AQA A Level Business Paper 1 - 3.8 Content

AQA A Level Business Paper 1 - 3.8 Content [3.8.1] What is Ansoff Matrix? A marketing planning model that helps a business determine its product and market strategy. Always consider the degree of risk. [3.8.1] What are the four elements to the Ansoff Matrix? Market Penetration, Product Development, Market Development, and Diversification. [3.8.1] What is Market Penetration? A growth strategy where a business aims to sell existing products into existing markets. - Aims to increase market share. - Selling more existing products to the same target customers = get existing customers to buy more. [3.8.1] How can we evaluate Market Penetration? - Business focuses on markets and product it knows well. - Can exploit insight on what customers want. - Unlikely to need significant market research. - Will the strategy allow the business to achieve its growth objectives? [3.8.1] What is Product Development? A growth strategy where a business aims to introduce new products into existing markets. - Driven by investment in new product development. - Usually requires consistent, long-term investment in R&D. - Brand extensions are examples. [3.8.1] How can we evaluate Product Development? - A strategy that often plays to the strengths of an established business. - Strong emphasis on effective market research. - Great way of exploiting the existing customer base. - Being first to the market is important. [3.8.1] What is Market Development? A growth strategy where the business seeks to sell its existing products into new markets. - New geographical markets. - New distribution channels. - Different pricing policies to attract new customers. [3.8.1] How can we evaluate Market Development? - Often more risky than product development - particularly expansion into international markets. - Product may not suit existing market. [3.8.1] What is Diversification? The growth strategy where a business markets new products in new markets. Approaches to diversification: - Innovation & R&D; develop new solutions. - Acquire an existing business in the market. - Extend an existing brand into the market. [3.8.1] How can we evaluate Diversification? - Inherently risk strategy - customers you aren't aware of. - No direct experience of the product or market. - Few economies of scale. - However, if successful, overall risk of the business is spread. [3.8.2] What is a competitive advantage and what does Porter argue for his Generic Strategy model? Competitive Advantage: - An advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefit