Page 1 - CIMA SCS Workbook February 2019 - Day 2 Suggested Solutions

Day 2 Suggested Solutions

CIMA FEBRUARY 2019 – STRATEGIC CASE STUDY

CHAPTER EIGHT

EXERCISE

Email

To: Paul Pau, CFO
From: Senior Manager
Subject: Strategies for growth

The purpose of these briefing notes is to consider all the ways in which Vita could look to achieve
strategic growth. To do this, use will be made of Ansoff’s matrix, which looks at two different
variables for growth – the products that are offered, and the markets that are served. Both of
these can be addressed under the headings of ‘Existing’ and ‘New’.

The email will then consider whether I can advise you personally as a potential successor to Gal as
CEO.

Market Penetration (Existing Product, Existing Market)

This is an exercise in trying to achieve growth through increasing current market share. For Vita,
this means fitness and activity trackers (the product) sold to the current customers in those
locations where we already have a retail presence.

There are a number of ways in which such growth in market share can be achieved. Firstly, we
could look to launch a targeted marketing campaign with the purpose of persuading more
customers who might currently purchase an alternative fitness tracker to purchase a Vita model
instead. We would therefore be looking to take market share away from competitors such as
Funfitt.

This is likely to require a significant marketing budget, and therefore due thought must be given in
advance to what the marketing message is going to be. For instance, what attributes of the Vita
range are we looking to promote as unique selling points? Do we have a particular area of activity
in mind? For example, the Pax model is suitable for yoga/pilates workouts and meditation
tracking; could it be used for other similar activities? Are we looking to make use of celebrity
endorsements e.g. sign a global film star to always be seen wearing one of our models in public?

Secondly, Vita could look to compete on price. We could take the strategic decision to order
retailers to reduce the selling prices, with a view to offering better value for money to the
consumer. Whilst this might work in many product areas, it could easily have the opposite effect
in the premium fitness tracker market; competitors exist at many price points, and Vita would
therefore simply go from competing in one price segment to another. It could also have the effect
of making our product look cheaper in quality. For example, does Vita really want to compete
with Clown, whose unique selling point appears to be bright colours rather than sophisticated
functionality?

Thirdly, Vita could increase the market share of the fitness tracker market by buying a competitor,
such as Clown or even Funfitt. This would add a significant number of new models of fitness

60 KAPLAN PUBLISHING