aim is to iffer products at a lower price than competitors in the market
to achieve this the firm must be able to reduce its own costs (e.g. through economies of scale) by finding the lowest cost suppliers or by moving its own operations to a low cost location
Differentiation
applies to both niche and mass markets
purpose is to create a USP so as to make the product superior to others in the market
a differentiation strategy involves all elements of the marketing mix, for example pricing will reflect the exclusivity of the product and the distribution will be strictly controlled if possible to maintain this image
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Ansoff's Matrix
Market Penetration
aims to increase sales of current products to existing customers to entice consumers away from competing brands through more promition, reduction in price etcv
Carries the least risk
Market Development
Trying to increase sales or present products by selling them to new markets
Risky as it requires extensive research targets at new segments/geographcal markets
emphasis on promotion
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Ansoff's Matrix continued....
Product Development
Entering a new product/product line into an existing market or developing product/services/functions/performance.
Diversification
carries the biggest risk; new product AND new market
requires extensive market research
amount of research and development necessary can be very expensive
can actually help to spread risk - new products to rely on in new markets if old products fall our of favour
can be related diversification (same industry) or unrelated.
E.g. nokia diversifies in tyres
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Strategies for investing in international markets
Why?
UK market is saturated or very competitive
Opportunities abroad to achieve economies of scale
firm has excess capacity
additional costs involved are very small
Methods
Exporting from UK through accepting international orders and making regular visits to the target country
Opening an overseas operation by forming an alliance with a local company or setting up a registed subsidary with locally recruited employees
Using an overseas sales agent benefiting from their knowledge in return for a high salary
Giving control to distributor to buy and sell goods in the target market and benefiting from their expertise of that market
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