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Growth Strategies
2005 John Wiley & Sons
Copyright 2005 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in Section 117 of the 1976 United States Copyright Act without the express written permission of the copyright owner is unlawful. Requests for further information should be addressed to the Permissions Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages, caused by the use of these programs or from the use of the information contained herein.
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
PPT 13-1
Chapter Thirteen
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
PPT 13-2
- Maimondies
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
PPT 13-3
- Benjamin Franklin
2005 John Wiley & Sons Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
PPT 13-4
New Markets
Vertical Integration
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
Revitalize the Brand e.g., Abercrombie & Fitch New Applications for Existing Product Users e.g., Arm &
Hammer, Jell-O
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
PPT 13-6
Incumbents Curse
1. Even if new technology is successful may be making investment just to maintain same level of sales and profits 2. Need to improve costs, quality, and service for existing offering, which leaves little time to explore new technologies.
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
PPT 13-7
New Products for the Existing Markets e.g., Lenox jewelry & giftware; Gerber baby clothes, H & R Block legal services
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
PPT 13-8
Will customers benefit from a systems capability or service convenience made possible by a broad product line? Do potential manufacturing, marketing, or distribution cost efficiencies exist from an expanded product line? Can assets or competencies be applied to a product-line expansion? Does a firm have the needed competencies and resources in R&D, manufacturing, and marketing to add the various products proposed?
PPT 13-9
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
Usage e.g., nonusers Distribution Channel e.g., intensify distribution Age e.g., J&J Baby Shampoo Attribute preference e.g., audiophiles Application-defined market e.g., American Airlines with NextJet
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
Big Ideas
Disneyland Niketown
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
Figure 13.3
PPT 13-13
Key Learnings
The most fruitful growth area is often to increase product usage within the existing product market, where assets and competencies are in place and only need to be leveraged. Growth within a product market can involve adding product features, new-generation products, expansion of the product scope, or new products. Developing new products, a second route to growth, can involve line extensions, expanded product scope, or new generation products.
A third growth route, market development, involves expanding the market either geographically or by targeting new market segments.
A key consideration of any growth strategy is how to achieve synergy by leveraging current assets and competencies.
PPT 13-14
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea
Key Learnings
Vertical integration, another growth direction, can provide access to supply or demand, control of the quality of the product or service, and entry into an attractive business area. It also, however, introduces the risks of managing a very different business and reducing strategy flexibility. Outsourcing rather than vertical integration makes it easier to change strategic direction in response to threats and pressures for the market. Growth can be achieved with incremental growth strategies, significant growth initiatives, or big ideas. All businesses should strive to uncover and implement big ideas, because they are usually the source of breakthrough strategies.
PPT 13-15
Growth Strategies: Penetration, Product-Market Expansion, Vertical Integration, and the Big Idea