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How do firms penetrate an existing market?

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Introduction

Existing Markets How do firms penetrate an existing market? Cadburys have to improve their levels of market penetration and also make more sales customers. Cadburys have improved their penetration which helps them to improve market share. It can increase in there market share which can create significant sales. Market penetration suggests a further penetration of existing markets with existing products. This will involve a strategy of increasing market share within existing segments and markets. Present Products New Products Above is the Ansoff Matrix. It is an analytical tool helping in making decisions developed by Igor Ansoff. * Market development is a strategy requires the producer to develop raw market segments for products. * Product development is the process of researching market needs, creating products to meet the identified needs. * Diversification means going into new market with entirely new products. * Market penetration is increasing the % of sales in present markets by taking sales from competitors. To improve their market penetration there are six district stages in the development process for new products are; * Ideas All Cadbury products start from ideas. These ideas may come from the following sources: Research and Development -This is where product development and market research working together. Mindstorming -This is where it involves few people developing ideas from words and concepts. ...read more.

Middle

There are a number of ways of entering such markets. These might include the following: * Indirect exporting- This may initially be through an export house where main activity is the handling or the financing of international trade. * Direct exporting - This involves manufactures or suppliers shipping their products overseas and selling their wares directly to customers. Diversification This is a strategy for growth that involves developing products or business areas that are outside the organisations market. Diversification will lead to a move away from core activities. This might involve some form of integration of production into related activities. This is the most expensive and risky strategy for Cadbury to choose and it requires intensive screening of both the ideas for new products. Nestle and many other businesses find that the costs of development and entry are too high. Product life cycle This product life cycle is the period over which it appeals to customers. The life cycle can be broken down into distinct stages. In the introductory phase growth is slow and volume is low because of a limited awareness of the products existence. In this phase for Cadbury it can be expensive but if Cadburys use Internet sales and direct selling it is particularly useful it will make them overcome the entry barrier. ...read more.

Conclusion

This will help them identify the areas of growth. A useful technique for doing this is Boston matrix, originally developed by the Boston Consulting Group, a leading firm of management consultants in the USA. Stars These are products with a high market share like Cadburys in a rapidly growing industry. Unless Cadburys chocolate bar has not achieved this position through heavy discounting, it should be generating high profits. For Cadbury to remain a star in a competitive environment its chocolate bean will continue to need heavy marketing expenditure. Cash cow Cash cows have a high market share in a slow growing, but mature market. Cadbury could fall into this because there competitors do have higher cost slightly. But Cadbury benefits from high economic of scale. It can generate high profits which could be used to finance 'problem children/question marks'. Question Marks and problem children This product has a low market share in a rapidly growing market. The business has to decide whether to with draw the product or to support it with heavy marketing, which could be difficult if it is not generating funds elsewhere. Dog This product has a low market share in markets where there is little or no growth. At this stage a product is at the end of its life cycle. The product is best if it is dropped out of its portfolio. ?? ?? ?? ?? ...read more.

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