Search Market Development Strategy Market development is one of the four alternative growth strategies in the Ansoff Matrix. A market development strategy involves selling your existing products into new markets.
Once you have successfully launched your product or service, you can then begin to increase your price or move to a skimming or premium pricing strategy. Penetration pricing is great if you are launching a product in a market where demand tends to fluctuate significantly as prices change.
This "price elasticity" allows you to use your lower launch price as a competitive weapon against your more established rivals. Satellite broadcasters, for example, often use it to grow their subscriber base, before getting existing customers to sign up for more expensive sports and movie packages.
This strategy is the fastest way to win market share from your competitors and to then secure it against new rivals. Rapidly increasing your sales volume makes it possible to achieve economies of scale in a short space of time.
As the price of your product is initially set quite low, your profit margins can suffer until you increase the price. If you set the initial price too low, it can lead to your brand being perceived as low quality, or "budget.
It can be hard to raise your price as this can meet strong customer resistance.
Price Skimming Price skimming involves setting a high price on a low-quality product, with the aim of generating as much revenue as possible from the small number of people who are prepared to buy it at that price, before lowering the price once this market becomes saturated.
Once this happens, you will be able to "skim" profits from wider, more price-sensitive segments of the market.
Price skimming is often used in markets that have a high level of new product launches, and where novelty is important. A good example of this is the book market. A new book is first published in hardback for a high price and, if it sells well, it is later re-published as a cheaper paperback.
Price skimming is designed to maximize profits in a market. It is the best strategy for ensuring that you cover your production costs. Your product's lifespan will likely be short, due to the high level of product development and launch activity in these markets. So skimming allows you to take advantage of an initial high price, putting you in a better position to "skim" revenues from different customer segments as both demand and price begin to fall.
Launching with a high price which you then drop can annoy your early buyers, who have paid a premium for the privilege of getting your product first. This can damage their loyalty to your brand, particularly if you drop the price too fast after your launch, and if products aren't sufficiently differentiated.
If you keep the price of your product high for too long, customers may begin to lose interest. This can put your potential for future growth at risk. Premium Pricing When your production costs are high and you have a unique or "prestige" product that you believe will appeal to image-conscious and aspirational buyers, a premium pricing strategy might be the best option.
Your product comes at a premium, which means that you have the potential to achieve a high profit margin. A premium price tag can help to enhance your brand identityand adds to the aspirational quality of your product.
Premium pricing strategies are difficult to initiate and maintain.
Unit and branding costs will likely be high, while sales volumes will be low. At the same time, your product's high price tag means that you will be undercut by discount rivals. The risks associated with over- or underproducing a premium offering can be significant — underproduce, and you'll be unable to meet demand; overproduce, and you risk production costs destroying your profit.
It's therefore essential that you accurately plan and forecast your sales when using this type of strategy. Monitoring Your Prices Nothing stays the same forever.
The marketplace is fluid and ever-changingand production costs are liable to fluctuate. This means that, once you've settled on a price, it's important to monitor it to ensure that your product or service remains competitive, and that your profit margins stay healthy.
Ask your customers for feedback on price, and keep an eye on your rivals' pricing strategies — particularly new entrants to the market that are using penetration pricing strategies.
Key Points A pricing strategy is a method for determining the optimum price of a product or service. The Pricing Strategy Matrix describes four of the most common strategies by mapping price against quality.
The matrix quadrants show: Economy Pricing — Setting a low price for low-quality goods. Penetration Pricing — Initially setting a low price for a high-quality product and then increasing it. Price Skimming — Initially setting a high price for a new low-quality product and then reducing it.
Premium Pricing — Setting a high price for high-quality goods. Each of these strategies serves a different purpose, and it's important to choose the one that is most relevant to your situation.Ansoff matrix guides organisations in their pursuit of strategies.
Harry Igor Ansoff, a Russian American mathematician, developed the Matrix in The matrix outlines four possible growth strategies available for an organisation. Feb 08, · Marriott International Case Study Marriott International Case Study Transcript of Marriott International Case Study Questions Marriott International After the upgrade, MarriottMobile booked a total of $ million in gross annual revenue and is expected to see double-digit growth in the future In , MarriottMobile was ranked Save Paper; 5 Page.
46 CHAPTER 2 Marketing Strategy Situational Assessment The situational assessment is an analysis of the or ganization’s environment and of the organization itself. This process is referred to as the SWOT analysis(so named be- cause it examines the Strengths and Weaknesses of the organization, as well as the.
The report focuses on Marriott International putting strategic management at the center core of analysis and discussion that allows Marriott strengths and weaknesses to be known and be evaluated according to such SWOT related strategies, CPM, EFE, IE matrix and many other important points for.
Gary Business strategy Premier Inn Ansoff Growth Matrix for Premier Inn 3 Figure 2 - BCG Growth Share Matrix of Premier Inn 4 Figure 3 - Strengths and Weaknesses of Premier Inn 5 Figure 4 - Stakeholder Analysis of Premier Inn 7 Figure 5 - SAFe Analysis for Premier Inn 10 (Marriott) is global chain of hotels and lodging.
Ansoff Matrix. To portray alternative corporate growth strategies, Igor Ansoff presented a matrix that focused on the firm's present and potential products and markets (customers).