Chapter Three
Interactive Exercise – Marketing Strategy
Instructions for the Professor:
Overview:
The purpose of this exercise is to help students extend their conceptual
knowledge of the strategic marketing planning process, specifically as it relates
to the broad types of strategies that a firm might choose to pursue.
For each of the four strategic opportunities, students are shown statements
describing marketing actions undertaken in the context of specific brands.
Students are expected to select the statement description that best illustrates the
particular type of strategic opportunity that is under consideration.
Concept Review:
The overwhelming purpose behind strategic marketing planning is to match a
firm’s capabilities, resources, and objectives to attractive opportunities that the
firm is in a position to successfully capitalize upon. SWOT analysis is the
preferred method of identifying and evaluating opportunities in light of the
strengths and weaknesses of the firm, and the environmental forces that may
influence the success or failure of the venture. While many firms will pursue
more than one type of strategic opportunity concurrently, it is useful to distinguish
the four basic types of opportunities in terms of their similarities and differences.
The strategic opportunities discussed below represent the four combinations of
A) present vs. new products, and B) present vs. new markets. It may be worth
reminding students that “market” in this context refers to groups of consumers /
businesses with a basic shared need, or new and untapped geographic
locations. “New” products are those that are new to the company and are not
restricted to first time product innovations that essentially create a new product
category within an industry.
Market penetration (present product; present market) occurs when a company
undertakes various actions designed to encourage current customers to buy,
consume, or in the case of charities – contribute more.
Market Development (present product, new market) occurs when a firm attempts
to expand sales by targeting a new user market with an existing product. Two
key methods of implementing this strategy include 1) selling an existing product
to a new geographic market in which the firm currently does not conduct
business, and 2) marketing new uses of existing products to new users.
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Product Development (new product, present market) occurs when new or
improved products are developed for present markets. Restaurants frequently
undertake product development when they introduce new menu items or menu
lines.
Diversification (new product, new market) is typically considered to be the riskiest
opportunity of the four, as it requires a company to move into a totally new line of
business while marketing to a new market. Risk is greater as the company’s lack
of expertise and experience in both the product (industry, competition, production
process, perhaps distribution channels, etc.) and market (targeted consumers,
needs, buying habits, perhaps methods of reaching consumers) leaves greater
potential for error.
Using the Exercise:
Initial Screen
1. Slide one uses a replication of exhibit 3-2 to introduce the four
types of strategic opportunities.
 The interactive exercises are meant to be involving and fun for
students. As you begin the exercise, you might lighten the mood
and grab students’ attention by means of phrases such as:
“{student name}, come on down! You’re the first contestant to play
our game today!”
 The professor then asks the student volunteer to choose any one of
the four opportunities.
 The professor clicks on the portion of the strategic opportunity
matrix representing the student’s selection.
Next Screen
2. The screen pertaining to the selected strategic opportunity
appears.
 The professor reads the descriptions to the class.
 The professor then asks students to select the statement that
exemplifies the strategic opportunity being investigated, and clicks
on the letter that corresponds to the student’s response.
 If the wrong response is given, a buzzer will sound, and the letter
designating the incorrect answer will turn red. For details related to
right and wrong answers, refer to the ANSWERS AND
EXPLANATION section below.
 The selection process is repeated until the correct answer is
chosen, and a cash register “Ch-ching!” sound is heard. The slide
automatically transitions back to the expanded initial screen as
described below in step 3.
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Expanded Initial Screen with Correct Example
3. The four strategic opportunities are shown, with modifications.
 Exhibit 3-2 is updated.
i. The opportunity that was previously chosen is displayed in a
different color to indicate that it has already been
investigated and cannot be reselected.
ii. The answer that correctly illustrates an application of that
strategic opportunity is now listed in the appropriate
product/market grid cell.
 The remaining strategic opportunities transition briefly.
 The professor asks for a student volunteer to select from the three
remaining types of opportunity, and clicks on the table cell
corresponding to that student’s choice.
Next Several Screens
4. The procedures described in steps 2 and 3 are repeated until
all strategic marketing opportunity types have been examined.
Final Screen
5. The final screen displays each form of strategic opportunity
accompanied by the correct statement describing marketing
actions that provide that opportunity.
6. The professor clicks the indicated icon to end the exercise.
NOTE: Clicking the “X” at any time will end the exercise.
Answers and Explanations
MARKET PENETRATION
Answer A: INCORRECT, BUT DEBATIBLE
This one is rather tricky. While the majority of people who purchase TV
Guide do so for its functional value, there has always existed a small group
who collects TV Guide for the sake of collecting. TV Guide’s strategy of
publishing multiple covers is probably best described as an attempt to
develop and grow a market that has existed, but has traditionally been
ignored. Students may argue that A) TV Guide is actually following a market
penetration strategy since collectors existed prior to its implementation and
offering multiple covers encourages this group to buy more, or B) that it is
actually an example of product development, since the cover is different. As
a counterpoint, the instructor can point out that the new covers are simply a
means by which a new use (collecting) is being satisfied, and that promoting
new uses for existing products is a means of market development. The
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product itself (contents within the TV Guide) do not change, only the cover.
Useful discussion can be generated as a result of differing points of view.
Answer B: CORRECT!
Promotions have always been an excellent means of penetrating the market.
Until the recent scandal, McDonald’s “Monopoly” promotion was the most
successful of the company’s games.
Answer C: INCORRECT
The development of a new product by a company known as an ice cream
manufacturer does not qualify as market penetration. Firms pursuing a
market penetration strategy do not alter the product being sold, or the market
to which is targeted.
Answer D: INCORRECT
This is an example of product development by Dr. Pepper.
MARKET DEVELOPMENT
Answer A: INCORRECT
Developing a new product outside current areas of expertise for a new market
(mechanics, do-it-yourselfers) is an example of diversification.
Answer B: INCORRECT
This example features a new, rather than existing product, and thus does not
qualify as market development.
Answer C: CORRECT
Offering existing products to a new geographic market never before served is
an example of market development. International expansion, or domestically
expanding distribution to new regions of the U.S. qualifies as market
development. As previously noted, developing new uses for existing products
that satisfy different needs is a second form of market development.
Answer D: INCORRECT
A local bank that develops its own Internet service division is not only serving
a new national market, it is also venturing into a new line business outside of
its area of expertise. Pursing this opportunity would be an example of a bank
engaging in diversification.
PRODUCT DEVELOPMENT
Answer A: INCORRECT
The Lean Cuisine example is best classified as diversification, as it would
require new suppliers, production facilities, channels of distribution,
advertising, etc., in order to service what is essentially a new market via
products new to the company.
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Answer B: INCORRECT
Frito-Lay has decided to take advantage of a Market Development
opportunity by introducing snack food to the Russian market.
Answer C: CORRECT
RC is developing a line of fruit flavored ice tea beverages for their existing
market of beverage consumers. Perhaps RC is attempting to better satisfy
the needs of caffeine drinkers who don’t care for carbonated beverages, and
prefer the taste of fruit to cola. The drinks will be made available through
traditional distribution channels (grocery, convenience, mass merchandise)
and can be produced through existing production processes; beverage
production and marketing represents a core competency of the firm rather
than a new business, so capitalizing upon this opportunity would NOT be
considered an example of diversification.
Answer D: INCORRECT
The product has not changed, just the suggested usage – an example of
market development.
DIVERSIFICATION
Answer A: INCORRECT
Increasing the amount or rate of giving among current donors is an example
of market penetration.
Answer B: INCORRECT
This example best corresponds with the strategy of product development.
Answer C: INCORRECT
This example best corresponds with the strategy of product development.
Answer D: CORRECT
Saudi Arabia is clearly a new market for Coors, as religious convictions
typically forbid the consumption of fermented beverages such as beer among
the Saudi; hand-held power tools represent a business far removed from
Coors current brewing operations.
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