First of all................what is Ansoff's Matrix used for?
This matrix is another nice pretty little packaging of information. This matrix is used to decide which direction to take in regards to product and market growth.
As you can see in top right model, there are four different options.
1. Entering an existing product into an existing market.
This is called Market Penetration Strategy.
Why?.......................because Mr. Ansoff says so!
It's pretty much the same product for the same customers with some extras or some sort of change.
What does this mean?
Well, when you have an existing product in an existing market, what do you do to increase market share?
It's not going to increase by itself!
The options for increasing market share are pretty much two.You can find ways for the product to be used more per occasion, or find new uses for it.
Ex. Ever see when shampoo and conditioner bottles say in the directions rinse and REPEAT! Ha! Nobody washes their hair and then rewashes it! This is asked so that you use more of the product and in turn, buy more of the product. Sneaky! Sneaky! Or, have you ever seen on the back of baking soda boxes, where they show you all sorts of different ways to use the baking soda? Do you think they like you and want to be helpful? No! That my friends, is a way to make you think that they are really nice and in return you use more of their product which eventually makes them more money!
Or......You can turn non users into users.This is pretty much promotion. You got to convince the other people in that particular market that they should be using the product that the other people in their market segment are using.
2. Existing products into New markets
This is called Market Development Strategy.
Why?..................Because by entering a new market you are developing markets, or at least Mr. Ansoff felt that to be so.
Anyways..............what does this mean?
There are a few different options for existing products to be introduces into new markets. Remember, using the Market Development Strategy you have to clearly define your market. Defining the criteria for the market includes geographic, demographic, psychographic, user status, and so on criteria. After you define your existing market then you decide how you will enter the new market. You can go into another country or geographical location.You can alter aspects such as the packaging in order to attract different market segments.You can enter new distribution channels.You may even change the price to attract new markets. Pretty much what it gets down to is, any change that will attract new markets is New Market Development Stategy.
3. New Products into Existing Markets
This is called Product Devopement Strategy.
Why?.................because here we are developing the existing products or making new ones!
This isn't so hard to understand. Your basically making a new product that you will introduce into the market that you already have. Ex. You make shampoo, now you make hair gel. The product is aimed at the same group of people, its just something new. Even adding something to a product technically makes it new. Like adding strawberries to cereal. Its still cereal, but now it has strawberries!
4. New Products into New Markets
This is called Diversification Strategy!
Why?................Why not?
This is where you get risky. You are taking a new product and you are taking it into a new market.
Ex. You make cars and now you decide to open a chain of fast food places. Two completely different products in two completely different markets.
Now you should be able to answer that multiple choice question on your mid-term regarding Ansoff's Matrix!
Good Job!
By Maria
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