Marketing Strategies – How to choose? Strategy is about the future… Strategy must be achievable… Strategy is company specific…

Ansoff’s Matrix Igor Ansoff sought to categories strategies His model outlines potential growth strategies by increasing sales in existing or new markets using existing or new products Model provides four main strategy types to choose between Considers high risk / high reward / vs. lower risk / lower reward

Ansoff’s Matrix – 4 types of marketing strategy PRODUCTS Existing New Market Penetration Product Development Market Development Diversification Existing Increasing Risk MARKETS New Increasing Risk

The 4 quadrants: Market Penetration Focus on building sales of existing products within existing markets – increase market share  known market, established product simplest and most predictable least risky  may be least potential for growth not stretching the scope of the firm

The 4 quadrants: Market Development Find a new market for an existing product  knowledge of the product know what works, who likes it, etc  don’t know about new market requires a lot of research to reduce risk can dilute the efficacy of the product to the previous markets if firm isn’t careful

The 4 quadrants: Product Development Launching a new or improved product to an existing market  known customers & market useful when extension strategies are required for an older product it may take little to inject new energy into an old product  any new product carries risks requires significant research & testing

The 4 quadrants: Diversification Targeting a new market with a new product  potential reward is very high, esp. if it’s an untapped market helps when existing products and markets offer little opportunity helps firm to diversify, potentially reducing risk helps firms move away from markets in decline  risky!! lots of unknowns - new product and new market

Diversification High risk and low risk Related diversification is lower risk, eg integration (merger/takeover) With a firm in the same industry but at a different stage of production Tesco buying a food manufacturer Apple buying PC World Unrelated is higher risk The business will have no experience of the new product and market

Diversification Firms may seek to mitigate the risk Buy an existing firm in the industry Asda buying B&Q is less risky than starting from scratch Enter only successful and growing markets Particularly if the firm has a strong brand, the risks are reduced