Transcript Ansoff Matrix
Group “C”
Ahmed Najeeb (MM103014)
Tabassum Riaz (MM103034)
Sufyan Saeed (MM103053)
Mustajab Khan (MM103075)
Igor Ansoff created the Product / Market diagram in 1957 as a method to classify options for business expansion. The simplicity of this model is that the four strategic options defined can be generically applied to any industry.
This well known marketing tool was first published in the Harvard Business Review (1957) in an article called ‘Strategies for Diversification’. It was consequently published in Ansoff’s book on “Corporate Strategy” in 1965.
It is used by marketers who have objectives for growth. Igor Ansoff’s matrix offers strategic choices to achieve the objectives. There are four main categories for selection.
• • •
Market Penetration Market Development Product Development
•
Business Diversification
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
In terms of the product, the two options are:
• •
selling existing products developing new ones
Existing Existing
MARKETS
New
MARKET PENETRATION
Sell more in existing Markets
MARKET EXTENSION
Achieve higher sales/market share of existing products in new markets
PRODUCTS
New
INCREASING RISK PRODUCT DEVELOPMENT
Sell new products in existing markets
Diversification
New Products in New Market
Improving the performance of existing businesses Improving the performance of existing businesses “Do Nothing” if the environment is static (short-run only) “Withdraw” when there is an irreversible decline in demand or opportunity costs of staying in a market are too high “Consolidation” means concentration of resources and focusing on existing competitive advantages “Penetration” means gaining market share
Existing Existing
MARKET PENETRATION PRODUCTS INCREASING RISK
New Sell more in existing Markets
MARKETS
New
Here we market our existing products to our existing customers 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
Maintain or increase the market share of current products Secure dominance of growth markets Restructure a mature market by driving out competitors Increase usage by existing customers. For example by introducing loyalty schemes.
Penetration Pricing Bundling Aggressive campaign
Existing Existing
MARKET PENETRATION PRODUCTS INCREASING RISK
New
MARKETS
New Sell more in existing Markets
MARKET EXTENSION
Achieve higher sales/market share of existing products in new markets
Here we market our existing product range in a new market Example: Gourmet now Expand its business in different cities( Faisalabad, Multan . etc) of Pakistan but initially it was only in Lahore Objective
“Increase Numbers of Customers”
New geographical markets New product dimensions or packaging For Example:
New distribution channels Different pricing policies to attract different customers or create new market segments
Existing Existing
MARKET PENETRATION
Sell more in existing Markets
PRODUCTS
New
INCREASING RISK PRODUCT DEVELOPMENT
Sell new products in existing markets
MARKETS
New
MARKET EXTENSION
Achieve higher sales/market share of existing products in new markets
This is a new product to be marketed to our existing customers (existing markets, new products) Least risky of all four strategies E.g. Coca-Cola. This has been developed to have vanilla, lime, cherry and diet varieties (amongst others) in the SOFT DRINKS market
Objective
To Increase Number of Products
Strategies
Increase Product Line Product Line Stretching (Both Horizontally & Vertically)
Existing Existing
MARKET PENETRATION
Sell more in existing Markets
PRODUCTS
New
INCREASING RISK PRODUCT DEVELOPMENT
Sell new products in existing markets
MARKETS
New
MARKET EXTENSION
Achieve higher sales/market share of existing products in new markets
DIVERSIFICATION
Sell new products in new markets
(new markets, new products) This is a new product to be marketed to our existing customers Objective
“Increase New Products and New Market”
Types
Related Diversification Un related Diversification
Diversification is Further Grouped into Lateral Diversification Horizontal Diversification Vertical Diversification
Globalization/Geographical Expansion Attacking New Segments With New Products Acquiring Weak Competitors To Gain New Customers Segment
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
“Analysis and Planning to meet