Ansoff Matrix Maxwell Marchand Function Ansoff Matrix developed

Ansoff Matrix Maxwell Marchand

Function Ansoff Matrix developed by Igor Ansoff, a Russian American mathematician and business manager Made as a framework for identifying corporate growth opportunities Four generic growth strategies: -Market Penetration -Market Development -Product Development -Diversification

Growth Strategies Increase sales to the existing market Penetrate more deeply into existing market Existing products sold to new markets New Products developed for existing market New products sold in different markets

Marketing Penetration Aim • To maintain or increase share of the current market with current products • To secure dominance of a growth market or restructure a mature market by driving out competition • Low risk Risks • Low rewards Profits Includes • Involves an increase in sales of existing products to existing markets • Selling more of the same thing to the same people Problems • Difficult 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 intense Marketing Penetration is achieved by: Examples of Market Penetration: -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 buy Starbucks coffee starting out was small, marking to people who wanted coffee in a local area.

Product Development Aim Risks Profits Includes ●Bringing existing products to new markets • Moderate • Selling the same product to different people, entering new markets or segments with existing products, Gaining new products, new segments, new markets, and entering overseas markets ● Moderate risk, Costly Problems Product Development is achieved by: Examples of Product Development: -New products to replace current products A company extending their branding to another -New innovative products product. Example: Arm & Hammer extending to -Product improvements include sale of toothpaste -Product line improvements -Product line extensions -Products at different quality level to existing products

Marketing Diversification Aim Risks Profits Includes ●New products sold to new markets ●New products for new consumers • High> because of dealing with two unknowns • High range of profitability • Selling new products to new markets ● Very Risky Problems Marketing Development is achieved by: Examples of Market Development: -New products to new markets. -New products for new customers Mc. Donalds starting Mc. Cafe.

Market Development Aim Risks Profits Includes ●Same product to different people ●Entering existing markets with • Moderate>Lack of familiarity with customers • Medium range of profitability • Entering existing markets ● Moderate Risk Problems Market Development is achieved by: Examples of Market Development: -Same product to different people -Entering new markets or segments with existing products -Gaining new customers, new segments, new markets -Entering oversea markets 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.

Advantages & Disadvantages Advantages of the Ansoff Matrix: Disadvantages 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. -is highly simplistic and does not factor in the external environment,