Ansoff Product/Market Growth Framework Flashcards
If it is an existing product in an existing market what strategy do we take?
Market penetration
If it is an new product in an existing market what strategy do we take?
Product Development
If it is an existing product in an new market what strategy do we take?
Market development
If it is an new product in an new market what strategy do we take?
Diversification
What is market penetration?
Main aim is to increase market share using existing products within existing markets
What approach do we take with market penetration?
First attempt is to stimulate usage by existing customers: new uses of advertising, promotions, sponsorship, quantity discounts
Then attempt to attract non-users and competitor customers via: Pricing, promotion and advertising, process redesign
When is market penetration considered?
Overall market is growing
Market not saturated
Competitors leaving or weak
Strong brand presence by your company with established reputation
Strong marketing capabilities exist within your company
What is market development?
Aims to increase sales by taking the present product to new markets. Entering new markets or segments may require the development of new competences which serve the particular needs of customers in those segments.
What approach do we take in market development?
Add geographical areas
Add demographic areas
New distribution channels
What are the key notes to consider in market development?
Slight product modifications may be needed
Advertising in different media and in different ways
Research - primary research at this point given significance of the investment
Company is structured to produce one product and high switching costs exist for transfer to other product types
Strong marketing ability is needed, usually couple with established brand backing
What is product development?
Focuses on the development of new products for existing markets.
Offers the advantage of dealing with known customer bases
What is the approach to diversification?
New products to new markets
When is diversification appropriate?
When existing markets are saturated or when products are reaching the end of their life cycle
What is the limitations of Ansoffs matrix?
Matrix is seen as being too simplistic as it fails to take account of the external environment.
Matrix focuses on ways that the organisation can grow.
Any decision made by management using Ansoff’s matrix is subjective.
