2 FunctionAnsoff Matrix developed by Igor Ansoff, a Russian American mathematician and business managerMade as a framework for identifying corporate growth opportunitiesFour generic growth strategies:-Market Penetration-Market Development-Product Development-Diversification
3 New Products developed for existing market Growth StrategiesNew Products developed for existing marketIncrease sales to the existing marketPenetrate more deeply into existing marketExisting productssold to new marketsNew products soldin different markets
4 Marketing Penetration AimTo maintain or increase share of the current market with current productsTo secure dominance of a growth market or restructure a mature market by driving out competitionRisksLow riskProfitsLow rewardsIncludesInvolves an increase in sales of existing products to existing marketsSelling more of the same thing to the same peopleProblemsDifficult to achieve growth through market penetration if market is saturated.In a stagnant market, increase in sales is only possible by grabbing market share from rivals- Hence competition will be intenseMarketing Penetration is achieved by:-Increased usage by existing customers-Attracting customers away from rivals-Gain Marketing share at expense of rivals-Encourage increase of frequency of use-Devise and encourage new applications-Encourage non buyers to buyExamples of Market Penetration:Starbucks coffee starting out was small, marking to people who wanted coffee in a local area.
5 Product Development Product Development is achieved by: AimRisksModerateProfits●Bringing existing products to new marketsIncludesSelling the same product to different people, entering new markets or segments with existing products, Gaining new products, new segments, new markets, and entering overseas marketsProblems● Moderate risk, CostlyProduct Development is achieved by:-New products to replace current products-New innovative products-Product improvements-Product line improvements-Product line extensions-Products at different quality level to existing productsExamples of Product Development:A company extending their branding to another product. Example: Arm & Hammer extending to include sale of toothpaste
6 Marketing Diversification AimRisksHigh> because of dealing with two unknownsProfitsHigh range of profitability●New products sold to new markets●New products for new consumersIncludesSelling new products to new marketsProblems● Very RiskyMarketing Development is achieved by:-New products to new markets.-New products for new customersExamples of Market Development:McDonalds starting McCafe.
7 Market Development Market Development is achieved by: AimRisksModerate>Lack of familiarity with customersProfitsMedium range of profitability●Same product to different people●Entering existing markets withIncludesEntering existing marketsProblems● Moderate RiskMarket Development is achieved by:-Same product to different people-Entering new markets or segments withexisting products-Gaining new customers, new segments, new markets-Entering oversea marketsExamples of Market Development:Expanding their market to undeveloped (in terms of the business and marketing) areas and parts of the world- example: Coca Cola expanding their reach to Russia.
8 Advantages & Disadvantages Advantages of the Ansoff Matrix:- Increasing the brand loyalty, this will encourage customers to buy their brand instead of some other. Well known brands use this strategy, such as; Kellogg's corn flakes. - Encourages customers to buy the product more regularly. - The brand may bring out different size quantities of the product, which will encourage customers to buy more of the product.Disadvantages of the Ansoff Matrix:-is highly simplistic and does not factor in the external environment,