1. Ansoff’s matrix
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2. Ansoff
This theory builds on the concept of the marketing mix, which is studied earlier in the course. Igor Ansoff identified four key strategies that firms can pursue and demonstrated that the further a business moves away from market penetration the more risky it becomes. The idea of risk is a key area to consider when looking at this concept.
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3. Ansoff’s matrix
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4. Market penetration
This involves a business trying to sell more of the same products, e.g. a typical strategy could be to use BOGOF or they could try and get customers to use more of the product, e.g. Head & Shoulders became frequent-use shampoo.
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5. Product development
Existing market but new products. Risky compared to market penetration as you are designing a new product, which is time consuming and expensive in terms of the research and development. Innovation though is key and can be very profitable with the right product, e.g. Dyson.
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6. Market development
Same product but new markets, e.g. Manchester United have taken their football brand to Asia during the off season. This can be quite an expensive approach in terms of the marketing budget but it offers the business a much larger potential market.
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7. Diversification
Where a business expands its product range into new markets. The most risky strategy, e.g. Virgin Cola failed due to a lack of knowledge of the soft drinks market. A more successful example is Whitbread, which identified stagnant sales and diversified into new areas such as coffee and hotels.
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8. Research task 1
Task
Research five business examples and place in the grid, e.g. Costa is an example of diversification for Whitbread.
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9. Research task 2 Task Research Cobra beer (see lesson plan).
Place Cobra beer products within the grid.
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10. Usefulness
Ansoff’s matrix is a useful tool not only for outlining four potential strategies a business can use but also for forcing businesses to consider the risk involved. However, it does not tell a business the right strategy to pursue. That depends on a firm’s existing situation, objectives and strengths.
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