PPT 6 Flashcards
What is Ansoff’s Product/Market Expansion Grid?
A strategic tool to help businesses explore growth opportunities, developed by H. Igor Ansoff. It includes four growth strategies: Market Penetration, Market Development, Product Development, and Diversification.
What is Market Penetration Strategy?
A low-risk growth strategy where a firm seeks to increase sales of existing products in existing markets, typically by encouraging current customers to buy more, attracting competitors’ customers, or finding non-users.
When is Market Penetration Strategy appropriate?
It is appropriate when the industry resists major technological advancements, demand is stable, target markets are not saturated, and there are strong entry barriers.
What is Market Development Strategy?
A growth strategy where a firm seeks to enter new markets with existing products by finding new uses or users, expanding distribution, or targeting new geographical markets.
When is Market Development Strategy appropriate?
When a firm has proprietary technology, potential customers in new markets are profitable, and consumer behavior is similar to the existing markets.
What is Product Development Strategy?
A strategy where a firm seeks to develop new or improved products for existing markets, often through quality, feature, or style improvements.
What are examples of Product Development approaches?
Quality improvement (e.g., stronger, bigger products), feature improvement (e.g., safer, more convenient), or style improvement (e.g., new models of cars or phones).
What is Diversification Strategy?
A high-risk strategy where a firm enters a new market with a new product, involving both market and product development, offering the greatest potential for new revenue streams.
How can a firm mitigate risk in a Diversification Strategy?
Through related diversification, where the new products and markets are closely related to the firm’s existing ones, leveraging existing strengths.
