Ansoff's Matrix

Question 1

What is Ansoff’s Matrix?

Answer 1

A business model that helps a business determine its product and market strategy

Question 2

What are the four areas of Ansoff’s Matrix and what do they mean?

Answer 2

• Market penetration: launching existing products into existing markets
• Market development: launching existing products into new markets
• Product development: launching new products into existing markets
• Diversification: launching new products into new markets

Question 3

What is the least risky and riskiest area of Ansoff’s Matrix?

Answer 3

Least: market penetration
Most: diversification

Question 4

What is an example of a business that uses market penetration?

Answer 4

Aldi: trying to increase it’s UK market share by opening multiple stores in areas where they have a large customer base

Question 5

State one advantage of using market penetration

Answer 5

• Business knows market and products well so unlikely to need significant market research

Question 6

State one disadvantage of using market penetration

Answer 6

• Unlikely that the firm will achieve their growth objectives

Question 7

What is an example of a business that uses product development?

Answer 7

Dyson: spent heavily on technological innovation to sell new hoovers to the same target market

Question 8

State one advantage of using product development

Answer 8

• Effective for established businesses

Question 9

State one disadvantage of using product development

Answer 9

• Requires successful market research and innovation: can be fairly costly

Question 10

State the three different approaches to market development

Answer 10

• New geographical markets
• New distribution channels
• Different pricing policies to attract new customers

Question 11

What is an example of a business that uses market development?

Answer 11

Starbucks: entered the Chinese market

Question 12

State one advantage of using market development

Answer 12

• Will generate a brand new stream of revenue if successful

Question 13

State one disadvantage of using market development

Answer 13

• More risky than product development

- Existing products may not necessarily suit new markets

Question 14

What is an example of a business that uses diversification?

Answer 14

Samsung: sell a large variety of products to multiple different markets

Question 15

State one advantage of using diversification

Answer 15

• Increases businesses brand awareness if successful

Question 16

State one disadvantage of using diversification

Answer 16

• Enormously risky
• Huge finance required for both research and development and marketing
• Few economies of scale initially