Product- Market Expansion Grid free essay sample

Product- Market Expansion Grid Away from assessing current businesses, designing the business portfolio absorbs finding businesses and products the company should consider in the future. Companies need expansion if they are to compete more effectively, satisfy their stakeholders, and magnetize top talent. Growth is like pure oxygen and it creates a vital, enthusiastic corporation where people see genuine opportunity. At the same time, a firm must be careful not to make growth itself an objective. The companys objective must be profitable growth. Marketing has the main responsibility for achieving profitable growth for the company. Marketing must identify, evaluate, and select market opportunities and lay down strategies for capturing them. One useful device for identifying growth opportunities is the product-market expansion grid. It’s a portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification. Identifying Companies new intensive growth opportunities product-market expansion grid can be a very useful framework. We will write a custom essay sample on Product- Market Expansion Grid or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page There are four strategies, one for each of the quadrants: Market Penetration Strategy When the product is in the current market, it can still grow. There are three major approaches to increasing current products market share: 1. Encourage current customers to buy more. 2. Attract competitors customers. 3. Convince non-users to use the product. Market-Development Strategy When the current product is launched in a new market, there are three approaches to develop the market: 1. Expand distribution channels. 2. Sell in new locations. 3. Identify the potential users. Product-Development Strategy When a new product is launched in the current market, the intensive growth strategies could be to: 1. Develop new features. 2. Develop different quality levels. 3. Improve the technology. Diversification When a new product is launched in a new market, diversification makes good sense as better opportunities are found outside the present business. The diversification strategies are of three types: 1. Concentric Diversification Strategy: Develop new products with the earlier technology for new segments 2. Conglomerate Diversification Strategy: Develop new products for new markets. 3. Horizontal Diversification Strategy: Develop new products with new technology for old customers. Evaluation of Business Portfolio Using Product-Market Expansion Grid For a whole variety of reasons, there are times when as an individual or in business want or need to expand or change field or market. In business, manager might need to achieve economies of scale, make more money for investors, or gain national or even global recognition of their brand. Having decided that manager wants to grow business, he’ll have hundreds of ideas about things he could do; this means new products, new markets, new channels, or new marketing campaigns. Using a strategic approach, such as the Product-Market Expansion Grid, helps manager evaluate available options and choose the one that suits the situation best, and gives the best return on the potentially considerable investment that business’ need to make. To understand the process of evaluation of business portfolio better here I am going to depict an example of Toyota Motor Corporation. Toyota Motor Corporation commonly known simply as Toyota and abbreviated as TMC is a multinational automaker headquartered in Toyota, Aichi, Japan. In 2010, Toyota Motor Corporation employed 317,734 people worldwide. TMC is the worlds largest automobile manufacturer by sales and production. The company was founded by Kiichiro Toyoda in 1937 as a spinoff from his fathers company Toyota Industries to create automobiles. Three years earlier, in 1934, while still a department of Toyota Industries, it created its first product, the Type A engine, and, in 1936, its first passenger car, the Toyota AA. Toyota Motor Corporation group companies are Toyota (including the Scion brand), Lexus, Daihatsu and Hino Motors, along with several non-automotive companies. TMC is part of the Toyota Group, one of the largest conglomerates in the world. Toyota Motor Corporation is headquartered in Toyota City, Aichi and in Tokyo. Its Tokyo head office is located at 1-4-18 Koraku, Bunkyo-ku, Tokyo 112-8701, Japan. Nagoya Office at 4-7-1 Meieki, Nakamura-ku, Nagoya City, Aichi Prefecture. In addition to manufacturing automobiles, Toyota provides financial services through its Toyota Financial Services division and also builds robots. Initially Toyota management might consider whether the company can achieve deeper market penetration-making more sales to current customers without changing its products. It might initiate new marketing program, extra effort on research and development, new production facilities, vehicle assembly plant or dealership in current market areas to make it accessible for more customers. For example, Toyota used to penetrate market depending heavily on aggressive marketing and research and development and superior product quality. In 2010 Toyota spend total of 2. 5 billion US Dollar for advertisement and research and development purpose. Toyotas marketing efforts have focused on emphasizing the positive experiences of ownership and vehicle quality. The ownership experience has been targeted in slogans such as You asked for it! You got it! (1975–1979), Oh, what a feeling! (1979 – September 1985, in the US),Who could ask for anything more (September 1985–1989), I love what you do for me, Toyota! (1989–1997), Everyday (1997–2001), Get the feeling! (2001–2004), and Moving Forward (2004–present). Recently, Toyotas new United States marketing strategy has included such hits as Swagger Wagon[and the marketing for the new Avalon, which includes a throwback to the old days of travel. As a result today is the world’s largest automobile manufacturer by sales and production. And every year its annual turnover is increasing. Second, Toyota management may regard as potential for market development identifying and developing new markets for its current products. For instance, managers could review new demographic markets. Managers also could review new Geographical markets. Toyota is now expanding swiftly into new markets, especially in African countries. And its expanding rapidly in new global markets. Toyota has factories in most parts of the world, manufacturing or assembling vehicles for local markets. Toyota has manufacturing or assembly plants in Japan, Australia, India, Sri Lanka, Canada, Indonesia, Poland, South Africa, Turkey, Colombia, the United Kingdom, the United States, France, Brazil, Portugal, and more recently, Argentina, Czech Republic, Mexico, Malaysia, Thailand, Pakistan, Egypt, China, Vietnam, Venezuela, the Philippines, and Russia. In 2002, Toyota initiated the Innovative International Multi-purpose vehicle project (IMV) to optimize global manufacturing and supply systems for pickup trucks and multipurpose vehicles, and to satisfy market demand in more than 140 countries worldwide. IMV called for diesel engines to be made in Thailand, gasoline engines in Indonesia and manual transmissions in India and the Philippines, for supply to the countries charged with vehicle production. For vehicle assembly, Toyota would use plants in Thailand, Indonesia, Argentina and South Africa. These four main IMV production and export bases supply Asia, Europe, Africa, Oceania, Latin America and the Middle East with three IMV vehicles: The Toyota Hilux (Vigo), the Fortuner, and the Toyota Innova. Third, management could consider product development-offering modified or new products to current markets. For example, Toyota is one of the largest companies to push hybrid vehicles in the market and the first to commercially mass-produce and sell such vehicles, an example being the Toyota Prius. The company eventually began providing this option on the main smaller cars such as Camry and later with the Lexus divisions, producing some hybrid luxury vehicles. It labeled such technology in Toyota cars as Hybrid Synergy Drive and in Lexus versions as Lexus Hybrid Drive. The Prius has become the top selling hybrid car in America. Toyota, as a brand, now has four hybrid vehicles in its lineup: the Prius, Auris, Highlander, and Camry. The popular minivan Toyota Sienna is scheduled to join the hybrid lineup by 2010, and by 2030 Toyota plans to offer its entire lineup of cars, trucks, and SUVs with a Hybrid Synergy Drive option (Toyota has said it plans to make a hybrid-electric system available on every vehicle it sells worldwide sometime in the 2010s). Worldwide sales of hybrid vehicles produced by Toyota reached 1. 0Â  million vehicles by May 31, 2007, and the 2. 0Â  million mark was reached by August 31, 2009, with hybrids sold in 50 countries. [51][52] Toyotas hybrid sales are led by the Prius, with worldwide cumulative sales of 1. 3Â  million by August 2009. [51] Toyotas CEO has committed to eventually making every car of the company a hybrid vehicle. [53][54] Lexus also has their own hybrid lineup, consisting of the GS 450h, RX 400h, and launched in 2007, the LS 600h/LS 600h L. Fourth, Toyota might consider diversification-starting up or buying businesses outside of its current products and markets. For ex ample, Toyota is a minority shareholder in Mitsubishi Aircraft Corporation, having invested US$67. 2Â  million in the new venture which will produce the Mitsubishi Regional Jet, slated for first deliveries in 2013. Toyota has also studied participation in the general aviation market and contracted with Scaled Composites to produce a proof-of-concept aircraft, the TAA-1 in 2002. In 2004, Toyota showcased its trumpet-playing robot. Toyota has been developing multitask robots destined for elderly care, manufacturing, and entertainment. A specific example of Toyotas involvement in robotics for the elderly is the Brain Machine Interface. Designed for use with wheelchairs, it allows a person to control an electric wheelchair accurately, almost in real-time, with his mind. The thought controls allow the wheelchair to go left, right and forward with a delay between thought and movement of just 125Â  milliseconds. In a more extreme diversification, Toyota invests in several small start-up businesses and partnerships in biotechnology, including P. T. Toyota Bio Indonesia in Lampung, Indonesia, Australian Afforestation Pty. Ltd. in Western Australia and Southern Australia, Toyota Floritech Co. , Ltd. in Rokkasho-Mura, Kamikita District, Aomori Prefecture, Sichuan Toyota Nitan Development Co. , Ltd. n Sichuan, China, Toyota Roof Garden Corporation in Miyoshi-Cho, Aichi Prefecture. Conclusion Companies spend vast amounts of money and time launching new brands, leveraging existing ones, and acquiring rivals. They create line extensions and brand extensions, not to mention channel extensions and subbrands, to cater to the growing number of niche segments in every market. To be the market leader and successful companies should examine their brand portfolios fr om time to time to check if they might be selling too many brands, identify weak ones, and kill unprofitable ones.