Ansoff Matrix Flashcards
What is the Ansoff Matrix
it is a planning tool that provides structure to help top employees such as executives and senior managers to promote future growth. Created by American Igor Ansoff
How does the Ansoff Matrix work
The Ansoff Matrix works by identifying the current market problems. Once you have identified the difficulties that customers have in your sector, this tool helps you to position your product. You can also use these concerns to develop new products, which can then be marketed to your customers.
What is market penetration
Market penetration refers to the successful selling of a good or service in a specific market. It is measured by the amount of sales volume of an existing good or service compared to the total target market for that product or service
In what way is market penetration done (1)
Attracting customers who have not yet become regular users, but are occasional users by increasing brand loyalty. This can be a successful strategy where there is fast market growth and new consumers are just”testing the water’. Tescos club card or neros card
In what way is market penetration done (2)
Attacking competitors’ sales. This will often happen in mature markets, where increased sales for abusiness will have to be captured from competitors. The strategy in this case will be an adjustment of themarketing mix, altering one or more of the elements such as price or promotion techniques. Tesco hasbeen successful in this type of strategy over the last 10 years, taking customers from all its supermarketrivals. Internet service providers are continually trying to win customers from competitors through pricingstrategies and promotional activities.
In what way is market penetration done (3)
Increasing consumption amongst existing users perhaps by reducing the price or offering promotions. Thiscan work very well with services, consumption goods and consumer durables. For example, Sky offerspackages or bundles to get existing customers to increase their monthly subscription and food producersoffer convenience packs, lunch size, maxi size etc. In consumer durable markets, the introduction of newand rapidly changing technologies can encourage further purchases.
What is market development
Market development is a strategic step taken by a company to develop the existing market rather than looking for a new market. The company looks for new buyers to pitch the product to a different segment of consumers in an effort to increase sales
Broad market strategy’s (1)
Identifying users in different markets with similar needs to existing customers. The product may Anvers to be adapted with new distribution channels. For example, Microsoft computers may be needed in china or Russia, yet the computer needs adapted. Such as the language needed and the keyboard used
Broad market strategies (2)
Identifying new customers who would use the product in a different way. For example using Lucozade as a sports drink rather than something to have next to your bed when you have flu or measles. Repackaging and resizing the product may open up a new market. Different distribution channels may be used example high street retailers started selling online and now achieve a high proportion of their sales via the internet.
What is product development
the business will attempt to increase profitability and growth by introducing new products targeted at the existing customer base. This involves creation and development of new products that are similar to those that the business already sells to existing customers. An example is with Mars producing ice cream and drinks in addition to their chocolate range.
Examples of product development
Product development can often be as simple as taking an existing product, modifying it slightly and selling it into your existing market. This adds value for customers, who may well buy your new product, even though they have the current version. Apple is a prime example of this.
Apple is a prime example due to the extensive upgrades in cameras and all over build of the design. Netflix started out as a DVD rental platform. Now, as one of the most popular streaming platforms, the shift toward streaming media is a great example in evolving alongside market trends.
5 main steps of product development
Idea generation, screening, concept development, product development and, finally, commercialisation
What is diversification
Developing new products for new markets involves changes to both a business’s product and market. Diversification may be attempted if a business sees a new opportunity and has investment funds available. Alternatively, a business may be forced into this type of action because of pressures in existing markets or on existing product ranges, such as sales declining in existing markets or for certain products.
Example of diversification success
One of the most prominent examples of diversification strategy is General Electric. Originally, the company was focused on electrical goods. However, over the years they have acquired and created operations in the aeronautic, rail, power plant, gas, and kitchen appliances industries.
Examples of diversification failure
Diversification carries the greatest level of risk (compared with market penetration, which is low risk and the othertwo options considered as medium risk strategies) because it involves changes in both the market and the product.Virgin’s move into train travel has not been as successful as was initially hoped, and the criticisms of the serviceprovided may have some effect on the overall strength of the brand. However, Virgin also diversified into VirginMoney, which has been more successful.
