ansoff's matrix

Question 1

what is ansoff matrix and what is it used for

Answer 1

• considers a businesses product portfolio
  but focuses more on profitability, growth and sales
• outlines options if business wishes to grow, increase profits / revenue
• looking at options according to ‘ products’ and ‘ markets ‘

-outlines potential risks and rewards associated with each possible startegy

-higher the risk the higher the reward

this helps them determine their strategy.

Question 2

market penetration

Answer 2

how businesses can increase sales within an existing market with current products

-encouraging new users of your products
-target competitor customers/ sales
- increase usage amoungst existing customers

although… low risk stratedy, lower rewards
existing market may already be saturated and offer limited opportunities got futher sales growth

although…- can be sucessful when there is fast market growth and new customers

Question 3

strategies for market penetration

Answer 3

• attracting customers who have not yet become regular users but are occasional users - increasing brand loyalty
• attacking competitor sales, capture competitors customers through adjustments in marketing mix- e.g. price or promotion - loyalty schemes or e.g. cheaper bread in aldi- people begin to shop there
• increasing consumption amougst existing customers
  lower prices/ promotions e.g. sky packsages

Question 4

product development

Answer 4

development of new products targetted existing customers

• extension strategies
• research and development
• ideas may fail and not reach customer= sunk cost
• must require market research- monitor consumer fashions, trends, tech

Question 5

stratedy for product development

Answer 5

creation and development of new proficts similar to what already sell

innovate, extend product lif ecycle e.g new feature, flavour, eco freiendly

• risk if dont meet customers needs and wants
• expensive R+D

Question 6

market development

Answer 6

• identifying new markets with existing products - mac donalds

e.g. new geographical markets
- high risk, every country has different tastes, interests and needs
- products are adapted for sale in new market, high costs
may require adjustments of marketing campaigns
OR may target younger audience, diff socio economic group
- repackaging/ rebranding
-new distribution channels e.g. online markets

although….
existing competitors in new market likely to respond and try and force out new entrants

therefore must understand cultural and economic and legal differences

Question 7

diversification

Answer 7

high risk , new products in new markets

spreading risk, by focusing on existing productds and markets sales may decrease especially if market is matured and there is low room for growth

• requires staff training expertise in new sector, in new sector, high cost, sunk cost- if fails.

Question 8

evaluation

Answer 8

high risk- high reward

depends on how much risk the business is willing to take

must consider the external factors
therefore would be better used alongside PESTLE or SWOT to make fully informed decisions