GROWTH AND STABILIZATION STRATEGIES

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PENETRATION STRATEGIES

  • A penetration strategy focuses on firm‘s existing product in its existing market, and the entrepreneur attempts to penetrate this product or market further by encouraging existing customers to buy more of the firm’s current products.
  • It relies on taking market share from competitors.

MARKET DEVELOPMENT STRATEGIES

  • Market development Strategies involve selling the firm’s existing products to new groups of customers. New group of customers can be categorised in terms of :

1.New geographical market

2.New demographic market

3.New product use

PRODUCT DEVELOPMENT STRATEGIES

  • Product Development Strategies for growth involve developing and selling new products to people who are already purchasing the firm’s existing products.
  • Experience with a particular customer group is a source of knowledge on the problems customers are having with existing technology and the way in which they can be served better.

DIVERSIFICATION STRATEGIES

  • Diversification Strategies involve selling a new product to a new market.
  • There are three types of related diversification explained through value added chain.
  • Value added chain captures the steps it takes to develop raw material into a finished product and get it into to hands of customer. Value is added in every step of chain. For the value added, firm makes some profit.

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Considering a manufacturer , opportunities for growth arise from:

  • Backward integration
  • Forward integration

Above growth opportunities are related to firms existing knowledge base and thus have advantage over others.

Being ones own buyer/supplier provides synergistic opportunities to conduct transactions more efficiently.

Provides learning opportunity that could lead to new processes or new product improvements.

  • Horizontal integration

Same level but complementary

Bundled and sold together

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