Ansoff Matrix: Market Penetration, Product & Market Development, Diversification, Lecture notes of Product Development

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Growth Strategies

Ansoff Matrix

Ansoff Matrix

Market Existing Existing Market Penetration New Product Development N ew Market Development Diversification

• Product

• Market Penetration is an increase in the same types of items to the same types of customers.
• Market Development is the addition of new customers to an already existing customer base.
• Product Development is an increase in diversity of products to already existing customers.
• Product Diversification is simply new products for new customers.

Market penetration

“Market penetration is where the company gains Market share”. Either the number of consumers using the product that is bringing in new consumers. Consumption levels of the existing consumers It mainly aims at 4 objectives-

• Enhancing market share of the existing products
• Securing market share of dominant markets
• Restructure the existing market by thrashing out competition by aggressively promoting the product.

• Increasing consumption levels of existing consumers

Market Development

Aim Risks Contents Achieved^ How is it When to use it Examples An example of Market Development is when Tesco expanded into the convenience store market. Moderate risks come with Market Development. There is also a lack of familiarity with customers, but the product stays familiar. Market Development is best used when untapped markets are beckoning, the firm has excess capacity and there are attractive channels to access a new market. Selling the same product to a newer, expanding customer base or entering new markets with the same base. Basically gaining new customers with the same product. This will include changes to many different aspects of a firm, such as marketing strategies, new distribution channels, a different pricing policy and many others. The aim of market development is basically to expand the market and customer base of a firm or company.

Product development

Product development can differ from the introduction of a new product in an existing market or it can involve the modification of an existing product. By modifying the product one would probably change its outlook or presentation, Its requires R & D Its requires assessment of customer needs Its requires clear path of brand extension

Product Development Aim Risks Contents Achieved^ How is it When to use it Examples Two examples are Tesco expanding petrol sales and the development of financial services. The aim of Product Development is to create new products for an already existing market. The creation of new products is usually quite costly and there are moderate risk levels associated. Probably the biggest risk is will this new product be successful. Companies usually utilize product development when they have strong Resource and Development capabilities, the market is growing and there is rapid change. This could be new products to replace current older ones, new innovative products, product improvements or product line extensions. What makes Product Development easiest, is a strong Research and Development program, also known as R&D. Without this, it is very risky and has a lower success rate. Diversification

• Diversification is the name given to the growth strategy where a business markets new products in new markets.
• This is the most risky strategy because the business is moving into markets in which it has little or no experience.
• There are two types of diversification. There is related diversification and unrelated diversification.

COCA-COLA: ANSOFF MATRIX

• Market Penetration
• Due to the incredible strength of Coca-

Cola‟s brand, the company has been able

to utilise market penetration on an annual

basis by creating an association between

Coca-Cola and Christmas, such as through

the infamous Coca-Cola Christmas advert,

which has helped boost sales during the

festive period.

• Product Development
• A prime example of this was the launch of Cherry Coke in 1985 – Coca-Cola‟s first extension beyond its original recipe – and a strategy prompted by small-scale competitors who had identified a profitable opportunity to add cherry- flavoured syrup to Coca-Cola and resell it. The company has since gone on to successfully launch other flavored variants including lime,

lemon and vanilla.

Market Development

• The launch of Coke Zero in 2005 was a classic example of this – its concept being identical to Diet Coke; the great taste of Coca-Cola but with zero sugar and low calories. Diet Coke was launched more than 30 years ago, and whilst more females drink it every day than any other soft drink brand, it came to light that young men shied away from it due to its consequential perception of being a woman‟s drink. With its shiny black can and polar opposite advertising campaigns, Coke Zero has successfully

generated a more „masculine‟ appeal.