The Igor Ansoff product-market mix helps to understand and assess marketing or business development strategy. Any business, or part of a business can choose which strategy to employ, or which mix of strategic options to use. This is one simple way of looking at Strategic development options.
Existing ProductsNew Products
Market Penetration| Product Development| Market Development| Diversification|
Each of these strategic options holds different opportunities and downsides for different organizations, so what is right for one’s business won’t necessarily be right for another. Every organization should think about what option offers the best potential for their own business and market. They should also think about the strengths of their business and what type of growth strategy their strength will enable most naturally.
Here are the Ansoff Strategies in summary:
MARKET PENETRATION (SAME PRODUCTS, SAME MARKETS)
Developing your sales of existing products to your existing market(s). This is fine if there is plenty of market shares to be had at the expense of your competitors, or if the market is growing fast and large enough for the growth you need. If you already have large market share you need to consider whether investing for further growth in this area would produce diminishing returns from your development activity. It could be that you will increase the profit from this activity more by reducing costs than by activity seeking more market share. Strong market share suggests there are likely to be better returns from extending the range of products/services that you can offer to the market as in the market option. In Zimbabwe when current markets are not saturated with a particular product/services market penetration is needed for example market for beer is not saturated Delta Beverages can increase production and supply the remote areas of the country. When the usage rate of present customers could be significantly increased market penetration is needed in the form of educating customers on the benefits of using the products and services. When the market shares of some major competitors have been declining while total industry demand has been rising as in the bakery industry where Lobels closed shop market penetration by smaller bakeries is needed. When the correlation between sales and marketing expenditures has historically been high and also when increased economies of scale provide major competitive advantages companies must use market penetration strategies..
MARKET DEVELOPMENT (SAME PRODUCTS, NEW MARKETS)
Developing new markets for your existing products. New markets can also mean new sub-sectors within your market, it helps to stay reasonably close to the markets you know and which you know. Moving into completely different markets, even if the product/service fit looks good , holds risks because this will be unknown territory for you, and almost certainly will involve working through new distribution channels, routes or partners. If you have good market share and good product/service range then moving into associated markets or segments is likely to be an attractive strategy. In Zimbabwe companies can use new channels of distribution available that are reliable, inexpensive, and of good quality to develop their markets. Companies like Delta Beverages which are very successful at what they do can also develop their market by taking their products to areas where demand for them is very low. Manufacturers of agricultural inputs can take their products to the farms where new untapped or unsaturated markets exist. Companies like Seedco which has the needed capital and human resources to manage expanded operations can also develop its market by engaging farmers in contract farming. Telecommunications industry is rapidly becoming global in scope so companies like Econet need to...