8.1 a Ansoff Matrix Flashcards
What is the Ansoff Matrix?
A marketing planning model that helps a business determine its product and market strategy
What is the output from the matrix?
Four suggested growth strategies
What are the four growth strategies of the Ansoff Matrix?
- Market penetration
- Product development
- Market development
- Diversification
Market penetration sells what products into what markets?
Existing products into existing markets
What is the aim of market penetration?
To increase market share by getting existing customers to buy more
What is the risk level in market penetration?
Very low
‘Cadbury’ market penetration example:
Cadbury chocolates repackaged into Christmas selection boxes
Situations that might make a business choose market penetration:
- Potential to grow in the market
- Existing customers would be willing to buy more of the product
- New customers could be attracted away from competitors
Advantages of market penetration:
- Little risk
- Change is likely to be small
- Familiar with market
Product development sells what products into what markets?
New products into existing markets
‘Dyson’ product development example:
Producing hair-dryers as well as hoovers
What is the risk level of product development?
Educated risk - new product aimed at existing customers who like similar products
Situations that might make a business choose product development:
- Its current products are becoming obsolete
- They have a new innovative product
Advantages of product development:
- Enables business to stay competitive
- Can develop product portfolio
- Gain a patent for new products
Market development sells what products into what markets?
Existing products into new markets
What is the risk level of market development?
Fairly high - no guarantee customers will buy new product
Why do the government support market development?
They are keen to encourage international trade
‘Lego’ market development example:
Produced new colours to sell into female market
Situations that might make a business choose market development:
- Market segments that don’t buy its products
- Spare capacity to produce additional quantities
- Strong brand name
Advantages of market development:
- Can use popularity of its products to attract a new group of customers
- Its not changing what it actually does
- Usually already a proven product
What is a risk of market development?
- Cultural difference can cause successful products to fail in other markets e.g. B&Q in China
Different approaches to market development:
- New geographical markets
- New product dimensions or packaging
- New distribution channels
- Different pricing policies to attract different customers
Diversification sells what products into what markets?
New products into new markets
‘HMV’ diversification example:
Diversified into the live entertainment market with the £40m purchase of several live music venues but exited the market soon after
