2008 Spec. Issue 2 Sept. 2009
NGFL WALES BUSINESS STUDIES A LEVEL
The Ansoff Matrix
Specification requirement -The Ansoff
Matrix – marketing strategies with differing
degrees of risk.
The Ansoff Matrix approaches product mix
or portfolio management from a different
point of view to Product Life Cycle Analysis
and the Boston Matrix. Instead of focusing
on profitability or sales, the Ansoff Matrix
outlines the options open to firms if they
wish to grow, improve profitability and
revenue. These options indicate to how to
manage the development of the product
The Ansoff Matrix looks similar to the
Boston Matrix in that it is a two-by-two
analysis, but in this case the axes of the
matrix relate to whether marketing strategy
is targeted at existing customers or new
customers and if existing products should be
used or as an alternative new products should
be developed. We see the structure below.
growth, is faced with four choices for action
(these can be combined or mixed).
These options are:
Market Penetration. Concentrating on
existing products to existing markets.
Market Development. Finding and
developing new markets for existing
Product Development. Developing new
products for existing markets.
Diversification. Developing new products
and new markets.
Market Penetration—Existing products for
We can see from the matrix, that an
business looking to increase sales and create
Focusing on existing products for existing
markets, means that the firm aims to increase
sales within its present market place. To be
successful at market penetration firms must
be aware of what has made the product a
success in the first place. The firms marketing
strategy should be based on this existing
There are several penetration strategies open
to firms. These strategies include:
The Ansoff Matrix
The easiest method is to attract
customers who have not yet become
regular users, but are occasional users.
This can be a successful strategy where
there is fast market growth and new
consumers are just 'testing the water'.
Attack competitors sales. This will often
happen in mature markets, where
increased sales will have to come from
Title Ansoff Matrix
competitors. The strategy in this case
will be adjustment of the marketing mix,
altering one or more of the elements
such as price or promotion techniques.
Tesco has been successful in this type
of strategy over the last 10 years,
taking customers from all it’s
supermarket rivals. Internet service
providers are continually trying to win
customers from competitors.
A third strategy can be to increase
consumption amongst existing users.
This can work very well with both
consumption goods and consumer
durables. Examples of this strategy
includes BT's attempts to encourage
more phone calls, (Friends and Family),
and the probably apocryphal story of a
toothpaste company that increased the
size of the nozzle on its tube by 30%
and saw an increase in sales of 25%. In
consumer durable markets, the
introduction of new and rapidly changing
technologies can encourage further
purchases. This is now clearly seen in
the mobile phone market, where a model
only remains on the market for as little
as six months,
Market Development—Develop markets
for existing products.
If the business takes the option of market
development, the objective will be to find
new markets for the firms existing products.
There are two broad market development
strategies. These are:
Identify users in different markets
with similar needs to existing
Identify new customers who would use a
product in a different way.
One method of...
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