Ansoff's matrix

Question 1

Define Ansoff’s matrix

Answer 1

A strategic or marketing planning model that can help a business decide its strategic direction in terms of its product portfolio and target markets

Question 2

Draw Ansoff’s Matrix

Answer 2

See picture, rate understanding out of 5

Question 3

What is market penetration?

Answer 3

Promoting growth in existing markets with existing products

Question 4

List ways market penetration can be achieved

Answer 4

Increasing brand loyalty (reduces competitors sales), encouraging more frequent product use (more frequent purchases) or promoting using more on each occasion e.g. promoting sale of larger packs

Question 5

When can market penetration not be used?

Answer 5

When the market approaches saturation

Question 6

What is an example of market penetration?

Answer 6

Teddy bear makers e.g. Deans, Merrythought and Steiff have started to aim their teddy bears at grandparents who may buy teddy bears for their grandchildren

Question 7

List 3 reasons why a business would choose market penetration as a strategy

Answer 7

1. There is growth in the existing market
2. There is scope to encourage greater frequency of use among existing customers
3. Some consumers may be encouraged to put an existing product to different uses, thus increasing demand

Question 8

What is the value of market penetration?

Answer 8

+Low cost of implementation likely-business is only slightly modifying existing strategy
+Business can play to its strengths- already operating in this market
-Not useful at saturation stage - good for short-term, small gains

Question 9

What is market development?

Answer 9

Seeking new geographical territories, promoting new uses for the product, or entering new market segments to extend a product’s market into new areas

Question 10

What is an example of market develpoment?

Answer 10

Starbucks pursued market development strategy by having opened 30,626stores in 76 different countries

Question 11

State three reasons why a business would pursue a market development strategy

Answer 11

1. There are market segments that don’t currently buy an existing product in significant numbers, but that the business believes has the potential to buy more of the product
2. There is scope to enter new markets, such as overseas countries
3. New markets/market segments can be reached easily using the businesses existing channels

Question 12

What is the value of market develpoment as a strategy?

Answer 12

Popularity of its products may make it easy to enter new markets successfully
Business isn’t changing its core functino, instead its extending its marketing to different country
The product has already proved it has potential to be successful
If the culture in the new market differs from its existing markets, this can cause marketing difficulties

Question 13

What is product development?

Answer 13

Could involve substantial modifications or additions to a product range to maintain a competitive position

Question 14

Exampels of product development

Answer 14

Mars Ice Cream, KitKat Kubes

Question 15

Provide three reasons for why a business would use a stratgey of product development

Answer 15

There is scope to adapt the quality of a product to appeal to different market segments
An existing product is becoming obsolete or out of date and needs to be replaced to avoid the loss of market share
An existing product has created a need or desire for complementary products

Question 16

What is the value of product development as a strategy?

Answer 16

Enables busines to stay campetitive in rapidly changing market and allows a business to build a product portfolio on the strength of existing brands
New products develpoed through R and D may gain patent protection and give the busienss monopoly power within that market for 20 years
Can enable a business to compete effectively in markets that are becoming increasingly segmented

Question 17

What is diversification?

Answer 17

Launching products into new markets

Question 18

Example of diversification

Answer 18

Unilever uses over 400 brand names and is now encouraging those brands to use its “Unilever” brand name along with their own brand name to increase the awareness about Unilever’s diversified nature

Question 19

Three reasons for choosing a diversification strategy

Answer 19

1. Existing products and/or markets are in decline and likley to remain so
2. Existing markets are saturated and therefore there is no scope for expansion within
3. Senior managers of the business want to avoid complacency and so want to give the business a new challenge

Question 20

Value of diversification

Answer 20

Considered to be riskiest strategy
Can enable business to grow when market is saturated
Can spread risks when business faces potential decline and can create synergy where two different businesses may still gain some benefits from being united , if business is undervalued and diversification occurs, making it financially beneficial