MKT501 Marketing Management Assignment No. 01 Solution & Discussion Fall 2014

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MKT501 Marketing Management Assignment No. 01 Fall 2014 Solution & Discussion Due Date: December 04, 2014

NOTE: Assignments after due date will not be accepted
Objective of Assignment
The prime objective of this discussion is to make students familiar with the importance of
marketing strategies being employed in different situations.
Learning Outcomes
After attempting this students will be able to:
• Able to identify intensification strategies by extending their knowledge of basic strategies
• Able to categorize different situations in a real life scenario into appropriate grid of
intensification strategies
Background
Extension to Handout tutorial’s lesson 9
Horizontal Integration is a strategy used by a business or corporation that seeks to sell one type
of product in numerous markets. To get this market coverage, several small subsidiary
companies are created. Each markets the product to a different market segment or to a different
geographical area. This is sometimes referred to as the horizontal integration of marketing. One
important form of horizontal integration is intensification strategies.
Intensification strategies include market penetration strategy, product development strategy,
market development strategy and Diversification strategy. Market penetration strategy aims to
gain more market share with its current market and current products. Market development
strategy aims to develop new markets for its current products e.g. a local product may be
marketed in a foreign land. Product-development strategy aims to develop a new innovative
product for the current market e.g. a new and more delicious cake with a totally different recipe,
taste and dressing may be marketed for the current market by the existing bakers. Diversification
strategy is pursued when good opportunities exist outside the present business domain of the
company. Related diversification is adding new but related products or services. E.g. Google
which started its services as a search engine acquired the web-site You-tube which contains
many video clips and TV commercials. Unrelated diversification is adding new but unrelated
products or services e.g. Ford Motor entered industrial bank business.


Case
Real life Scenario
Starbucks Corporation, doing business as Starbucks Coffee, is an American global coffee
company and coffeehouse chain based in Seattle, Washington. Starbucks is the largest
coffeehouse company in the world with 20,737 stores in 63 countries and territories Starbucks
locations serve hot and cold beverages, whole-bean coffee, micro ground instant coffee, full-leaf
teas, pastries, sand witches and snacks.
Starbucks has achieved growth in different ways. Around 2000 Starbucks identified a niche in
the market of cafes, serving fresh gourmet coffee directly to customers. A loyal customer base
was created in Seattle. In the second phase of growth Starbuck applied this successful formula to
other cities in America, and finally across globe. In the third phase of growth Starbucks initiated
to increase its sales by offering its existing base of customers compilation CDs, a Starbuck visa
card that allowed customers to receive points toward Starbucks purchases whenever they use it
and offering its customers a high speed wireless internet connection at its outlets known as hot
spots through a deal with T mobile. In the fourth stage of expansion Starbucks entered into a
totally new market of grocery stores Frappuccino bottled drink; Starbucks brand ice-cream and
the purchase of tea retailer TAZO tea.

Question Requirement:
You are required to categorize or classify the four phases of Starbucks growth initiatives into
Intensification strategies (as discussed above) by substantiating your answer with valid
arguments.
(10 Marks)
I
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