The Ansoff Matrix is a tool used by businesses to aid in decision-making surrounding product offerings and market growth strategies.
The need for companies to grow and expand has been known to drive product and marketing innovation, which in turn prompts them into adopting different organisational strategies, based on the products they sell and markets they target Ansoff, The Ansoff Matrix, developed by Igor Ansoff in highlights four major strategic options Figure 1 through which an organisation could adapt its new or existing products into a new or existing marketplace.
The matrix is employed by businesses in decision-making processes surrounding product offerings and market growth strategies. Johnson et al also depict it as a method of ascertaining the benefits or risks associated with each strategic option.
The major strategic options available, as depicted in Figure 1, are for an organisation to penetrate its existing market, develop its market, develop its products or diversity completely with a new product into a new market. The first of which is market penetration.
This is a strategic option for an organisation seeking to expand its market share in an existing market, with an existing product. Mercer states that the growth strategy inherent in the Market Penetration option is for an organisation seeking to maintain or increase share of its existing products within the market place, gain market leadership, change competitive processes within a matured market, or increase awareness amongst existing consumers.
According to Hooley et althe option to penetrate deeper within the marketplace is a low risk option that makes use of existing resources.
A typical example of an organisation using this strategy would be Southwest Airlines. Southwest Airlines aggressively offers low cost flights within small distance cities.
However, through its combination of aggressive marketing and low cost pricing, the company is able to dominate the market within Southwest United States Shaw, Another example of market penetration strategy would be that of Pakistan State Oil.
The company experiences competition from local and foreign oil companies that sell petroleum through retail petrol stations. The strategy adopted by Pakistan State Oil is similar to that of Southwest Airlines, in that they operate within competitive markets, but by investing competitively, they are able to maintain market share and grow within their respective industries.
This strategy also illustrates the low risk advantage of market penetration. The companies utilise existing products in an already known market. They do not have to invest in research and development or excessively advertise within a new market in order to create awareness.
Since market penetration is focused on retaining existing customers, it is a lot cheaper than acquiring new customers in an unknown market. However, a major disadvantage of this strategy is that it does not promote corporate growth into other potentially higher earning sectors Watts et al, By focusing simply on retaining existing customers, Watts et al argue that the company loses out on the new investment potential, while Fifield also depicts that expanding market share within an existing industry poses a significant risk as the industry growth may decline and the organisation has lower growth potential.
The various alternatives available would be to leverage an existing product into a new geographical region, using different product dimensions, distributing the products through new channels, or adopting different pricing strategies Proctor, The major goal of market development would be to attract a new customer segment, using a slightly different strategy, into consuming an existing product Ansoff, The risk associated with this strategy has been depicted by Watts et al to be moderate, due to the risks associated with entering a new market.
According to a case study in Christensen et alp.
They realised that apart from being used solely for baking, the products could be used as a household cleaning and deodorizing product, so they repackaged its contents and marketed them to supermarkets and corner shops as effective cleaning agents.
Due to the relative infancy of the market, they had to engage in a series of advertisement that helped to communicate the relevance of their product and methods through which it could be used for other purposes.
Through this strategy, they were able to increase revenue and adapt one product to different market segments. This case study confirms previous assumptions that through market development, a company could leverage an existing product into a new market Collis and Montgomery, The market development actions they engaged in were essential in building product awareness amongst the new customers.
According to Fifieldcompanies engaging in market development would gain new customers, increase turnover and profits, and ensure corporate growth due to the relative potential for growth within the new segment. However, Hooley et al also discuss the risks associated with market development.
If the strategy fails, then the company would have lost the substantial capital utilised in marketing and pushing this product into the new market. This definition entails any new or modified product aimed at an existing market.
This strategy entails a moderately high risk due to the level of product development and research required to develop a new product for a market that is already used to an existing product Watts et al, The Apple iPod is a real life example of a new product delivery into an existing market. Prior to its introduction, most individuals usually listened to music on cassette players, desktop computers and the Sony Walkman CNet, There was no innovative product in the market that allowed individuals to carry their music library on a digital device without the need for cassettes or compact discs.
The iPod is a typical example of product development due to its innovative approach to playing music. It consisted of the sleek wheel navigation system that was relatively easy to use and display methods, which made scrolling through vast amounts of music much easier.
Due to the product innovation method employed during its development, the Apple iPod quickly gained market share and is now the market leader in music devices CNet, May 19, · Strategic matrix ANSOFF MATRIX BCG MATRIX: ADL MATRIX SWOT MATRIX (Strengths, Weaknesses, Opportunities, Threats) 1.
ANSOFF MATRIX This well known marketing tool was first published in the Harvard Business Review () . The Ansoff Matrix is a tool used by businesses to aid in decision-making surrounding product offerings and market growth strategies. Often referred to as the product/market growth matrix, the output of the matrix suggests whether businesses should offer new or .
When deciding on the strategic path that your company can take you can refer to the models of Ansoff's Growth Matrix, Bowmans Clock and the BCG Matrix.
It is obvious that in such a competitive industry as airlines it is vital that companies have a clear vision of their long term direction. Ansoff Product Market Matrix For Airline Industry. the Ansoff matrix The Ansoff product/ market matrix is a tool that helps businesses decide their product and market growth strategy.
Ansoff’s product/ market matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing pfmlures.com . ANSOFF MATRIX- PRODUCT/MARKET GRID. Igor Ansoff (Dec 12, -July 14, ) who was a Russian American, Applied Mathematician and Business manager created the Product / Market Grid in as a method to classify options for business expansion.
It is a tool that helps businesses decide their. Ansoff Product Market Matrix For Airline Industry. the Ansoff matrix The Ansoff product/ market matrix is a tool that helps businesses decide their product and market growth strategy. Ansoff’s product/ market matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing pfmlures.com traditional four box grid or matrix Ansoff model.