Marketing strategy — common mistakes

In an exam, when recommending Market Penetration, justify your choice by referring to the case study. For example, if a business has low market share in a growing market, penetration is a logical strategy. Always suggest specific tactics, such as 'launching a loyalty card to increase repeat purchases'.

When evaluating diversification, always consider the concept of 'core competencies'. A business is more likely to succeed if the diversification strategy, even if unrelated, can still leverage some of its key strengths, such as a strong brand name, a skilled management team, or significant financial resources.

Not necessarily. While diversification has the potential for high rewards, it is unequivocally the highest-risk strategy. A business could invest millions in developing a new product for a new market and fail completely, jeopardising the entire organisation. Often, lower-risk strategies like market penetration or development are more sensible and sustainable, depending on the business's resources, objectives, and the market conditions. The 'best' strategy is always contextual.

This is a classic example of Market Development. While the geographical market might be the same, the business is entering a new distribution channel (the internet) to reach a new market segment (online shoppers, who may not visit their physical stores). It requires new skills in e-commerce, digital marketing, and logistics, which carries more risk than simply trying to get more customers into the existing physical stores (which would be market penetration).

Yes, this is a perfect example of Product Development. The company is introducing a new product (the sugar-free variant) into its existing market (current and potential drinkers of its brand). It is leveraging its brand name, distribution network, and understanding of its customers' changing health preferences. It is not diversification because the market is the same, and it is not market penetration because the product is new.