This is why the focus strategy is also sometimes referred to as the niche strategy Lynch, In other words, products with greater market share or within a fast growing market are expected to wield relatively greater profit margins. My favorite definition is: The risks of diversification can be minimised by moving into related markets Ansoff, The SWOT analysis classifies the internal aspect of the company as strengths or weaknesses and the external situational factors as opportunities or threats.
No one strategic option is suitable for all organisations at all times. Diversification new markets, new products: The main disadvantage of choosing to employ a market development strategy is the risk associated with such a strategy.
Concepts and Cases, Thirteenth ed. AnsoffA market penetration strategy is used when and organization wants to achieve and increased share in the market. This revelation enabled them to target a new market of professional cooks and baking enthusiast.
Selling through e-commerce will capture a larger clientele base since we are in a digital era where most people access the internet often. Before entering into a diversification strategy it is important for an organisation to have clear goals and an honest assessment of the risks associated with the strategy.
While the advantages of diversification can be great, so can the disadvantages of engaging in such a strategy. Frequently, when a firm creates new products, it can gain new customers for these products.
Product development can differ from the introduction of a new product in an existing market or it can involve the modification of an existing product. Before entering into any strategic decision, an organisation should be clear on what are its goals and objectives and the risks associated with each.
This strategy is important for businesses because retaining existing customers is cheaper than attracting new ones, which is why companies like BMW and Toyota Lynch, and banks like HSBC engage in relationship marketing activities to retain their high lifetime value customers; same applies to Diamond bank in Nigeria which won the award for Bank of the Year in Thisday Awards Thisday Style magazine.
Market Development The strategy of market development focuses on offering existing products in new markets. Diversification is considered to be a high-risk strategy due to the fact that it requires organisations to enter into new territory where the parameters are unknown.
It is important to note that these four outputs are not mutually exclusive and often times organisations engage in more that one strategy depending on the environment in which they operate.
Some general examples of differentiation include better service levels to customers, better product performance etc. There are risks associated with all of the four strategic options entailed in the Ansoff matrix.
The Ansoff Matrix is a tool used by businesses to aid in decision-making surrounding product offerings and market growth strategies.
Porter has argued that for a company employing a differentiation strategy, there would be extra costs that the company would have to incur.
A product development strategy involves identifying new needs within the existing market and developing products to meet these needs while the diversification strategy involves the organisation entering new markets with new products.
Using this strategy, Southwest Airlines focuses on offering low cost flights between small distance cities. Another example is the easy jet which has diversified into car rentals, gyms, fast foods and hotels.
While the risk is said to be moderate, this can still prove to be an unsuccessful strategy for many organisations. One can diversify from a food industry to a mechanical industry for instance.
The advantages of diversification can be great. The company will be engaging in a strategy that utilises current products and markets; therefore it will potentially have an advantage over other companies.
Through its competitive advantage Southwest Airlines is able to dominate the market for travel between small distance cities in the southwest market Shaw, A disadvantage of choosing to use a strategy of market penetration is that this strategy does not allow for any company growth. Diversification The last strategy is Diversification.
Another example of market penetration is Pakistan State Oil. The reasons that justify the use of this strategy include one or more of the following: In New Product packaging, it means repacking the product in another method or dimension.
Advantages of choosing to engage in a strategy of market development include: Using the Ansoff Matrix allows businesses to evaluate the options available for growth.
Hence, new product development can be a crucial business development strategy for firms to stay competitive. Horizontal integration takes place when a company moves into businesses that are related to its existing activities Lynch, ; Macmillan et al, Ansoff Product-Market Growth Matrix [pic] Source: Ansoff (, ) A market penetration strategy is used when and organization wants to achieve and increased share in the market.
A market development strategy in contrast involves the organization searching for new markets in which to sell its current product.
Ansoff's Matrix - Product-Market Growth Matrix - Expansion Strategy is a technique that enables better strategic planning in business.
The Ansoff Matrix allows marketers to consider ways to expand the business via current and/or new products, in current and/or new markets - there are four possible product/market combinations. Ansoff Matrix Introduction The Ansoff Growth matrix is a tool that helps businesses decides their product and market growth strategy.
Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.
Explain How the ‘Ansoff Matrix’ Can Be Applied to Help Develop Strategic Marketing Options for an Enterprise. Words Mar 19th, 13 Pages Explain how the ‘Ansoff matrix’ can be applied to help develop strategic marketing options for an enterprise. Ansoff’s Matrix Ansoff’s product/market growth matrix is a marketing tool that suggests a business’s attempts to grow depends solely on whether it is going to market a new or existing product in a new or existing market.
Ansoff S Strategic Marketing Growth Matrix In Fast Food Industry. Assignment title: ANSOFF MATRIX 08/04/ Tanju Colak AccountID: 1 Tanju Colak () – Betriebswirtschaftliche und volkswirtschaftliche Grundlagen 1.
Introduction Inthe author Lynch suggested that the Ansoff Matrix describes the market and .Download