns 2). Providers and Users of Cash and Other Resources B. Investment Strategies for SBU’S, Product Lines, SKU’S e.g., Invest to Grow, Invest to Build, Maintain Position, Harvest, Divest

  13. Portfolio Models:Criteria for Evaluation A. Profitability, Expected Return B. Growth, Related to Stage of PLC C. Risk (Variability of Return) D. Competitive Position / Strength E. Market Position, Share F. Demand on, Utilization of Resources

  14. Portfolio Models: Analytical Process A.Level of Analysis B. Define the Market C. Time Dimension: Historical Vs. Projected D. Identify Dimensions: Single Criterion Vs. Composite E. Construct the Matrix and Position Individual Entities F. Project the Future Position of Each Entity G. Select the Desired Portfolio H. Make Strategic Choices Based on Achieving Desired Portfolio

  15. BGC Model Dimensions • Market growth • PLC • Indicator of cash demand • Relative share • PIMS data • Indicator of cash generated

  16. BCG Matrix

  17. GE-McKinsey Model • Use of composite dimensions: • Market Attractiveness • Business Strengths or Competitive Position • Provides guidance for investment strategy

  18. Dimensions of the GE Matrix:Industry Attractiveness and Competitive Position • Industry Attractiveness • Market Size, Growth Rate • Industry Profitability, Margins • Market Diversity • Competitive Structure • Environment • Competitive Position • Size of Business • Growth Rate • Market Share, Relative Market Share • Profitability, Margins, Relative Cost Position • Technology Position

  19. GE-McKinsey MatrixVertical Axis: Market AttractivenessHorizontal Axis: Competitive Position

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