ansoff's

• ansoff's matrix

  a model used to compare the level of risk involved with the different growth strategies. it helps managers decide on a direction for strategic growth
• ansoff's matrix 4 strategies

  market penetration, product development, market development, diversification
• market penetration


  trying to increase market share in existing markets. least risky method. done to increase sales. best in growth markets.
• market penetration methods

  sales promotion, pricing strategies, advertising, extension strategies
• product development


  selling new products in existing markets. medium risk. requires some market share, but not extensive. products are sold to same audience. best when market has good growth potential
• product development when to use

  business has good brand loyalty, is a market leader, has high cash flow, has strong RD
• market development


  selling existing products to new markets. new markets refers to different segments or geographical locations (eg international). medium risk. market research required. be aware of culture differences
• market development methods

  create new advertising campaign/promotion, use new channels of distribution (eg e-commerce instead of retailers)
• diversification


  selling new products to new markets. very risky (no experience in new market). market research needed. R&D needed. doesn't have to be completely unrelated with what's already being done
• diversification when to use

  when market is saturated, product is in decline stage, high profits are likely, business has to reduce dependence on limited product range
• advantages of ansoff's matrix

  - forces market planners and management to think about the expected risks of moving in a certain direction

  - it lays out possible strategies for growth
• disadvantages of ansoff's matrix

  - fails to show that MD and diversification require a change to every day running of the business

  - does not take into account the activities of external competitors

  - accurate predictions are difficult due to unforeseen events

  - oversimplifies options available for growth