Product/Market Opportunity Matrix Market Penetration Increasing sales of current products to current market segments without changing the product. Product Development Offering modified or new products to current market segments. Market Development Identifying and developing new market segments for current products. Diversification Starting up or acquiring businesses outside the company’s current products and markets. Existing Products New Products New Markets Existing Markets Strategies for company growth
Market Penetration Starbucks is adding 23 stores per week. Product Development Starbucks recently added hot breakfast sandwiches to its menu. Market Development Starbucks might consider new demographic markets (for example: senior citizens or different ethnic groups). Diversification Starbucks tested new restaurant concepts in San Francisco to enter a new related market. Existing ProductsNew Products New Markets Existing Markets Examples of Starbucks’ growth Product/Market Opportunity Matrix
Tool for assessment 5 To assess the value of product and product opportunity companies use the SWOT tool
What is SWOT? It is a planning tool used to identify Strengths, Weaknesses, Opportunities and Threats involved in a business. It is used as part of Strategic Planning Process to assess the potential value and fit of new opportunities.
Internal Environment Analysis of Internal Environment leads to identification of: a) Strengths: Positive aspects which are within the control of the organization. b) Weaknesses: Constraining factors that obstruct the organization ability to achieve its desired goals.
External Environment Analysis of External Environment leads to identification of: a) Opportunities: Attractive factors that help an institution to develop & improve b) Threats: Factors beyond the control of an institution that potentially damage the present existence and future development
Opportunities & Threats Contributing Factors: Technological Economic Legal/Regulatory Social Demographic Political
Dell recognized that its strength was selling directly to consumers and keeping its costs lower than those of other hardware vendors. As for weaknesses, the company acknowledged that it lacked solid dealer relationships. Identifying opportunities was an easier task. Dell looked at the marketplace and saw that customers increasingly valued convenience and one-stop shopping and that they knew what they wanted to purchase. Dell also saw the Internet as a powerful marketing tool. On the threats side, Dell realized that competitors like IBM and Compaq Computer Corp. had stronger brand names, which put Dell in a weaker position with dealers. Dell put together a business strategy that included mass customization and just-in-time manufacturing (letting customers design their own computers and custom-building systems). Dell also stuck with its direct sales plan and offered sales on the Internet.