Growth Strategies: Penetration, ProductMarket Expansion, Vertical Integration, and the Big Idea

1
Chapter 12
Growth Strategies Penetration, Product-Market
Expansion, Vertical Integration, and the Big Idea
2
Marketing should focus on market creation, not
market sharing. - Regis McKenna
3
Results are gained by exploiting opportunities,
not by solving problems. - Peter Drucker
4
Only the paranoid survive. - Andy Grove Former
CEO, Intel
5
Alternative Growth Strategies

• II. Product Development
• Add product features, product refinement
• Expand the product line
• Develop a new generation product
• Develop new products for same market

• I. Growth in existing
• product markets
• Increase market share
• Increase product usage
• Increase the frequency used
• Increase the quantity used
• Find new applications for current users

• V. Diversification involving new
  products and new markets
• Related
• Unrelated

• III. Market Development
• Expand geographically
• Target new segments

• IV. Vertical Integration Strategies
• Forward integration
• Backward integration

Figure 12.1
6
Growth in Existing Product Markets

• Increasing Market Share
• Increasing Product Usage
• Provide Reminder Communications
• Position for Regular or Frequent Use
• Make the Use Easier
• Provide Incentives
• Reduce Undesirable Consequences of Frequent Use
• Revitalize the Brand
• New Applications for Existing Product Users

7
Product Development for the Existing Market

• Product Feature Addition
• Developing New-Generation Products
• New Products for Existing Markets

8
Market Development Using Existing Products

• Expanding Geographically
• Expanding into New Market Segments
• Usage
• Distribution Channel
• Age
• Attribute preference
• Application-defined market
• Evaluating Market Expansion Alternatives
• Is the market attractive?
• Resources and will for commitment
• Adapt to new market
• Transfer assets and competencies

9
Vertical Integration Strategies

• Access to Supply or Demand
• Access to Supply
• Access to Demand
• Idiosyncratic Products and Services
• Control of the Product System
• Entry into a Profitable Business Area
• Comprehensive services
• Embedded services
• Integrated solutions
• Risks of Managing a Different Business
• Reduction in Strategic Flexibility
• Alternatives to Integration

10
The Impact of Growth Strategies
Incremental Growth Strategies
Significant Growth Strategies
Big Ideas

• Disneyland
• Niketown

• New Flavor
• Reminders to use

• Enter New Country
• New generation product

Figure 12.3