Product And Market Strategies :
Product/market strategies are detailed in nature. They address the specific market impact of a product or product line. This section examines three concepts useful in formulating such strategies: the product/market matrix, PIMS (product impact of market strategy) analysis and the product lifecycle (PLC).
Product/market matrix :
Ans off (1975) developed a policy/market matrix (or ‘Ans off matrix’) which provides a useful linkage between products and markets. The matrix(Figure ) considers four combinations of product and market. Each combination suggests a growth strategy. The organization’s potential is determined by the combination of current and new products within current and new markets. Additionally, the element of risk must be considered. As organizations move away from existing markets and products the potential risk factors increase.
The product/market matrix can be expanded to consider the degree to which new activities are related or unrelated (Figure below) to the core business. As previously stated, it is more difficult to achieve success in unrelated activities. Hence, unrelated diversification of product and/or markets is often tackled via joint ventures,mergers and acquisitions.
Expanded product/market matrix
PIMS analysis :
Many influential marketing studies have examined the link between profit and marketing strategy. These PIMS (profit impact of market strategy)studies aimed to identify the key drivers of profitability and have recognized the importance of market share as such a driver. Generally speaking, profits will increase in line with relative market share. This relationship (Figure below) has influenced marketing thinking, promoting actions aimed at increasing market share as a route to profitability. While such a relationship is often true, it is not universal, and some industries display a ‘V-shaped’ relationship. Here, profitability
Profit related to market share
can initially fall until a critical mass, in terms of market share, is reached. The effect of the ‘V-curve’ is polarization – industries with small niche players and large dominant companies. Medium-sized firms see profits fall until critical mass is reached. This makes it very difficult for small/ medium companies to grow. Figure below shows the relationship. Clearly, the marketing strategist must consider the nature of these relationships and not blindly pursue market share. It should be possible to determine the optimum market share/profitability position.
‘V-shaped’ profit/market share relationship
The product life cycle :
The product life cycle (PLC) has been described as the most quoted but least understood concept in marketing. Any strategy considering products and markets will be influenced by the PLC. Organizations are advised to ensure that they fully understand the product life cycle for their products and industry segments. The basic concept (Figure below) can be summarized as products passing through four stages: introduction, growth, maturity and decline. Sales will vary with each phase of the life cycle.
Product life cycle
Variation in product life cycle shape
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Marketing Strategy Tutorial
The Strategic Perspective
Developing A Future Orientation
Targeting, Positioning And Brand Strategy
Product Development And Innovation
Alliances And Relationships
The Strategic Marketing Plan
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