Market Penetration

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Analytical Tools

Prepared for: Prof Madya Sofiah Abd Rahman MKT750 Strategic Marketing Management

Prepared by: Muhammad Mazlan Farid b. Mastar 2009306619 EMBA14B

Analytical Tools 1. ANSOFF Matrix The Ansoff Matrix is a marketing tool created by Igor Ansoff. The Ansoff Matrix is a tool that helps businesses decides their product and market growth strategy.

When to use it Ansoff’s growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.

How to use it This matrix helps companies decide what course of action should be taken given current performance. The matrix consists of four strategies: •

Market penetration (existing markets, existing products): Market penetration occurs when a company enters/penetrates a market with current products. The best way to achieve this is by gaining competitors' customers (part of their market share). Other ways include attracting non-users of your product or convincing current clients to use more of your product/service, with advertising or other promotions. Market penetration is the least risky way for a company to grow. Product development (existing markets, new products): A firm with a market for its current products might embark on a strategy of developing other products catering to the same market (although these new products need not be new to the market; the point is that the product is new to the company). Market development (new markets, existing products): An established product in the marketplace can be tweaked or targeted to a different customer segment, as a strategy to earn more revenue for the firm. Diversification (new markets, new products): Virgin Cola, Virgin Megastores, Virgin Airlines, Virgin Telecommunications are examples of new products created by the Virgin Group of UK, to leverage the Virgin brand. This resulted in the company entering new markets where it had no presence before.


Analytical Tools

The matrix illustrates, in particular, that the element of risk increases the further the strategy moves away from known quantities - the existing product and the existing market. Thus, product development (requiring, in effect, a new product) and market extension (a new market) typically involve a greater risk than `penetration' (existing product and existing market); and diversification (new product and new market) generally carries the greatest risk of all. In his original work[, which did not use the matrix form, Igor Ansoff stressed that the diversification strategy stood apart from the other three. While Ansoff are usually followed with the same technical, financial, and merchandising resources which are used for the original product line, diversification usually requires new skills, new techniques, and new facilities. As a result it almost invariably leads to physical and organizational changes in the structure of the business which represent a distinct break with past business experience. For this reason, most marketing activity revolves around penetration.


Analytical Tools 2. SWOT Analysis SWOT Analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective.

When to use it The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT analysis may be used in any decision-making situation when a desired end-state (objective) has been defined. Examples include: non-profit organizations, governmental units, and individuals. SWOT analysis may also be used in pre-crisis planning and preventive crisis management. SWOT analysis may also be used in creating a recommendation during a viability study/survey. Identification of SWOTs...
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