Ansoff Matrix 3

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The Ansoff Matrix
Providing strategic options is a role of the marketing plan, but how does the marketing team come up with bright ideas? Fortunately there is a simple tool that can help – the Ansoff Matrix. Developed in 1957 it still holds true today – a 2 x 2 matrix that guides planners in coming up with options.

Basically, it gives you four options dependent on two variables – developing new products or entering new markets. New product development and entering new markets involve expense and therefore risk. They also produce risk to your brand – if an undertakers’ firm were to branch out into whoopee cushions their credibility as an undertaker would be scarred! Therefore, the further down or right on the grid you go, the higher the risk.

When is a product entirely new or when is it just an amendment? That is subjective, so judgement must be used – a car manufacturer producing a new model probably doesn’t count as “new” but if that same company were to launch a mission to Mars it may well do…

There is no guarantee of success for any plan, as highlighted below:

Market Penetration
You stay with the same product and keep selling it to the same people. So how do you grow? The answer comes from adjusting the marketing mix – maybe promoting yourself better, making the product better or lowering the price. It is the least risky option, but consequently is likely to reap the least reward.

A good example of market penetration is Fuller’s London Pride – once a regional ale in the South East but now the best selling cask ale in the UK (CAMRA). They have done this by relying on a high quality product but increasing promotional activity – particularly advertising connected with sports events.

On the other side is Rover – they kept selling similar cars to the same market but just lost touch. The product was well-overtaken and badly promoted, and the results are there for all to see. The moral of the story? Even if you do nothing, make sure you do...
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