The Ansoff Matrix, which is designed by Igor Ansoff, classifies and explains different growth strategies for a company (Team FME, 2013). This matrix is used by companies that have a growth target or a strategy of specialization. This tool, which allows making a cross analysis of the products and markets of a company, facilitates decision making.
The Ansoff matrix offers four strategies to achieve objectives:
• Penetration of the market;
• Extension of the market;
• New products;
• Diversification. Figure: Ansoff Matrix
4.10.1 Defining the quadrants
4.10.1.1 Market Penetration Strategy
The main role of this strategy is to concentrate on the selling of the already existing services and products into the market so that market share can be
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• It has four different kinds of strategies that can help to achieve this: new geographical markets; new product scopes and its packaging; new channels used for distributions; with the help of new pricing, new market segments can be created.
• The biggest threat this strategy can bring is the estranging of the current customers.
4.10.1.3 Product development strategy
This growth strategy needs variations in business operations, for example R&D research and development techniques so that new products can be introduced to the existing customer base.
Being a part of the successful strategy to develop the product and the business, your major role is to appreciate the new emphasis that is placed on marketing. This is helpful for you in evaluating the consequences of the changes that have happened in the following areas:
• Requires research and development
• Requires assessment of customer needs
• Requires a clear path for brand extension
Key Points
• This strategy involves the development of the new products and the services in the current
Research & Development: We will concentrate our existing product line into the Low End and Traditional segments. The traditional product will migrate to the Low End segment. The High product will migrate to the Traditional segment. During the early years we will migrate (gradually) our Performance and Size segment products to the Traditional segment. We can also introduce a new product to work in the Traditional market.
This first strategy calls for the creation of more sales without changing the original product, which can achieved through the four P’s of marketing. The next strategy, market development, allows the supplier to find new markets for their current products by using demographic markets to see where the greatest revenue will be based on the target group you are selling to (seniors, teens, etc.). Product development is the next strategy which focuses on new products the modification of current products. This strategy is rather important as without evolving products to meet the ever changing needs of current and potential companies can see a loss in sales and would limit their ability to be competitive in the market. The final strategy is diversification. This strategy calls for companies to attain current or new businesses allowing them to “diversify” their offerings and break into new markets.
The current strategy of the company is to enter foreign markets and to succeed there. The corporate main strategy is to provide high quality product to its customers.
A common goal in business is profit maximisation. The strategic role of marketing is to translate this into a reality. The business will look to how it can increase its sales, and that means there will be an increase in profits.
A tool that can be used to help strategic thinking is the Ansoff Growth Vector Matrix to decide their product and growth strategies.
as the focal point of the marketing concept (Brassington and Pettitt 2007). This can be clearly seen in the role
The growth concept is divided into five separate levels one being dominant, strong, favorable, tenable and weak and relates this to the stages of market development. The stages are embryonic, growing, mature, and aging, which produce a series of strategic guidelines for company development. The market growth concept provides valuable guidance about broad policies, replacing the concept of market attractiveness in the GE matrix with stages of market growth.
This means that the main thrust of the strategy has been to find new market opportunities where
I assumes a strategy of market penetration, consisting in acquisition of the highest recognition among customers, at low prices of the provided services. However, we see a necessity to modify this strategy according to new competitors appearing on the market, and unsatisfactory financial results.
Anosff matrix was invented by H. Igor Ansoff in 1975. He was mainly a mathematician with a profound insight into business management. In order to demonstrate growth strategies of the company, he introduced this matrix that focused on presented situations, potential products, markets shares and customers of the company during their life cycle by considering possible technological advances. Anosff market growth matrix illustrates that company wants to grow depend on whether its markets new or existing products in new or existing markets. It also can reflect a series of growth strategies that set the direction for the business strategy. These four areas comprise the Ansoff growth matrix, which are market penetration, market development, product development, and diversification.
Expand market share at horizontal which is area level of market expanding which is limiting thinking about new business market. Never thinking about vertical expanding which means expand the customer in the same location.
Anosff matrix was invented by H. Igor Ansoff in 1975. He was mainly a mathematician with a profound insight into business management. In order to demonstrate growth strategies of the company, he introduced this matrix that focused on presented situations, potential products, markets shares and customers of the company during their life cycle by considering possible technological advances. Anosff market growth matrix illustrates that company wants to grow depend on whether its markets new or existing products in new or existing markets. It also can reflect a series of growth strategies that set the direction for the business strategy. These four areas comprise the Ansoff growth matrix, which are market penetration, market development, product development, and diversification.
In order to succeed in the market, all industries participants must have a develop strategy as we can see from current situation, the market conditions are changing. Sometimes it is very difficult to handle these changes. So these changes should be monitored and reacted upon to get success in the market.
“Competitive strategy involves positioning a business to maximize the value of the capabilities that distinguish it from its competitor’s” (Porter 1980:47). A successful business plan requires first and foremost the formation of an appropriate strategy. Through the implementation of a suitable strategy, the company is able to obtain its own industry niche and gain an understanding of its customers (Porter 1985). Whichever strategy is adopted it must be adequately integrated within the firms goals and missions to achieve a competitive advantage (Parker and Helms 1992).
The Ansoff Matrix was first published in the Harvard Business Review in 1957, and has given generations of marketers and business leaders a quick and simple way of thinking about growth.