There are different types of strategies used by business in identifying their market. There is the SWOT Analysis, in which it identifies the strengths, Weaknesses, Opportunities and Threats of the target market. Another is the BCG Product Portfolio Matrix which is used by businesses with multiple portfolios or product lines in examining the products through relative market shares and rates of growth. STP, which stands for segmenting, targeting and positioning, is a strategy wherein it helps an organisation targets it goods to the consumers, prioritizing the target and developing a marketing mix. And lastly is the Ansoff Matrix, which is according to (1999) is a method of arranging the four fundamental product strategies of marketing which are the market penetration, market extension, product development and diversification.
According to , the Ansoff Product-Market Growth Matrix is an instrument in marketing that was developed by Igor Ansoff. In the Ansoff matrix, it allows the marketers to look at different ways to grow the business through existing products and markets and new products and markets. Moreover, the matrix is composed of four various strategies:
Market Penetration- market penetration is composed of existing products and markets, it occurs when an organisation enters an existing market with current products and services.
Product Development- product development is composed of existing markets and new products, it occurs when an organisation with a current or existing market undertakes a strategy of creating a new product which provides to the same market.
Market Development- market development constitutes new markets and existing products, it occurs when the organisation with an existing product targets a new market through tweaking the product and marketing to new consumers.
Diversification- diversification is composed of new products and new markets, it occurs when an organisation or a company embarks on an area of business in which it had no presence before, from the four strategies of the matrix diversification has the highest risk, however the gains that the business owners will be more abundant than the rest.
Ansoff matrix is one of the most widely used tools in marketing of products and businesses. It is a simple yet powerful tool in identifying the market and the products. Ansoff Matrix has contributed to a number of decisions by multinational companies worldwide.
For a number of businesses, market penetration is usually the choice of a number of small firms and some large firms because of its low risk, at the same time it increases the product sales and growth rate of the company. According to (2006) in market penetration the organisation’s purpose is to sell the existing products in the market wherein it already sells the products and services so that it could attain higher sales of the product, aside from selling the existing product organisations can also increase the sales of existing products through improving the quality.
The market penetration strategy of the Ansoff Matrix has a great contribution in the strategic marketing management because a number of big companies are using this strategy,...