MBA 706 EXAM 4
Study online at https://quizlet.com/_cdjao3
1. Product Market The Ansoff Matrix, better known to many as the product-growth matrix (or prod-
Growth Strategy uct/market expansion grid), provides a framework that helps marketers to evaluate
four potential growth strategies and their associated risks.
Choices within the matrix vary according to whether the firm seeks to service
existing markets (customers) or expand into new markets, and whether the firm
chooses to use existing products and services or develop new products and
services.
A market penetration strategy is the least risky strategy, as it seeks to sell existing
products and services to current markets. The focus is on getting people to buy
more of the product. Distribution must be reliable, and the product must be of
consistent quality. Market penetration strategies are common in the early life of
a product, when advertising and branding attempt to differentiate the product
from the competition. Marketing communications are critical to penetration strat-
egy. Certain types of sales promotions can also be helpful for grocery goods or
low-priced consumer goods, including coupons, buy-one-get-one (free, half-off,
etc.), bonus packs (which offer more product at the same price as a regular sized
package), etc.
A market development strategy occurs when a firm introduces an existing product
or service to a new market. While the firm is using a proven product, market
development strategies still require a greater capital investment when compared
to a market penetration strategy and are riskier from that perspective. Firms that
expand into new countries with their current product line are following a market
development strategy. Expansion into new countries often requires additional
market research, to test the product name and acceptance. Cultural changes often
necessitate a change in messaging strategy or presentation of the message. But
geographic expansion isn't the only way to develop a new market. Often firms find
a secondary use or new application for an existing product and in doing so reach
a new target market who otherwise might not have purchased the item. Firms
must be careful not to alienate their core market however. For example, it would
probably not make sense to promote the rust removal properties of Coca-Cola to
mechanics. The message would spillover and be seen by those who drink Coke,
, MBA 706 EXAM 4
Study online at https://quizlet.com/_cdjao3
and likely cause consumers to wonder if Coke is eroding their stomach lining in a
fashion similar to which it is removing rust.
A product development strategy seeks to create new products (outside of the
firm's area of expertise), primarily for existing markets, though existing markets
can be broadly defined such as "higher income consumers" or more specifically,
"sporting good consumers". The emphasis is on the creation of a new product.
The new product development process can be time-consuming and very costly due
to market research, engineering, testing and other costs. New products often fail
making this a riskier strategy that the two that were previously discussed.
A diversification strategy is the riskiest strategy of all, as the strategy requires selling
a new, unproven product/service to a new market that the firm may not entirely
understand.In 2019 Lexus (the car firm) announced that their Ly 650 luxury yacht
would soon be available at a price tag of $4.85 million dollars. Yacht building is far
outside of the firm's area of expertise, but to mitigate the risk, they partnered with
Marquis Yachts to actually build the boats.This represents a new market for Lexus,
as the type of people who purchase yachts are far more likely to own higher end
cars or be chauffeured than they are to buy a Lexus.Plus, while Lexus understands
the car buying process and those who purchase their autos well, the same cannot
be said for potential yacht owners.
2. Brand Names A brand is a name, picture, design, symbol, or combination of these elements,
and Characteris- used by a seller to identify its offerings and to differentiate them from competitors'
tics offerings. A brand name, like Apple, is the spoken part of a brand's identity.
A brandmark is a symbol, icon, or drawing—such as Nike's Swoosh mark or
Starbucks' mermaid—that consumers associate with a brand. Brand names and
brandmarks are important to companies because consumers link benefits and
characteristics to brand names and brandmarks, and both or either of these factors
may influence future shopping behavior.
3. Logos Logos appear on packages, buildings, websites, and in advertisements, and make
use of brandmarks, brand names or a combination of both elements. More
information about the various types of logos is available in Table 7.1.
, MBA 706 EXAM 4
Study online at https://quizlet.com/_cdjao3
4. Corporate Brand- Corporate branding activities benefit the firm as a whole and build, enhance,
ing or repair the reputation of the firm. In many industries, the corporate brand
is indistinguishable from the products sold. Dell and IBM are two examples. A
strong corporate brand can also help build acceptance for individual branded
products. Corporate branding strategies target many stakeholder groups and not
just consumers. Shareholders and potential investors, the community within which
the business operates, the government, and the general public represent key
target markets for corporate branding messages. In many firms, the public rela-
tions department focuses on corporate branding through corporate advertising.
For example, a Hyundai corporate TV ad ran during the 2018 Super Bowl. The
advertisement built goodwill toward the firm and made people aware globally that
the firm donates money from every vehicle sale to help fund childhood cancer
research. The emotional TV ad showed Hyundai owners being identified by metal
detectors at the Super Bowl, then led to a back room by security team personnel
where they watched a video showing survivors of childhood cancer telling their
success stories and thanking Hyundai owners for helping fund cancer research.
After the short clip ran, the teenagers featured in the video came out in person to
thank Hyundai owners.2
5. Individual Prod- · Reduced marketing costs for retailers as the manufacturers spend a great deal of
uct Branding money promoting the brand and its benefits;
· Customers who are loyal to the brand name are more likely to purchase brand
extensions;
· A greater likelihood that product failures or quality issues will damage the
manufacturer rather than the retailer;
· Lower inventory levels and lower inventory carrying costs, as manufacturers
should be capable of just-in-time inventory delivery.
6. Private Label · Are more profitable for the retailer than are individual product brands offered by
Branding manufacturers;
· Are exclusive to the retailer that sells the private label;
· Provides retailers with total control of the marketing mix for the private label
Study online at https://quizlet.com/_cdjao3
1. Product Market The Ansoff Matrix, better known to many as the product-growth matrix (or prod-
Growth Strategy uct/market expansion grid), provides a framework that helps marketers to evaluate
four potential growth strategies and their associated risks.
Choices within the matrix vary according to whether the firm seeks to service
existing markets (customers) or expand into new markets, and whether the firm
chooses to use existing products and services or develop new products and
services.
A market penetration strategy is the least risky strategy, as it seeks to sell existing
products and services to current markets. The focus is on getting people to buy
more of the product. Distribution must be reliable, and the product must be of
consistent quality. Market penetration strategies are common in the early life of
a product, when advertising and branding attempt to differentiate the product
from the competition. Marketing communications are critical to penetration strat-
egy. Certain types of sales promotions can also be helpful for grocery goods or
low-priced consumer goods, including coupons, buy-one-get-one (free, half-off,
etc.), bonus packs (which offer more product at the same price as a regular sized
package), etc.
A market development strategy occurs when a firm introduces an existing product
or service to a new market. While the firm is using a proven product, market
development strategies still require a greater capital investment when compared
to a market penetration strategy and are riskier from that perspective. Firms that
expand into new countries with their current product line are following a market
development strategy. Expansion into new countries often requires additional
market research, to test the product name and acceptance. Cultural changes often
necessitate a change in messaging strategy or presentation of the message. But
geographic expansion isn't the only way to develop a new market. Often firms find
a secondary use or new application for an existing product and in doing so reach
a new target market who otherwise might not have purchased the item. Firms
must be careful not to alienate their core market however. For example, it would
probably not make sense to promote the rust removal properties of Coca-Cola to
mechanics. The message would spillover and be seen by those who drink Coke,
, MBA 706 EXAM 4
Study online at https://quizlet.com/_cdjao3
and likely cause consumers to wonder if Coke is eroding their stomach lining in a
fashion similar to which it is removing rust.
A product development strategy seeks to create new products (outside of the
firm's area of expertise), primarily for existing markets, though existing markets
can be broadly defined such as "higher income consumers" or more specifically,
"sporting good consumers". The emphasis is on the creation of a new product.
The new product development process can be time-consuming and very costly due
to market research, engineering, testing and other costs. New products often fail
making this a riskier strategy that the two that were previously discussed.
A diversification strategy is the riskiest strategy of all, as the strategy requires selling
a new, unproven product/service to a new market that the firm may not entirely
understand.In 2019 Lexus (the car firm) announced that their Ly 650 luxury yacht
would soon be available at a price tag of $4.85 million dollars. Yacht building is far
outside of the firm's area of expertise, but to mitigate the risk, they partnered with
Marquis Yachts to actually build the boats.This represents a new market for Lexus,
as the type of people who purchase yachts are far more likely to own higher end
cars or be chauffeured than they are to buy a Lexus.Plus, while Lexus understands
the car buying process and those who purchase their autos well, the same cannot
be said for potential yacht owners.
2. Brand Names A brand is a name, picture, design, symbol, or combination of these elements,
and Characteris- used by a seller to identify its offerings and to differentiate them from competitors'
tics offerings. A brand name, like Apple, is the spoken part of a brand's identity.
A brandmark is a symbol, icon, or drawing—such as Nike's Swoosh mark or
Starbucks' mermaid—that consumers associate with a brand. Brand names and
brandmarks are important to companies because consumers link benefits and
characteristics to brand names and brandmarks, and both or either of these factors
may influence future shopping behavior.
3. Logos Logos appear on packages, buildings, websites, and in advertisements, and make
use of brandmarks, brand names or a combination of both elements. More
information about the various types of logos is available in Table 7.1.
, MBA 706 EXAM 4
Study online at https://quizlet.com/_cdjao3
4. Corporate Brand- Corporate branding activities benefit the firm as a whole and build, enhance,
ing or repair the reputation of the firm. In many industries, the corporate brand
is indistinguishable from the products sold. Dell and IBM are two examples. A
strong corporate brand can also help build acceptance for individual branded
products. Corporate branding strategies target many stakeholder groups and not
just consumers. Shareholders and potential investors, the community within which
the business operates, the government, and the general public represent key
target markets for corporate branding messages. In many firms, the public rela-
tions department focuses on corporate branding through corporate advertising.
For example, a Hyundai corporate TV ad ran during the 2018 Super Bowl. The
advertisement built goodwill toward the firm and made people aware globally that
the firm donates money from every vehicle sale to help fund childhood cancer
research. The emotional TV ad showed Hyundai owners being identified by metal
detectors at the Super Bowl, then led to a back room by security team personnel
where they watched a video showing survivors of childhood cancer telling their
success stories and thanking Hyundai owners for helping fund cancer research.
After the short clip ran, the teenagers featured in the video came out in person to
thank Hyundai owners.2
5. Individual Prod- · Reduced marketing costs for retailers as the manufacturers spend a great deal of
uct Branding money promoting the brand and its benefits;
· Customers who are loyal to the brand name are more likely to purchase brand
extensions;
· A greater likelihood that product failures or quality issues will damage the
manufacturer rather than the retailer;
· Lower inventory levels and lower inventory carrying costs, as manufacturers
should be capable of just-in-time inventory delivery.
6. Private Label · Are more profitable for the retailer than are individual product brands offered by
Branding manufacturers;
· Are exclusive to the retailer that sells the private label;
· Provides retailers with total control of the marketing mix for the private label
