Product Development
Businesses who wish to develop new products for existing markets would follow the product development strategy. Targeting new products at new markets is one of the most opted for strategies by businesses because customers require change and businesses exist to fulfil these needs. A disadvantage of Product Development is that it requires a high amount of investment into Research and Development; however this is necessary for a return investment in the future. A good example of Product Development is the new iPad Mini by Apple, which aims to beat competitors and please customers by developing a medium size screen display and a good price tag.
Market Development
Market Development is the name given to a growth strategy which sets out to sell existing products to new markets. There are many different approaches to this strategy which include;
New geographical markets; for example expanding and selling products to other countries
New distribution channels; for example starting to sell through e-commerce or mail order.
A level of risk is involved when implementing market development due to the risk of new markets not reacting to the new unknown products well. This was the case when Tesco decided to expand into markets in Asia and USA, Tesco are now in the process of closing stores in these countries.
Diversification
Diversification is the name given to the strategy which is aimed at selling new products into new markets. This means businesses with a certain product, such as food for example; start selling or producing a completely different product or service. Unfortunately there is a high risk when a business carries out diversification, as the business has no experience or knowledge of the product or market.
TalkTalk, a telecommunications provider in the UK have just announced the launch of their new TV service, which aims to take on rivals like Sky, which already provide the products and services TalkTalk offer such as Internet and phone lines. This is a great example of a business which decided to launch a new product in a new market.
Survival Strategies
There are various ways a business can avoid and prevent the business failing. This is necessary for the business to survive in this poor economic climate and to reduce the risk of running at a loss or a loss in profits.
Downsizing the business
A chain of shops or restaurants for example may make the decision to close a number of their outlets to save money and to reduce the risk of making a loss if the business is worried about their future. La Tasca, a chain of Spanish restaurants recently closed a number of unprofitable restaurants around the UK, in order to save money.
Making employees redundant
If the business is worried about their future the business may decide to evaluate the need for staff and make cuts where possible. This is not a good experience for the employee and is usually a last resort for the business, due to the cost involved in paying a redundancy package.
Discontinue unprofitable lines
By stopping to produce and sell products that do not sell particularly well, the business can save a significant amount of money.
Branding
It is important for a business to create a strong brand to promote the image of the company and creating a unique name and image for a product in the consumers’ mind. This can be created by producing advertising campaigns with consistent themes. When building a brand companies must consider consistency and produce all promotional material with the same fonts and colours to ensure that it is instantly recognisable as a certain brand. Consumers now are aware of a number of different brands by identification of the company’s logo or colour. Coffee chain Starbucks has increased this trend by replacing all “Starbucks” text by its logo instead.
Relationship Marketing
Relationship Marketing provides the customer with a fantastic customer service experience by establishing relationships with companies and individuals. It focusses on retention and satisfaction rather than sales driven attitude. This is particularly valuable for businesses with high value customers or markets, as it is important to retain and attract their custom.
