Market Penetration
Market penetration is a technique in which a corporation uses current products to increase its market share in an established market. It is the process of a corporation selling more of its existing items to existing markets. Teva’s key strategy is market penetration because it spends a lot of money on marketing to enter new markets (Kela-Madar, 2021). It also aims to make the most of its distribution channels by forming profitable collaborations with various distributors. For example, some distributors are A F Hauser Inc, American Health Service, and Auburn Pharmaceutical Corp. These distributors are helping the organization penetrate different markets across the globe. Therefore, Teva pharmaceutical uses distributors and spends a lot of money to enter into various markets.
Teva pharmaceutical also uses market penetration strategies such as offering introductory discounts, launching promotion campaigns, and many more. Discounts significantly impact customer acquisition and brand loyalty among customers, particularly among millennials (Kela-Madar, 2021). It is also an excellent method to raise brand awareness and keep the organization, service, or product in front of its target audience. In addition to discounts, promotion campaigns help the organization penetrate the market because they enhance brand awareness. As a result, the organization can effectively reach and attract new customers. When Teva gives a product discount and unique promotions, they quickly capture the attention of your clients.
Moreover, Teva has been using a merger and acquisition strategy to penetrate the international market. This strategy has become prominent for companies that want to grow into new markets or areas, obtain a competitive advantage, or acquire new technology and skill sets. As a result, the organization has acquired and merged with different companies across the globe (Kela-Madar, 2021). For example, some of the companies acquired by Teva are Anda, Rimsa laboratories, Actavis, and Barr Pharmaceuticals. With the many mergers and acquisitions, the company has entered different markets.
Teva gains a more significant part of the current market by selling more of its existing products. To gain a competitive advantage in its present markets, the company raises sales by adding more authorized salespeople (Kela-Madar, 2021). Teva can use this method to reach markets where it does not yet have a strong presence. In this sense, the organization promotes itself through various websites and media outlets as part of its market penetration intense growth strategy. In addition, more consumers are persuaded to buy Teva’s products due to advertisements. In that it meets the need to extensively capture the market by selling more items to more clients, this intense growth plan corresponds with the company’s broad differentiation generic strategy.
Teva’s market penetration strategy’s strategic aim is to raise sales by lowering prices through price strategy. There is thought to be a link between low cost and low price leadership. The other option for achieving this goal is to leverage innovation to create a distinguishing base (Kela-Madar, 2021). Despite the fact that the market is saturated, Teva’s consumer base is growing. On the other hand, it is critical to note that as a market reaches saturation, market penetration becomes expensive. Investing in various marketing and promotional activities gives a low return in this scenario, pushing the firm to seek additional emerging market tactics.
Product development
Product development is a marketing technique in which a company develops new products to fulfill the needs of an existing market. Expanding the product line necessitates a significant amount of research and development. When a corporation has a solid awareness of its current market, it employs this technique. It should also be able to develop innovative solutions to meet market demands. Teva, for example, has been upgrading its existing goods by adding features that provide clients more value (Kela-Madar, 2021). The organization has also majored in launching new products alongside its present products. Thus, in addition to its longstanding presence in generics, Teva has considerable innovative research and operations to support our expanding range of specialty and biologic products.
Teva uses product creation as a secondary growth strategy to compete effectively in the market. This strategy involves developing new products or modifying existing ones to appeal to its customers. Growth-oriented firms, such as Teva Pharmaceutical, use this method when there are opportunities for growth in the existing market with their products (Kela-Madar, 2021). For example, Teva Pharmaceutical Industries Ltd has introduced new goods to specific market areas due to high competition. In addition, by focusing on its consumers with new services requires less time, resources, and effort.
Teva is developing its products by acquiring competitors, joint ventures, and strategic partnerships. By acquiring some of its competitors, the organization’s main purpose is to acquire talent and intellectual property. For example, Teva retains the best employees from the acquired firm, which helps in improving its products (Kela-Madar, 2021). Furthermore, through joint ventures and strategic partnerships, the organization learns new tactics by sharing information. In these arrangements, the employees can exchange vital information, which is integral in product development. In addition, the organization can understand the customers’ needs and work on improving the products to meet those needs.
Market development
Market development is a tactic in which a company uses its current products to break into a new market. Expanding into new markets could mean entering new geographies, consumer groups, territories, and many more. It all comes down to becoming global by concentrating on new regions or reaching out to new customer group. For instance, Teva has used this method effectively across various regions over the past decades to expand its market (Kela-Madar, 2021). Prior to moving on to more challenging regions like China, the organization began by growing into nations culturally comparable to nation of origin. As a result, the organization operates in an international market.
Teva’s acquisition of Rimsa, a prominent pharmaceutical production and distribution company in Mexico, is an example of market expansion. Rimsa is also a debt-free, cash-free transaction including a portfolio of Latin American and European products and enterprises, intellectual property, assets, and pharmaceutical patents. As a result of this acquisition, Teva became a leading pharmaceutical firm in Mexico, the second-largest market in Latin America and one of the top five fastest expanding markets (Kela-Madar, 2021). Teva believed that the deal would result in significant and attainable benefits and a platform for regional expansion. As a result, the organization could penetrate Mexico through the acquisition of Rimsa.
Teva Pharmaceuticals is a well-known brand in the pharmaceutical industry because of its products and effective cost. The only method to reach an increasing number of clients in the pharmaceutical industry is to be suggested by physicians and pharmacists (Kela-Madar, 2021). Teva has garnered a lot of popularity among pharmacists because it provides a wide range of medicines and practically every generic treatment. In addition, because of its low cost, it has been the preferred option for a number of clients, as branded sections in the medication categories are highly expensive. Therefore, Teva Pharmaceuticals’ marketing strategy plays an integral role in entering new markets.
Teva uses a market development technique as a high-intensity growth strategy. It involves delivering existing products in new areas using the company’s competitive advantages. For example, the corporation has a rapid expansion strategy by approving new distributors and sales agents in markets where it does not currently have a presence (Kela-Madar, 2021). By broadening the company’s market reach, this growth plan corresponds with the general approach of differentiation strategy. It also accomplished this by bringing current customers to new overseas markets. Teva achieves this overall approach for competitive advantage by delivering things to various market sectors, which it does through the emerging market.
Diversification
Teva’s diversification is driven by its price differentiation strategy, enabling the business to uncover new product prospects in new markets because of its cost-cutting capabilities and existing infrastructure. The main goal of the expansion intense growth strategy is to expand the portfolio through effective acquisition strategies (Kela-Madar, 2021). Due to risk concerns, the firm prioritizes connected diversification and shuns risky initiatives into a new market. Furthermore, the organization leverages its brand name and influence to provide complementary products to the international market. Teva’s diverse product line encompasses everything from refrigerators to shirts. Therefore, diversification enables the company to achieve its intended goals effectively.
Ansoff’s Matrix Analysis
The Ansoff matrix is a valuable concept for organizing a company’s expansion options. It includes market penetration, product development, and diversification (Desai, 2019). Market penetration is the least risky of the four possibilities, and it is the most common in everyday business. However, diversification is the most perilous since it requires a company to enter a new and unfamiliar market with a whole new and unexpected product. When a corporation succeeds in numerous unconnected markets, it obtains the advantage of a balanced product offering, which lowers its risk level. The matrix enables an individual to summarize the potential growth strategies quickly.
The benefit of Ansoff’s matrix is that it aids the company in monitoring all accessible options so that it may make the best selection possible, hence increasing sales and profits. For example, if a company’s product isn’t selling well in its current markets, it can pursue market development instead of developing a new product (Desai, 2019). In addition, it enables managers to think about the expected risks of moving in a certain direction. With this information, an individual can make informed decisions and improve organizational performance. This can save the organization from risks that might reduce its productivity in the market.
The Ansoff matrix’s most critical problem is that it overlooks competition. Competitors exist for every product and market; hence the matrix depicts the strategy with the company’s product and market in mind (Desai, 2019). Discovering who the competitors are and what services they offer can help differentiate the products, services, and marketing. In addition, it gives them the ability to establish competitive rates and react to competitor marketing campaigns to their programs. For example, if a competitor is using lowering its prices to attract and maintain customers, an organization can consider other strategies to counter the move. Therefore, it is dangerous for an organization to ignore its rivals in the market.
Recommended model
Porter’s five forces are the best model to address the limitations experienced when using Ansoff’s model. The concept is based on the assumption that the intensity of competitive intensity is determined by five forces (Desai, 2019). It can help understand who has the most power in an organization. This is expedient for determining the powers of an organization ‘s competitive environment as well as the strength of a position the company may select to seek in the future. Furthermore, strategists commonly use Porter’s five forces to analyze whether new products have the capability to evolve (Desai, 2019). Thus, by understanding where power exist, the model may be utilized to discover areas of strength, correct deficiencies, and avoid mistakes.
The model is a simple and efficient business assessment tool for analyzing whether a plan has the ability to be profitable in the competitive environment of an organization. When used correctly and with the appropriate tools, the model can reveal crucial information about a company’s competitiveness and market strength, enabling managers to adjust their competitive strategy (Desai, 2019). Through this model, Teva can effectively understand the market and make appropriate strategies to perform effectively. For example, Teva can better understand its competitors in the market and develop counter-strategies to maintain its competitive advantage. As a result, the model is a crucial business analysis tool because it enables a business to understand its environment effectively.
References
Kela-Madar, N. (2021). Teva pharmaceutical: generic market access to global healthcare industry [eBook edition]. Intech Open.
Desai, C. (2019). Strategy and strategic management. In Management for Scientists. Emerald Publishing Limited.