Business Studies Ansoff's Matrix
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What is ansoff’s matrix
This is analytical tools helps managers to formulate a growth strategy for the business concerning the product all market
This consider to growth areas
1. it could be the launch of a new all existing product in the market
2. it could be the growth of a new all expansion of the existing market
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Now the full growth strategies deadlocked based on product and market combinations ok one existing product in an existing market this is known as market penetration to new products in an existing market this is known as product development 3 existing products in new markets this is known as market development and full that’s a new product launched in a New market will use a diverse application strategy
Now let’s see how each one of these strategies work independently as regards to the product and market situation
The matrix outlines 4 possible avenues for growth with vary in risk:
1. Market Penetration
This strategy helps the business to focus on selling the existing products in existing markets.
For example in 2000 Mitsubishi car announced a 10 percent reduction in prices in UK in order to increase sales of existing products. The objective is a higher market share involve improving the elements of the marketing mix also the low-risk growth. And that is competent does react to the firm’s trying to cut down their customers and market share.
2. Market development
This strategy involves launching the existing products into a new market overseas or targeting new segments in the home market.
For example Toyota motors has come up with the launch of the existing car moderns in various countries with different purchasing for that they might to match cost of production of their cars in competition with the other existing businesses in the same country. This is also a medium risk strategy as the business its familiar with the product which is being marketing.
3. Product development
This strategy involves developing a new product for loyal group of customers in the existing market.
For example The launch of a new product with modified features in order to attract the present customer based this could be done. This is a medium risk growth strategy as a business lunches a new product under all well-known brand-name it is suitable for the products which have reached saturation or a decline stage of that product life cycle.
4. Diversification
This is a high-risk growth strategy which involves business entering a new market with a new product.
The advantage of this strategy is not the business can spread but to the diversification.
This strategy is suitable for businesses they have gained a market share in established markets and are seeking new growth opportunities of businesses which have reach saturation in their markets.
To conclude, this tool gives manages two options seeking growth opportunities for the business
1. In terms of market
- To remain in existing markets.
- To enter new markets.
2. In terms of product
- To sell existing products.
- To develop new products.
However the ansoff’s matrix cannot be used in isolation as this is a rather a simplistic model and needs to be used along with other decision-making tools.
Business is a complex phenomenon and the right tools on the energies to be used at the right time to the right situation to achieve right results
That brings us to the end of this section about ansoff’s matrix.