Biz News
No Result
View All Result
Friday, February 26, 2021
  • Home
  • Business
  • Education
  • Culture
  • Agriculture
  • Environment
Subscribe
Biz News
  • Home
  • Business
  • Education
  • Culture
  • Agriculture
  • Environment
No Result
View All Result
Biz News
No Result
View All Result
Home Business

Ansoff Matrix Product Development Strategy

by Biznews
in Business
5 min read
Ansoff Matrix Product Development Strategy
154
SHARES
1.9k
VIEWS
Share TweetSaveLinkedI n

Table of Contents

  • Ansoff Matrix Product Development Strategy
      • RelatedPosts
      • BATNA Negotiation Strategy & ZOPA Negotiation
      • PESTLE Analysis of Amazon
      • Lean Six Sigma Pareto Chart | Pareto Chart Example With Explanation
    • Market Penetration
    • Product development
    • 3. Market Development
    • 4. Diversification
      • Related Diversification Strategy
      • Related Diversification Strategy Examples
        • Advantages of Related Diversification Strategy
        • Disadvantages of Related Diversification Strategy
      • Unrelated Diversification Strategy
        • Advantages of Unrelated Diversification Strategy
        • Disadvantages of Unrelated Diversification Strategy
    • Ansoff Matrix McDonalds Example

Ansoff Matrix Product Development Strategy

The Ansoff Matrix, is also referred to as the Product/Market Expansion Grid  is an important strategy tool used by organizations to analyze and plan key strategies for growth. The strategy matrix was first developed by H. Igor Ansoff, renown applied mathematician and business manager and was published in 1957 in the Harvard Business Review (HBR). The Ansoff Matrix has helped many executives and marketers to better understand the risks inherent in growing their business.

Ansoff strategy analyzes potential growth strategies based on the extent to which new products and or new markets are sought.

RelatedPosts

BATNA Negotiation Strategy & ZOPA Negotiation

PESTLE Analysis of Amazon

Lean Six Sigma Pareto Chart | Pareto Chart Example With Explanation

Ansoff Matrix Product Development Strategy 2

  1. Market Penetration

Current products and current markets. It involves achieving wider adoption of an existing product by the existing target customers.

There are three ways in which a company can penetrate a market.

  • Stimulating customers to increase the current usage rate by increasing customer purchase units, speeding up the rate of product improvement/obsolescence suggesting new uses for the product, and offering price incentives for increased usage. For example, the frequent flyers club offered by KLM and KQ to loyal customers to encourage them to increase bookings. After a certain mileage, the customers get a free ticket.
  • Attract non-users through promotions.
  • Swing competitors’ customers through brand differentiation. This is appropriate when:
  1. When the overall market is growing or can be induced to grow, and therefore it is relatively easy to gain market share.
  2. If the firm holds a strong market position and is able to use its experience and competencies to obtain strong, distinctive competencies/competitive advantages.
  3. This strategy requires a relatively lower level of investment with a corresponding risk reduction.
  1. Product development

Offering new products to the present market and by developing this strategy, the company could:

  1. Develop new product features by attempting to modify, adapt,  magnify, or combine existing features.
  2. Create different quality versions of the product.
  3. Develop additional models and sizes.

 The reasons why a company may opt for this strategy are:

  • It holds a high relative market share, has a strong brand presence, and enjoys a distinctive competitive advantage in the market.
  • There is growth potential in the market.
  • The changing needs of the customers demand new products. Continuous product innovation is often the only way to prevent product obsolescence.
  • It needs to react to technological developments.
  • The firm is particularly strong in research and development.

However, this strategy has its downside, especially in the line of expense and risk.

3. Market Development

Ansoff Matrix Product Development Strategy

The process by which the firm seeks new markets for its current products. There are many possible approaches:

  1. a) New geographical areas and export markets, e.g., a radio station is a new transmitter to reach a new audience
  2. b) New distribution channels.
  3. c) The company may try attracting other market segments through developing product versions that appeal to them, e.g., travel companies have developed a market for cheap stay long winter breaks in warmer countries for retired couples.

4. Diversification

When a company decides to make new products for new markets. The company gets involved in activities that differ from those in which it is currently involved. The company selectively changes the product lines, customer targets, and manufacturing and distribution arrangements.

Diversification can either be related or unrelated.

Related Diversification Strategy

Related Diversification Strategy is a development beyond the present product market but still within the industry’s confines. It, therefore, builds on the assets or activities which the firm has developed. It takes the form of vertical or horizontal integration: – development into activities that are competitive with or directly complementary to a company’s present activity(ies).

Vertical integration: – occurs when a company becomes its own supplier or distributor. It can either be backward or forward.

Related Diversification Strategy Examples

Honda Motor Company  is an excellent example of leveraging a core competency  by using  related diversification strategy. Honda is well known for its trucks and cars  but the organization began motorcycle business area. Through competing in this business, Honda developed a unique ability to build small and reliable engines. When executives decided to diversify into the automobile industry, Honda was successful in part because it leveraged this ability within its new business. Honda also applied its engine-building skills in the all-terrain vehicle, lawn mower, and boat motor industries.

image

Other examples is CocaCola Company and have utilize the strategy well.

Advantages of Related Diversification Strategy

  • A secure supply of components or materials hence lower supplier bargaining power.
  • A stronger relationship with the final consumer can be built.
  • Share of profits at all the stages of the value chain.
  • Creation of barriers to entry and therefore deter competitors.

Disadvantages of Related Diversification Strategy

  • Over concentration in one area. Should the industry fail, the whole company suffers.
  • Failure to reap the benefits of economies of scale in the industry in which it has diversified.

Unrelated Diversification Strategy

Unrelated Diversification Strategy or conglomerate is a development beyond the present industry into product/markets which, at face value, may bear no close relation to the present product/market.

Advantages of Unrelated Diversification Strategy

  • Risk spreading: – entering new products into new markets offers protection against the failure of current products or markets
  • High-profit opportunities: -stability in profits because if there are hard times in one industry, they offset others’ losses.
  • Better access to capital markets because of the large size ―big is mighty.

Disadvantages of Unrelated Diversification Strategy

  • Lack of common identity and purpose and could affect the focus of the firm.
  • Failure of one business drags down the rest.

Ansoff Matrix McDonalds Example

Tags: Ansoff matrix examples

Related Posts

Business

BATNA Negotiation Strategy & ZOPA Negotiation

February 17, 2021
PESTLE Analysis of Amazon
Business

PESTLE Analysis of Amazon

February 13, 2021
Lean Six Sigma Pareto Chart
Leadership

Lean Six Sigma Pareto Chart | Pareto Chart Example With Explanation

February 5, 2021
Tannenbaum and Schmidt Leadership Continuum
Management

Tannenbaum and Schmidt Leadership Continuum | Leadership Continuum Theory

February 6, 2021
Leavitt Model of Organizational Change
Business

Leavitt Model of Organizational Change | Leavitt Diamond Model

January 28, 2021
John Kotter Change Management Model
Business

John Kotter Change Management Model

January 28, 2021
  • Trending
  • Comments
  • Latest
Importance of Feedback

Niche and Mass Marketing , Advantages & Disadvantages of Marketing Strategies

January 27, 2021
How To Build Self Confidence

How To Build Self Confidence :7 Mental Hacks to increase your Self Confidence

November 2, 2020
Why you need a website

Why You Need A Website: Top 10 Reasons why you need a website

December 13, 2020
7 Profitable Businesses You Can Start 

7 Profitable Businesses You Can Start with 20K or Less

December 13, 2020

Thomas Kilmann Conflict Resolution Model | Conflict Management Styles & Strategies

0
Amazing Business

How To Start A Blog In 2020: Everything You Need To Start

0
kills needed to run a business successfully

6 PROVEN skills needed to run a business successfully in 2020

0
5 Things You Need for a Successful Mindset

5 Things You Need for a Successful Mindset

0

Thomas Kilmann Conflict Resolution Model | Conflict Management Styles & Strategies

February 25, 2021

Barnlund Transactional Model of Communication

February 23, 2021

Eric Berne Transactional Analysis Theory | Parent Adult Child Ego States Model

February 22, 2021

Johnson and Scholes Cultural Web | Example of a Cultural Web Analysis

February 22, 2021

Recent News

Thomas Kilmann Conflict Resolution Model | Conflict Management Styles & Strategies

February 25, 2021

Barnlund Transactional Model of Communication

February 23, 2021

Categories

  • Agriculture
  • Aristotle
  • Business
  • Business Models
  • Change Management
  • Communication
  • Communication Models
  • Conflict Resolution
  • Culture
  • Economics
  • Education
  • Environment
  • Group Development
  • Innovation
  • Leadership
  • Management
  • Marketing
  • Negotiations
  • PESTLE Analysis
  • SWOT Analysis
  • Team Roles
  • Uncategorized

Site Navigation

  • About Us
  • Contact Us
  • Advertisement
  • Privacy Policy
  • Terms & Conditions
Biz News

We bring you the best Business news,ideas tips and
consulting services in digital marketing space Check our consulting services Consulting for details.

Copyright © 2020 BizNews - News & Magazine by BizNews.

No Result
View All Result
  • Home
  • Business
  • Shop

Copyright © 2020 BizNews - News & Magazine by BizNews.