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Ansoff Matrix

Ansoff Matrix. 2880 Strategy Yr 13. Background. Long-term business strategy is dependant on planning for their introduction Ansoff Matrix represents the different options open to a marketing manager when considering new opportunities for sales growth. Variables in the matrix.

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Ansoff Matrix

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  1. Ansoff Matrix 2880 Strategy Yr 13

  2. Background • Long-term business strategy is dependant on planning for their introduction • Ansoff Matrix represents the different options open to a marketing manager when considering new opportunities for sales growth

  3. Variables in the matrix Two variables in Strategic marketing Decisions: • The market in which the firm was going to operate • The product intended for sale In terms of the market, managers had two options: • Remain in the existing market • Enter new ones

  4. In terms of the product, the two options are: • selling existing products • developing new ones

  5. Existing PRODUCTS New INCREASING RISK Existing MARKETS New MARKET PENETRATION Sell more in existing Markets INCREASING RISK PRODUCT DEVELOPMENT Sell new products in existing markets MARKET EXTENSION Achieve higher sales/market share of existing products in new markets DIVERSIFICATION Sell new products in new markets

  6. Existing PRODUCTS New INCREASING RISK Existing MARKETS New MARKET PENETRATION Sell more in existing Markets INCREASING RISK

  7. MARKET PENETRATION • This is the objective of higher market share in existing markets • E.g. in 2000, Mitsubishi announced a 10% reduction in prices in the UK in order to encourage purchases

  8. Existing PRODUCTS New INCREASING RISK Existing MARKETS New MARKET PENETRATION Sell more in existing Markets INCREASING RISK MARKET EXTENSION Achieve higher sales/market share of existing products in new markets

  9. MARKET EXTENSION • This is the strategy of selling an existing product to new markets. This could involve selling to an overseas market, or a new market segment • Nintendo are making hand held games consoles (e.g. DS) appeal to the adult/grey market by introducing games such as Brain Train

  10. Existing PRODUCTS New INCREASING RISK Existing MARKETS New MARKET PENETRATION Sell more in existing Markets INCREASING RISK PRODUCT DEVELOPMENT Sell new products in existing markets MARKET EXTENSION Achieve higher sales/market share of existing products in new markets

  11. PRODUCT DEVELOPMENT • Least risky of all four strategies • This involves taking an existing product and developing it in existing markets • E.g. Coca-Cola. This has been developed to have vanilla, lime, cherry and diet varieties (amongst others) in the SOFT DRINKS market

  12. Existing PRODUCTS New INCREASING RISK Existing MARKETS New MARKET PENETRATION Sell more in existing Markets INCREASING RISK PRODUCT DEVELOPMENT Sell new products in existing markets MARKET EXTENSION Achieve higher sales/market share of existing products in new markets DIVERSIFICATION Sell new products in new markets

  13. DIVERSIFICATION • This is the process of selling different, unrelated goods or services in unrelated markets • This is the most risky of all four strategies • E.g. the Virgin group

  14. Summary • Risks involved differ substantially • The matrix identifies different strategic areas in which a business COULD expand • Managers need to then asses the costs, potential gains and risks associated with the other options

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