Ansoff Matrix - 4 STRATEGIES FOR GROWTH
The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy. Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets. The output from the Ansoff product/market matrix is a series of suggested growth strategies for the business and helps them decide what direction the business wants to take. Ansoff used these four categories in a matrix to show how the opportunities differ in terms of new and existing products and markets Market Penetration
Where the business focuses on selling existing products into existing markets. An example is the Wii, where other outlets such as Tesco, HMV, Amazon may decide to stock and sell a product that already sells, by introducing the product to their stores/websites they are allowing the public to purchase the product from them. They are entering into a market that already exists. Market penetration aims to:
• Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling • Secure dominance of growth markets
• Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors • Increase usage by existing customers – for example by introducing loyalty schemes A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research. Write an example here that you think is market penetration and explain why?
Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. This can be something such as selling a new chocolate bar in a new country. Nothing about the product changes, just the product has been introduced somewhere new. There are many possible ways of approaching this strategy, including: • New geographical markets; for example exporting the product to a new country • New product dimensions or packaging: for example
• New distribution channels
• Different pricing policies to attract different customers or create new market segments Write an example here that you think is market development and explain why?
Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets. A clear example is the development of the Iphone - where software upgrades are available to maintain customers and attract new customers. maintain customers
Diversification is the name given to the growth strategy where a business markets new products in new markets. In summary new products to new markets. This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience. For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks. An example would be a game for the Wii that targets a completely different target market or a business such as Tesco moving into the area of home and electrical goods. Write an example here that you think is diversification and explain why?
Then complete an Ansoff matrix for your...
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