Question

Review the below described Concentration strategies in the textbook. These are strategies that involve trying to successfully compete only within a single industry. There are three concentration strategies:

• Market penetration involves trying to gain additional share of a company’s existing markets using existing products. Often companies will rely on advertising to attract new customers with existing markets.
• Market development involves taking existing products and trying to sell them within new markets. One way to reach a new market is to enter a new retail channel or geographic areas.
• Product development involves creating new products to serve existing markets.

Select one of these and find an article that describes a company that has successfully used this strategy.   Identify the company and provide an analysis of what the company has done. Also, from your own learning from the class, assess what the company did to make this successful.

Answer 1

Introduction

Each company goes through different economic times and must come up with different strategies to maximize its performance and increase the overall sales. Depending upon the nature of the product and the available resources and level of innovation, the strategy selected by each company differs.

In the Three conditions described in the case study, we have selected product development which refers to a process in which a company creates a new product offering in an existing market type. This type of strategy is primarily followed by companies that aim at creating innovation through new products which revolutionize an industry and create bumper demand and sales.

Other strategies described are Market Penetration which is useful for smaller companies looking to enter a market and market development in which companies look to sell their existing products in newer areas.

Product Development Example:-

A key example of product development is the company Apple which engaged in development of a new product in an existing market in the form of the IPhone. Previous to its creation, phones were primarily operated by keypads and were extremely slow and yet people would buy them for their business and personal needs.

The development of a product which was easy to use led the company to be one of the highest profit making one. Further development led to the development of newer products such as the I Pad, MacBook’s, Apple Watch etc. which further enhanced the market and led to wide scale profits for the firm.

Such innovation helps in companies to lead the market and instead of selling similar products they engage in new development which gives them an advantage over competition.

Please feel free to ask your doubts in the comments section.