Evaluation of alternative growth paths available to organizations Essay

Evaluation of alternative growth paths available to organizations - Essay Example Everything takes some time and any initiative taken by a new entrant takes some time to fructify and yield desired results. There are four different strategies that can be chosen by a new entrant to penetrate a new market. These strategies are embodied in what is popularly known as Ansoff’s Matrix (Pearce and Robinson 2007). The four pronged attack that a marketer must implement in order to make a mark in a new market are aptly embodied in this matrix which clearly identifies between existing products and new products and existing markets and new markets. The pictorial representation of the matrix is: (tutor2u 2009) It is quite obvious that the strategies differ in different situations. If a company wishes to make its presence felt in an existing market with existing products it needs to adopt strategies that would help it in penetrating the market. But if the company is attempting to introduce new product in an existing market, it needs to concentrate more on strategies relat ed to product development as that would help it in creating a firmer hold on the existing market. Similarly, if the company is attempting to introduce existing products in new markets, it must concentrate on strategies that are closely associated with market development. Whereas, if the company has grand plans of entering new markets with new products it must embark on a path of diversification and devise relevant strategies. Market Penetration Product/market placement This strategy attempts to increase the market share of an existing product in an existing market and is generally adopted by firms that want to increase their turnover without altering their product portfolios. Main Principles As the main emphasis is on increasing the turnover, management should concentrate on increasing sales personnel while offering attractive discounts and bargain sales that are made to appear genuinely appealing through aggressive sales promotion and advertising. However, there is no assurance tha t such moves would pay dividends and a firm should adopt such strategies only if it feels the market has not matured or its market share is steadily decreasing due to onslaught of rivals. Organizational Example The best example of such market penetration strategy is observed in the way Airtel is promoting its services in the mobile telephony market in India. Pros and Cons There is bound to be a lot of investment in advertising and promotion and per unit revenue gets reduced due to discounts. So, the sales volumes must be sufficiently large to offset these reductions. But that can never be guaranteed. However, if the venture becomes successful, the firm can earn substantial revenue. Market Development Product/market placement When a firm tries to discover new markets for an existing product it is termed as market development strategy. It is obvious that a new market would result in additional turnover and consequent bolstering of the bottom-line. Main Principles There are two basic m ethods of focusing on a potential market. Such a market can be configured on the basis of geographical location such as state, country, region or even a city, or it could be delineated on the basis of demographic divides as gender or age. It could even be demarcated on the basis of income or educational or family background. This move is obviously riskier than market penetration as the firm is entering new and uncharted territories and should be undertaken only after potential for further expansion in domestic market is exhausted. Organizational Example The best example of market development strategy is exemplified by the ventures made by Pakistan Oil Company in new markets in Afghanistan or the way Chinese products, especially consumer products that have expanded their market all over the world. Pros and Cons A