Ansoff’s Matrix Flashcards
What is the Ansoff Matrix
A marketing planning model that helps a business determine its product and market strategy
Market penetration
Aim: to increase market share
• By selling more existing products to the same target customers
• Get existing customers to buy more • Widen the range of existing products
Examples of Market Penetration Strategies
Rapid organic growth in theUK targetingthe same customer base with new stores, Effective use of e- commerce to encourage existing customers to buy more pizza!, loyalty schemes e.g. Boots Advantage card
Advantages of market penetration
Business focuses on markets and products it knows well
• Can exploit insights on what customers want (and competitors)
• Unlikely to need significant new market research
Disadvantage of market penetration
will the strategy allow the business to achieve its growth objectives?
What is important in product development
First mover advantage
Approaches to market development
New geographical markets; e.g. exporting to emerging markets
• New distribution channels (e.g. using e-commerce and mail order)
• Different pricing policies to attract new customers in different segments
Suitability of market development
A logical strategy where existing markets are saturated or in decline
Disadvantage of market development
Often more risky than product development – particularly expansion into international markets
What does market development depend on
Existing products may not suite new markets: depends on customer needs
Diversification disadvantages
Inherently risky strategy
– No direct experience of the product or market
– Few economies of scale (initially)
Diversification advantage
Risk-spreading
Uses of Ansoff’s Matrix
A business can identify all their current products or services and their markets, then consider their future options for expansion using the matrix shown, considering opportunities, associated costs, benefits and risks
Ansoff’s matrix helps to identify potential new markets or marketing strategies for a business
Limitations of Ansoff
It only shows part of the picture
• It oversimplifies the market
• Large MNCs may need thousands of sub options and strategies
• Any organisation using Ansoff’s matrix as an analysis tool to help decide on a company strategy should also conduct a SWOT and a PESTLE analysis to get a better idea of the whole picture, to see the issues from more than one angle
