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Ansoff Matrix
Posted on: December 24, 2012 at 12:00 AM
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The Ansoff matrix or Ansoff Growth matrix is an effective marketing planning tool that helps a company or business built an effective product and market growth strategy. According to the Ansoff matrix, a business growth depends upon the factor that whether the business is marketing a new product or the existing product in a new or existing market.

The Ansoff matrix or Ansoff Growth matrix is an effective marketing planning tool that helps a company or business built an effective product and market growth strategy. According to the Ansoff matrix, a business growth depends upon the factor that whether the business is marketing a new product or the existing product in a new or existing market.

Ansoff Growth matrix

Based on this, factor Ansoff matrix provides four growth strategies that help the business to make an effective business strategy. The four growth strategies of Ansoff matrix are:

Market penetration

When a business sells it's existing product to an existing market, this is called market penetration growth strategy. Market penetration growth strategy focuses on achieving following objectives:

  • Retain or increase the market growth and share of an existing product by implementing various marketing tools like competitive pricing strategies, advertising, sales promotion and personal selling.
  • To dominate the existing market by driving out all the competitors through aggressive marketing and promotional activities and by adopting attractive pricing strategy.
  • Increase the usage of the product among the existing customers by implementing various offers and loyalty schemes.

In common market penetration growth strategy is the traditional approach of business, which intends to grow its market size in the well-known market.

Market development

Market development is the growth strategy that a business follows when it intends to sell its existing product to new markets. The new market may be explored on the basis of:

  • Geography: The Company can invade a new market abroad.
  • Distribution channel: The company may opt for online selling in addition to retail selling.
  • Pricing policies: New pricing policies to attract new segment of customers.

Product development

When a new product is implemented to an existing market, the growth strategy is called product development. Product development requires in depth market research to explore the competencies for the product and finally come out with a customer-appealing product.

This growth strategy is usually implemented when a business needs to differentiate its products from the competitors in order to gain a competitive edge over the competitors. Implementation of product development growth strategy requires:

  • Research and development and innovation
  • Analysis of customer needs.
  • Come with some product that is entirely new to the market.

Diversification

When a new product is launched in a new market, the growth strategy is called diversification. Diversification involves maximum risks as the business moves to an entirely new business and market with no prior experience.

The business must gather proper knowledge about the market and must be very clear about the objectives of the new business and associated risks.

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