Four Varieties Of Advertising Plans And Methods
In a now classic Harvard Business Review article, Ansoff (1957) identified four strategies for business growth. These four strategies also identify four basic types of marketing plans and the associated types of investments and activities. The strategies are defined by whether the focus is on new or existing products and new or existing markets.
1. Market penetration strategy
When a company focuses on selling its current products to existing customers, it follows a market penetration strategy. The marketing activities that will dominate this type of marketing plan are those aimed at increasing the loyalty of existing customers so that they are not prone to loss to competitors, attracting customers from competitors, increasing the frequency of product use and non-users convert to user.
Raising awareness through marketing communication and increasing availability through expanded sales are common marketing activities in this type of plan. Recognizing new uses and uses for a product can increase usage frequency or convert current non-users to users. For example, the advertising campaign for orange juice with the slogan "It's no longer just for breakfast" was an attempt to expand its use. Price promotions can be used to encourage competitors' customers to test the company's product if there is reason to believe that such an attempt would lead to repeated purchases. Loyalty programs can be very effective in customer loyalty. This strategy reduces risk by building on what the company already knows well – its existing products and existing customers. It is also a strategy in which investments in marketing should pay off faster as the company builds on an existing foundation of customer relationships and product knowledge.
2. Market development strategy
The effort to increase sales by selling current products in new markets is referred to as a market development strategy. Such efforts can include entering new geographic markets such as international markets. The creation of product awareness and the development of sales channels are important marketing activities. Some product modifications may be required to better meet the needs of the local market. For example, as fast food restaurants penetrate international markets, they have frequently changed their menus to better match the customers' food preferences in local markets. The expansion into a new market with an existing product carries a certain risk, since the new market is not well known to the company and the company and its products are not well known in the market. The return on marketing investments in such a strategy is likely to be longer than in a market penetration strategy because it takes time to build awareness, sales and product testing.
3. Product development strategy
Developing new products for sale to existing customers, a product development strategy, is a common marketing strategy for companies that can leverage their relationships with existing customers. For example, American Express was able to use its relationships with its credit card customers to also sell travel-related services. Similarly, cable television companies have expanded their offerings to include Internet and telephone services. Research and development activities play a dominant role in this strategy. The time it takes to develop and test new products can be long. However, once a product is developed, awareness, interest, and availability should be created relatively quickly because the company already has a relationship with customers. A product development strategy is also riskier than a market penetration strategy because the required product may not be able to be developed, at least not at a cost acceptable to customers, or the developed product may not meet customer needs.
4. Diversification strategy
A diversification strategy includes opening up new markets with new products. This is really creating a whole new business. This is the riskiest strategy, and the strategy probably requires the greatest patience when waiting for a return on your investment.
ContriBranding Strategy Insiders: David Stewart, Professor of Marketing and Commercial Law at the President of Loyola Marymount University, Author, Financial Dimensions of Marketing Decisions.
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