Growth Strategies Essay
Growth strategy is marketing tool which means by which an organization plans to achieve its objective to grow in volume and turnover. Four broad growth strategies are available – market penetration, product development, market development and diversification. The descriptions I will give about the four growth strategies will all relate to Microsoft Xbox and Comic relief.
Market Penetration: This strategy is used when a business decides to launch a product or service in an existing market with like products a market is a group of consumers who may purchase a product or service, in essence a market is a given potential of a product or service as a business goods value are often measured by the markets value e. g. The market of games console is a billions. An example of this is the original Xbox when this was launched by Microsoft there was already an existing product which in this was the Playstation 2 there was also an existing market.
They grew their business by increasing the number of people in the market who bought Xbox’s particular product from businesses. This type of growth strategy links with Comic relief this is because as a charity they have been asking for donations
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This could be done in many ways like advertising, better TV show and in general let consumers know about Comic relief Market development: This is when business intends to grow through having an existing product but introducing it to a different Market. This is most suitable when existing products require only minor modifications to be suitable for new, overseas markets. It also helps if the product life cycle is similar in the different markets that the business.
Microsoft Xbox used this strategy after their product the Xbox 36o was launched on November 20, 2005 in 2006 Microsoft decided to grow their market by introducing their product into a new market in South Africa they used this strategy again in October 2008 when they launched the Xbox 360 to the United Arab Emirates. As of yet Comic relief not launched their charity in any other country apart from Wales, Scotland and England however this would be an excellent consideration for Comic relief as introducing their charity to another country e. g. China would certainly generate more donations.
Product development: This growth strategy is when a business decides to grow by developing a new product in an existing market i. e. developing new products for existing markets. Microsoft Xbox used this strategy when they developed their new product the Xbox 360 in originally an existing market preoccupied by Microsoft’s original Xbox.
Comic relief have never in the past developed a new product to support their aim however they have regular improvements in their campaigns and Live TV broadcast by using celebrities to host and participate in their campaign gradually Comic relief is working its way up to A listers and highest viewing TV shows to help their business e. g. The apprentice and Dragons den in 2009 this is modifying the business model but not launching a new product as a Charity this would be out of the question. Diversification: This is where the business markets a new product to new market developing new product markets outside the existing business.
A firm will pursue this strategy where new markets are highly attractive. To do so, it may switch resources from some of its existing markets that it believes to be in permanent decline. An example of this would be the original Ipad because at the time it was a brand new product with no other completion and because of this factor it was to a new market. Microsoft Xbox could possibly relate to this as they are preparing to launch their new product the Xbox 720 there is a chance that this will be a new product but is unlikely as it probably will just be modified version of the 360.
As far as a new market if Microsoft incredibly do develop a new product this will open doors to other markets e. g. the older generation, businessman. Diversification is very unlikely to be on the mentality of Comic relief as they have been in the same market for 10 years however theoretically for comic relief to develop a new product to attract consumers in a new market would generate donations. Ansoff’s product / market matrix Survival Strategies It is not unheard of when businesses are faced with having to develop strategies for the sole purpose of surviving as a business; this includes reducing costs, redundancies, and downsizing.
When a business decides to use survival strategies they may less profitable markets and discontinuing less profitable lines just to break even and not make a loss. Branding This survival strategy would apply to businesses that consist of a brand name, logo or slogan. This survival strategy incorporates the brand itself and attempt to orientate it to something positive an example would be In 1991, Volkswagen took a 30% stake in Skoda and started work in training and educating the workforce to Western quality standards. It invested over ? 2 billion in the plant, research, development and new models.
Ten years later, in 2001, VW took total control of the business. This means that for 10 years Skoda despite investing millions failed to use the branding survival strategy to keep their business surviving until obviously it was by Volkswagen. Microsoft Xbox have never been in a position to use a survival strategy this is mainly because it is part of a sub-business Microsoft a billion pound global business and by using Microsoft’s expertise, branding, reliability and overall most importantly image to the customers Xbox have never failed to make beyond the break even therefore branding would have never crossed their minds.
Comic relief have always had enormous support from the public and celebrities even when it was founded in 1985 e. g. Lenny Hennry to this day where the government channel BBC host its 4 hour long program. For these reason survival strategies would not relate to a business like comic relief