How do firms penetrate an existing market?

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How do firms penetrate an existing market?

Cadburys have to improve their levels of market penetration and also

make more sales customers.

Cadburys have improved their penetration which helps them to improve

market share. It can increase in there market share which can create

significant sales. Market penetration suggests a further penetration

of existing markets with existing products. This will involve a

strategy of increasing market share within existing segments and

markets.

· Market development is a strategy requires the producer to develop

raw market segments for products.

· Product development is the process of researching market needs,

creating products to meet the identified needs.

· Diversification means going into new market with entirely new

products.

· Market penetration is increasing the % of sales in present markets

by taking sales from competitors.

To improve their market penetration there are six district stages in

the development process for new products are;

- Ideas

All Cadbury products start from ideas. These ideas may come from the

following sources:

Research and Development

-This is where product development and market research working

together.

Mindstorming

-This is where it involves few people developing ideas from words and

concepts.

Suggestion box

- Here Cadburys is working close to the customer and the sales forces

understand their needs and requirements.

Forced relationships

-At times one or more products can be joined together to form new

product concepts.

Competitors

- Monitoring the actions of competitors may provide a rich source of

new ideas.

Screening of ideas

-Once Cadburys ideas have been generated. It is important to screen

for the ideas likely to be successful. Considerations may include how

well the product fits in with others in the product range the unique

element of any idea that makes it competitive. They are likely to

demand for the product and whether or not it could be manufactured

economically.

The two main errors Cadbury needs to avoid when screening ideas are;

· They must not reject new ideas

· They must not develop poor ideas or Cadbury will loose money

Market analysis

Once Cadburys ideas have been screened market analysis begins. It

involves analysis of the product market potential. This he...

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...ment consultants in the USA.

Stars

These are products with a high market share like Cadburys in a rapidly

growing industry. Unless Cadburys chocolate bar has not achieved this

position through heavy discounting, it should be generating high

profits. For Cadbury to remain a star in a competitive environment its

chocolate bean will continue to need heavy marketing expenditure.

Cash cow

Cash cows have a high market share in a slow growing, but mature

market. Cadbury could fall into this because there competitors do have

higher cost slightly. But Cadbury benefits from high economic of

scale. It can generate high profits which could be used to finance

‘problem children/question marks’.

Question Marks and problem children

This product has a low market share in a rapidly growing market. The

business has to decide whether to with draw the product or to support

it with heavy marketing, which could be difficult if it is not

generating funds elsewhere.

Dog

This product has a low market share in markets where there is little

or no growth.

At this stage a product is at the end of its life cycle. The product

is best if it is dropped out of its portfolio.

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