27-05-2014, 04:21 PM
ANSOFF’S PRODUCT MARKET MATRIX
ANSOFF’S PRODUCT.ppt (Size: 325 KB / Downloads: 30)
Ansoff’s Matrix
Ansoff’s Product Market Matrix is a marketing tool created by Igor Ansoff.
It helps managers to analyze their product and market growth strategies.
The matrix allows marketers to consider ways to grow the business via new or existing products or enter new or existing markets.
The matrix consists of 4 strategies.
Market Penetration
Existing market – Existing products
Market Penetration occurs when a company enters a market with an existing product.
The company tries to expand its sales in the existing market. Existing products are sold to existing customers.
There is low risk- growth strategies.
Competitors react quickly as the company focuses on products and markets in which they are familiar with.
(Selling more of the same things to more of the same customers)
Product Development
Existing Markets – New Products
The most effective means to grow the business is to develop new products for the existing market. Eg: Apple iPhone.
There is medium risk strategy.
Product extension strategies and new product development i.e. it need not to be new to the market but the point is that the product is new to the company. Eg: McDonald’s introducing a new burger.
So to acquire other company's new product development can be a crucial business strategy.
(Selling new products or services to the same customers)
Diversification
New Markets - New Products
A high risk growth strategy that involves marketing new products in new markets.
The most common way for a business to diversify is to develop new products that take advantage of the core competencies of the organization in new markets.
Companies that dominant in one specific market can branch out into new markets to provide a new line of products that differ from their existing stock i.e. company had no presence before entering into that market.
(Selling new products or services to different customers)
Conclusion
The matrix helps companies to decide what course of action should be taken or given current performance.
Ansoff usually followed with the same technical, financial, and merchandising resources which are used for the original product line, diversification usually requires new skills, new techniques, and new facilities.
As it leads to physical and organizational changes in the structure of the business based on past experiences.
For such reason, most marketing activity revolves around penetration.