Smaller companies and aggressive medium-size companies venture with Diversification, accepting the higher risks of unknown technologies, production factors and consumer demand. Embedded in this diagram there is a risk sequence: Market Penetration is less risky than Product Development, which is also less risky than Market Development. Diversification is the riskiest strategy since it implies several sources of uncertainty.
Markets
Products Present
New
Present
Market Penetration
Product Development
New
Market Development
Diversification
CASES – MEXICO 1. NUTRICENTRO is a small bread maker, with sales in the range of US$ 25 million and 12% of their sales to BOP. They declare they do not have a clear BOP strategy and they do not have child-targeted products. They sell mainly in supermarkets. Doing business with the Government is considered difficult because of the cumbersome access to the government purchase process. Nutricentro is looking for new opportunities in traditional bread markets.
STRATEGY: Growth and Diversification (new products in new markets) 2. ALIMENTOS DE LA GRANJA is a small egg company that has developed a product; Dehydrated Eggs enriched with Spinach specifically for populations with the highest malnutrition rates in the southeast region of Mexico. They did a study and determined the need to develop a product enriched with vitamins that has a good taste and appearance before developing the product.
STRATEGY: Growth and Market Development strategy (Govt. program works as platform for market development) 3. SAMPLING INNOVATION & MULTIPACKING is a small company that makes fruit and vegetable pulps, specifically adding fruit that has soluble and insoluble fiber to decrease the product’s glycemic index. Products are fortified with iron, calcium and folic acid depending on the specific deficiencies in geographic zones or depending on the time of year. They produce a fruit pulp that is used in Mexico’s school meal program, DIF, and offer a product that is 100% natural, without preservatives, low sugar content that has a decent shelf life at an appropriate cost to generate regular consumption. 23