Marketing strategies can be examined using the Ansoff matrix.

The Ansoff Matrix

Marketing strategies can be examined using the Ansoff matrix.

[pic 1][pic 2][pic 3]

The two main variables in a strategic marketing decision:

• The market in which the firm was going to operate.
• The product intended for sale.

Product development

• Sell new products in existing markets i.e. soft drinks
• Low risk
• Low cost
• Established companies can use this strategy because they already have an existing market
• May require a complete marketing mix strategy

Market Penetration

• Sell more products (existing) in existing markets
• Could be use to move stock
• Low risk/cost
• Marketing mix strategy especially price
• Used frequently if competition exists (substitute goods)
• Attempting to sell a product for a different occasion

Market Development

• Achieve high sales/higher market share of existing products in new markets
• Medium risk
• Marketing strategy i.e. promotion
• New segments/maybe overseas markets
• Example = Lucozade – originally used for health/flu now a sports drink

Diversification

• Selling new products in new markets
• Highly expensive
• Time consuming
• Can help to spread risk
• Proctor/gamble
• May have little expertise
• Example = Virgin changing to an airline/train

Ansoff Matrix Key Points

1. Allows managers to analyse the degree of risk
2. Managers can then apply decision making techniques to assess costs/potential benefits
3. Particular strategy could depend on the size of the business, the number of products produced, rang and mix
4. A final decision should also reflect additional research both internal and external, primary and secondary data and an assessment of the current position

...