Page 66 - Marketing Management

DEVELOPING MARKETING STRATEGIES AND PLANS | CHAPTER 2 43

current businesses (integrative opportunities). The third is to identify opportunities to add attrac-
tive unrelated businesses (diversification opportunities).

INTENSIVE GROWTH Corporate management’s first course of action should be a review of
opportunities for improving existing businesses. One useful framework for detecting new intensive-
growth opportunities is a “product-market expansion grid.” It considers the strategic growth
opportunities for a firm in terms of current and new products and markets.
The company first considers whether it could gain more market share with its current prod-
ucts in their current markets, using a market-penetration strategy. Next it considers whether it
can find or develop new markets for its current products, in a market-development strategy.Then
it considers whether it can develop new products of potential interest to its current markets with
a product-development strategy. Later the firm will also review opportunities to develop new
products for new markets in a diversification strategy. Consider how ESPN has employed
growth opportunities. 22

ESPN ESPN (the Entertainment and Sports Program-
ming Network) was launched in 1978 in Bristol, Connecticut,
with a single satellite, broadcasting regional sports and
obscure international sporting contests such as the “World’s
Strongest Man.” Through its singular focus on providing
sports programming and news, it grew into the biggest name in sports. In
the early 1990s, the company crafted a well-thought-out plan: wherever
sports fans watched, read, and discussed sports, ESPN would be there. It
pursued this strategy by expanding its brand into a number of new cate-
gories and by 2009 encompassed 10 cable channels, a Web site, a
magazine, a restaurant chain (ESPN Zone), more than 600 local radio
affiliates, original movies and television series, book publishing, a sports
merchandise catalog and online store, music and video games, and a
mobile service. ESPN continues to expand its brand footprint. Its failed
seven-month foray into the fiercely competitive cell phone market in 2006
left it undaunted. It transitioned from a service provider to a content
ESPN has entered a wide range of
provider in 2007 and partnered with Verizon Wireless to launch ESPN MVP. Now owned by The Walt Disney
sports-related businesses, including
Company, ESPN earns $5 billion a year in revenue, but perhaps the greatest tribute to the power of its
its sports-themed ESPN Zone
brand came from one male focus group respondent: “If ESPN was a woman, I’d marry her.”
restaurant, to connect with its
customers in more ways and
places.
So how might Musicale use these three major intensive growth strategies to increase its sales? It
could try to encourage its current customers to buy more by demonstrating the benefits of using
compact disks for data storage in addition to music storage. It could try to attract competitors’ cus-
tomers if it noticed major weaknesses in their products or marketing programs. Finally, Musicale
could try to convince nonusers of compact disks to start using them.
How can Musicale use a market-development strategy? First, it might try to identify potential
user groups in the current sales areas. If it has been selling compact disks only to consumer mar-
kets, it might go after office and factory markets. Second, it might seek additional distribution
channels by adding mass merchandising or online channels. Third, the company might sell in new
locations in its home country or abroad.
Management should also consider new-product possibilities. Musicale could develop new
features, such as additional data storage capabilities or greater durability. It could offer the CD at
two or more quality levels, or it could research an alternative technology such as flash drives.
These intensive growth strategies offer several ways to grow. Still, that growth may not be
enough, and management must also look for integrative growth opportunities.

INTEGRATIVE GROWTH A business can increase sales and profits through backward, for-
ward, or horizontal integration within its industry. Merck has gone beyond developing and
selling prescription pharmaceuticals. It formed joint ventures in 1989 with Johnson & Johnson