Market forces

1. Draw and describe the Ansoff matrix.

	Existing Value	New value offerings
Existing markets	Market penetration	Value offering development
New markets	Market Development	Diverssification

This is a simplified two dimensional display mode for company’s marketing situation and strategy. In this framework we can choose of four category, which most describes the current or desired situation, or where a company wants to be. One dimension is the market share, the other is the value offerings.

2. What does the Ansoff matrix do?

This is a visual tool, used to simplify and help to decide and develop the marketing objectives for any company. It has two dimensions. One is the product or various value offerings, the other is the market share (market share can be the existing or a new market). Having a frame or system for a task usually makes work easier.

3. The Ansoff matrix contains the following (explain each)

Market penetration: If using this position, the company is taking the smallest risk while trying to increase market share, because already existing products, services and resources are used in a bit different format, or under a new name. For example when Quantas was present at the Australian market, they could see a segment what they could cover better, when they introduced JetStar.

Market development: Seeking for market growth with current products on new market segments or geographical areas. For example, when MTV music television expanded from the US to other countries (the main product didn’t change, just geographical fine tuning was applied).

Value offering development: This approach can be best used when a company is more depending on the current existing markets, and introducing new products features is an easier growth chance than finding new markets. Example: new flavours for Domino Pizza.

Diversification: The most risky strategy, because both new markets and new value offerings needs to be developed and maintained the same time. For example, when Toyota first decided to grow from Japan to the US, new American style models were needed to introduce on a new continent.

4. Describe the Five(market) Forces analysis

The five force analysis model was created by Michael Porter. In this visual system we can see how the marketplace competition looks like, how each factors effect each other and how they impact and drive the competitive activity within the industry.

5. The Five (market) Forces analysis, identifies five forces that drive competition within an industry. List and describe them

The threat of entry by new competitors: Depending on the market growth, the smaller the growth is, the bigger the new competitor threat is, because if there are 2 competitors on the market and a 3^rd enters, than in case of 3% market growth, each competitor can grow an average 1%, but if 30%, than each can grow 10% , in case of they take around the same market share.

The intensity of rivalry among existing competitors: The bigger a market is, the more competitors are there. Competitors are always trying to outperform each other, so if there are several competitors it can be easy to get behind them without continuous improvement.

Pressure from substitute products: Buyers also are always looking for their biggest benefit, and considering price, quality and switching cost, they might change to substitute products. For example if Ford have only 2 doors utes, than people with family may change to Holden with 4 doors utes.

The bargaining power of buyers: Number of buyers relative to sellers. When there are lot of sellers, and little buyers, the balance changes, and the advantage of choice and power goes to buyers. Buyers can drive average prices lower.

The bargaining power of suppliers: This is similar to the previous, just here the manufacturers become the buyers, and the suppliers become the sellers. Although there is another side of the market situation, when there are so few suppliers, that the buyer needs to pay higher prices for the inbuilt parts.

6. What are the main elements in the overview of Green River Clothing Company’s analysis scenario?

MACRO ENVIRONMENT

Economic

Technological

Political/legal

Cultural

Natural environment

TASK ENVIRONMENT

Distribution channels

Other specialist intermediaries

MARKET ENVIRONMENT

Markets

Target segments

Competitors

Five Forces analysis

PUBLICS ENVIRONMENT

MARKETING STRATEGY AUDIT

Business mission, vision, goals

Marketing objectives and goals

Strategy

MARKETING ORGANISATION AUDIT

Functional efficiency

Interface efficiency

MARKETING SYSTEMS AUDIT

Marketing information system

Marketing planning system

Marketing control system

New product development system

MARKETING PRODUCTIVITY AUDIT

Profitability analysis

Cost analysis

MARKETING MIX AUDIT

Products

Price

Distribution

Promotion – advertising, sales promotion and publicity

Promotion – sales force

Sales analysis

Cash flow projection

After asking and answering all the questions about the above areas, a company is on a good way to conduct a marketing audit. The goal is to find the current problems, adjust settings to fresh changes, find new better solutions, and implement them so the company is one step forward.