To reach any goal, an individual or an organization needs to build certain strategies and plan in order to achieve them. The era we live in demands organizations to constantly change, expand and use certain tactics in order to make themselves more dominant in the industry and grow. In this blog I will discuss about Ansoff Matrix, a strategy which helps executives, managers to devise strategies for future growth.
The ansoff matrix is divided into 4 categories through which a business is able to to determine the place of its product in the market and its possible market growth. Products are separated into two categories: Present and New, and Markets are separated into two categories: Present and New.
Market Penetration: Market Penetration is a strategy for any decision maker to boost sales for an existing product in an existing market. The decision makers plan to exploit more from the market than its current level without changing any features of the product. This is done by reorganizing the 4P’s of marketing for the product. Market Penetration is one of the least riskiest strategies. E.g. Coke in USA
Product Development: Product development is a strategy which focuses on creating a new product or modifying the same product and selling it in an existing market. The firm can either improve the physical quality of the product or it can improve the performance of the product. Product development has medium risk involved since there is uncertainty about the product’s performance in the market. E.g. Iphone 6S in Canada.
Market Development: Market development involves the decision maker or the strategist to sell an existing product in a new market. The firm will study the behavior of the customers in the new market, look at their preferences and tastes, and accordingly use different marketing techniques to sell the product in the new market. This strategy also involves . For e.g. British Petroleum entering India.
Diversification: Diversification is selling a new product in a new market, where the customers have never seen it or used it before. Diversification involves a lot of research, planning and forecasting in order to minimize the risk it faces to launch the product. Startups enter the diversification strategy since they have a completely new product which has been introduced in any market. This strategy involves the most risk since there is a high chance of failure.
This is important for any strategist since they need to understand the position of their business, product and the market they operate in so that they can gain a larger market share.
Sources:
- “Ansoff Matrix.” Ansoff Matrix. N.p., n.d. Web. <http://www.ansoffmatrix.com/>.
