Intensive & integration strategies....mine

INTENSIVE STRATEGIESANDINTEGRATION STRATEGIES

GROUP MEMBERS;

Farhan Ahmad (2729)Muhammad Ishaq (2750)Rezwan Ullah (2753)Shafqat Ullah (2755) Izhar Ahmad (2771)

INTENSIVE STRATEGIES

Those three strategies are sometimes referred to as intensive strategies because they require intensive efforts if a firm’s competitive position with existing products is to improve.

The aim of intensive strategies is to broaden the market share and to increase the profit by making the existing products more effective and by introducing new and various sets of products in order to increase the market share too.

Types Of Intensive Strategies

IntensiveStrategies

MarketPenetration

MarketDevelopment

ProductDevelopment

Diversification

MARKET PENETRATION STRATEGY...

A market-penetration strategy seeks to increase market share for present products or services in present markets through greater marketing efforts.

Market penetration includes increasing the number of salespersons, advertising expenditures, and publicity efforts or offering extensive sales promotion items.

FIVE GUIDELINES FOR WHEN MARKET PENETRATION IS ESPECIALLY EFFECTIVE: When current markets are not saturated. When usage rate of current customers could be

increased. When market shares of major competitors have

been declining while total industry sales have been increasing.

When the correlation between dollar sales and dollar marketing expenditures historically has been high.

When increased economies of scale provide major advantages.

GLAXOSMITHKLINE (GSK) TO PENETRATE MORE IN INDIA AND NIGERIA;

Raised its stake in its nigerian and indian consumer healthcare units as part of boss sir andrew witty's attempt to shift it away from "white pills in western markets".

Is to almost double its stake in its nigerian division, whose products include sensodyne toothpaste, panadol painkiller, and drinks horlicks and lucozade, to 80 per cent in a 15.4bn naira (£60.5m) deal.

A similar deal in india sees its stake in glaxosmithkline consumer healthcare rise to 75 per cent from 43.2 per cent

MARKET DEVELOPMENT STRATEGY...

Developing a new market for the existing company product is called market development strategy.This is the process of finding new market for the new customer to increase company performance by increasing sales and profits. Companies can develop market on geographical such as city,country,region,state etc and demographical such as age,sex,gender,class etc.

ex: Pakistan State Oil(PSO) developing new market by exporting

oil to Afghanistan. Chinese products developed new market for their product

worldwide.

Six guidelines for when market development may be an effective

strategy

When new channels of distribution are available that are reliable, inexpensive, and of good quality.

When an organization is very successful at what it does plus capital and HR plus has excess production capacity.

When an organization’s basic industry rapidly is becoming global in scope.

EXAMPLES OF MARKET DEVELOPMENT

Pakistan State Oil(PSO) developing new market by exporting oil to Afghanistan.

Chinese products developed new market for their product worldwide.

Product development is a strategy that seeks increased sales by improving or modifying present products or services.

Product development usually entails large research and development expenditures.

The best thing about this strategy is you’ve already established yourself in your current markets and you know what your customers want. You have the distribution channels, and you know how to reach them.

PRODUCT DEVELOPMENT

GUIDELINES FOR PRODUCT DEVELOPMENT TO BE AN EFFECTIVE STRATEGY;

When an organization competes in an industry that is characterized by rapid technological development

When major competitors offer better-quality products at comparable prices.

When an organization competes in a high-growth industry.

. When an organization has especially strong research and development capabilities.

PRODUCT DEVELOPMENT EXAMPLES;

Apple’s focus on new product development. iMacs, iPods, iPhones, and iPads are great examples of Apple’s ability to bring new products to the market over the past decade

DIVERSIFICATION STRATEGIES

Diversification Strategy is the development of new products in the new market.

Related diversification

Businesses are said be related when their value chains possess competitively valuable cross-business strategic fits. :

For example ;Adding new but related products or services.for example Glaxo Smith Kline (UK) introduced the new ADAPTOR toothbrush 

UNRELATED DIVERSIFICATION

Businesses are said to be unrelated when their value chains are so dissimilar that no competitively valuable cross-business relationships exist. For exampleVirgin media moved from music producing

to travels and mobile phones.Walt disney moved from producing

animated movies to theme parks and vacation properties canon diversified from a camera-making company into producing whole new range of office equipments.

VERTICAL INTEGRATION

Vertical Integration is an approach for increasing or decreasing the level of control which a firm has over its inputs/suppliers and distribution of outputs/distributers.

An illustration of vertical integration may be found in the Airline industry. By performing the traditional role of travel agents, Airlines have achieved forward integration. Likewise, by performing the role of suppliers such as aircraft maintenance and in-flight catering, airlines have backwards integrated.

STRENGTHS OF VERTICAL INTEGRATION. BENEFITS

Economies of scale. Economies of scope. Cost reduction. Competitiveness. Reduce threat from powerful suppliers and/or

customers. Higher degree of control over the entire

value chain.

LIMITATIONS OF VERTICAL INTEGRATION. DISADVANTAGES

There is no such thing as a completely integrated or a completely non-integrated firm. Thus the issue is not a choice between these two polar alternatives. Rather, it is a matter of selecting the optimal degree of vertical integration.

The degree of vertical integration can hardly be determined via quantitative means.

Whilst Vertical Integration may solve one headache, the firm may well be acquiring a bunch of others. Compare Core Competence.

Load and capacity balancing between the old and the new activities may be hard to achieve.

FORWARD INTEGRATION

Gaining ownership or increased control over distributors or retailers

for example; Why don’t more producers sell on-line? Aussie surfwear giant Billabong announced they had entered the online retail arena via the acquisition of California-based boardsports website Swell.com

FORWARD INTEGRATION EFFECTIVE WHEN;

Present distributors are especially expensive or unreliable

Availability of quality distributors is limited Competes in an industry growing and

expected to continue To grow An organization has both capital and HR

needed to manage for Distributing its own products

Present distributors or retailers have high profit margin

BACKWARD INTEGRATION

Seeking ownership or increased control of a firm's suppliers

For example; Hotels Inc. Purchased a furniture producer

Boeing in march 2008 purchasing of supplier to its 787 airplane. it enabled them to overcome production problems that have delayed the delivery of the plane to British Airways and Virgin. they key benefit is security of supply.

BACKWARD INTEGRATION EFFECTIVE WHEN:

Present suppliers are especially expensive or unreliable, have high profit margin.

Number of suppliers is small and the number of

Competitors is large. Competes in an industry growing and

expected to continue to grow. An organization has both capital and HR to

manage new business of supplying its own raw materials

The advantages of a stable raw material price particularly important.

HORIZONTAL INTEGRATION

Seeking ownership or increased control over competitors

For example; Virgin Active (which is majority owned by Branson and is having 1 million members in its health and racquets club portfolio) has agreed to pay £77.6 million in deal to buy 55 Esporta gyms - a move that will nearly double Virgin Active’s size in the UK. 

HORIZONTAL INTEGRATION EFFECTIVE WHEN:

Increase economy of scale provide major competitive Advantages

Competes in an industry growing and expected to continue To grow

An organization has both capital and HR needed to Manage an expanded organization

UNILEVER PAKISTAN INTENSIVE AND INTEGRATIVE STRATEGIES

MARKET PENETRATION

For the following brands unilever’s strategy is Market Penetration..

Clear All Shampoo Badami Vim Walls. Surf excel Dirt is good (Daag to achay hotay hain). Lifebouy

Hand Washing Campaign

MARKET DEVELOPMENT:

For the following brands unilever’s strategy would be Market Development.

VaselineThis is an old product but now they are working on its market development.

SunsilkIn order to further develop sunsilk’s market they have come up with an innovative idea that is by exploiting the religious Semitism of muslim women. They have launched a new product to address the HIjabi Women. 

PRODUCT DEVELOPMENT:

DomexIt is a new product in the market and its is launched against HARPIC of Reckitt Benckiser.

Fair Menz A new product to address specifically men in

terms of fairness

INTEGRATION STRATEGIES

Forward Integration:

Unilever has never indulged itself into forward integration.

Backward Integration:

Unilever has never indulged itself into backward integration.

Horizontal Integration:

Polka In 1994 Lever Brothers Pakistan tried to acquire Polka

Ice Cream for Rs 600 million. Polka refused the bid, and demanded Rs 1 billion. One year after the launch of Wall's Ice Cream by Lever Brothers in 1995, Polka approached Wall's with an offer to merge the two companies.

CONTINUED…….

Knorr It was a german brand which Unilever acquired

in year 2000. Glaxose-D

Glaxose-D is a fifty year old brand which was acquired by Unilever Foods Pakistan Ltd. from Glaxo Wellcome Pakistan Ltd in January 1999.

SO NICE OF YOU.

QUESTIONS? IF ANY……