Ansoff Matrix

ANSOFF MATRIX
WHAT IS AN ANSOFF MATRIX
• A planning model that helps a business determine its product and market
strategies and the inherent risks
ANSOFF’S MATRIX
Product
Increasing risk
Market
Increasing risk
MARKET PENETRATION
• The strategy of attempting to sell existing products in an existing market.

• This strategy aims to increase market share by selling to a well-defined and
well–known target customer base.
• It may take several forms: increasing the number of stores where products
available (for example supermarkets of e-commerce), promoting the product,
repositioning the brand or encouraging increased usage.
MARKET PENETRATION
MARKET PENETRATION
MARKET PENETRATION
https://www.reuters.com/article/us-ikea-strategy/ikea-to-try-selling-through-third-parties-idUSKBN18Y2JM
EVALUATING MARKET PENETRATION
• Lowest risk as business focuses on markets and products it knows well

• Lower cost strategy as no need to invest in product development and market
research
• May not be able to satisfy business growth requirements if market is not
growing fast enough
PRODUCT DEVELOPMENT
• The strategy of offering and introducing new products to existing

customers
• This strategy aims to increase market share by placing new products with a
well–known target customer base.
• It may take several forms: new product offerings to replace existing ones
(smartphone upgrades), developing new product ranges or brand extensions.
SUCCESSFUL PRODUCT DEVELOPMENT
• Brand extension for products such as the iPod, iTunes, iPad, and the iPhone,
which targeted the same customer base.
UNSUCCESSFUL PRODUCT
DEVELOPMENT
• Coca – Cola launched a “One

Brand” strategy in 2014
• The idea behind Coca-Cola Life
was that it would offer a lower
calorie option for more health
conscious consumers.
• It was sweetened from a blend of
sugar and stevia plant extract, and
contained 45% less sugar.
• The brand has now been axed in
the UK
EVALUATING PRODUCT DEVELOPMENT
• It matches well with market penetration as the company will be able to keep
existing customers happy by offering them existing and new products
• Requires investment in research & development (R&D) to develop new
products
• Requires market research to ensure the product responds to customers needs
• It is often necessary to be first to market
MARKET DEVELOPMENT
• A strategy aimed at selling existing products to new markets

• This can mean either attracting new business from competitors or expanding
operations to new regions or countries.
• It can be implemented in different ways: expanding to new international
markets or new national areas; using new distribution channels; establishing
different pricing policies to attract new customers
MARKET DEVELOPMENT
The opening of Starbucks in Milan is an

example of market development. An
existing product in a new market.
It is a market development strategy but

from a marketing perspecive it is
«glocalisation», adapting the existing
product to the local culture and tastes of
the market
STARBUCKS – NEW STRATEGY
• Takes into consideration localisation

• It has a new design strategy: to act local
https://youtu.be/96DfyeEJhMs
UNSUCCESSFUL MARKET DEVELOPMENT
• First Starbucks attempt to expand in Australia was disastrous. Entered market

in 2000 and by 2008 had losses of $143m, had to fire 700 employees and
closed 66 branches.
EVALUATING MARKET DEVELOPMENT
• Existing products may not appeal to customers in new markets: needs/tastes

may be different
• Expansion into international markets can be riskier than product development
• Useful when market penetration no longer available as a strategy because of
market saturation
DIVERSIFICATION
• A strategy aimed at selling new products to new markets.

• Based on Ansoff matrix this is the highest risk strategy.
• However, there are a number of companies that diversify very successfully.
TATA GROUP
• Tata Group is a privately owned group of nearly 100 companies,

including chemicals, cosmetics, consumer products,
energy, engineering, information systems, materials, and services.
Headquarters are in Mumbai.
SAMSUNG – FROM THE ECONOMIST
EVALUATING DIVERSIFICATION
• It is inherently risky
• Few economies of scale
• There are advantages to diversification, For example, a diversified company is
potentially better insulated against a loss of revenue in one business tranche,
spreading risk
• Banks are generally more willing to provide finance to diversified companies,
which means better access to capital markets.
SOURCES OF INFORMATION AND
IMAGES
• http://www.news.com.au/finance/business/retail/starbucks-coffee-is-quietly-
expanding-in-australia-after-humiliating-retreat-eight-years-ago/news-
story/b7f136c4d78f24aaa600a3822b1e 31b4. Source: News Limited
• https://www.britannica.com/topic/Tata-Group

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ANSOFF MATRIX

WHAT IS AN ANSOFF MATRIX

• The strategy of attempting to sell existing products in an existing market.

• Lowest risk as business focuses on markets and products it knows well

• The strategy of offering and introducing new products to existing

• Coca – Cola launched a “One

• A strategy aimed at selling existing products to new markets

The opening of Starbucks in Milan is an

It is a market development strategy but

• Takes into consideration localisation

• First Starbucks attempt to expand in Australia was disastrous. Entered market

• Existing products may not appeal to customers in new markets: needs/tastes

• A strategy aimed at selling new products to new markets.

• Tata Group is a privately owned group of nearly 100 companies,

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