The Ansoff’s model – also known as product market growth matrix, is one of the mostly implied marketing tools which was created by Igor Ansoff and was initially published in his article “Strategies for diversification” in the Harvard business review. It is the tool used by most of the companies in order to outline sundry strategies and to align them to ensure proper integration, in order to either introduce a new product, or to increase the market share with the same product. The firm’s potential present market and consumers are focused upon, while deriving out four possible ways to integrate the product-market combination in order to deduce product innovation or increment in the market share:-
This is the first step and the name given to this phase is because here, the businesses focus on to increase marketing share by push selling and diffusing the product in to the market in order to generate bulky revenues and increasing sales volume within the same market with the same existing products. The best to consider this is to gain your competitor’s customers i.e. new customers. Through proper optimization of sales management and advertising, this can be achieved. Following are the objectives of market penetration:-
(a) Maintaining or increasing the market share of company’s current products
(b) Dominate in the growing market
(c) Launching aggressive promotional campaigns to attract new customers
(d) Increase the frequency of purchasing your product, of the current customers
The market development is a growth strategy where the firms seek to expand their business. And by this, it means that to sell the products in the new market. The new market segmentation is done and then it is targeted and therefore the sales ratio and profit increases. The new product means those products which are new to the company, not necessary that they are new to the market. Some possible ways to nurture the pertinent cause are;
(a) Entering in to new geographical market i.e. new state, country etc
(b) Giving new dimensions to the product i.e. new design, packaging, labeling etc
(c) Identification of the new distribution channels
(d) Applying different pricing strategies in order to cater new customers and to hence create new market segments
As clear by the name, product development is the growth strategy, through which the businesses aim to launch new products within the same market. Here, the requirement is to develop and integrate new competent strategies through which’s aligning, the company can foster the new or modified products in to the pertinent market and the target audience should have developed the propensity to accept those, by then. An example is the Sony launches PS3 to replace PS2 which is its existing product.
The market diversity is the process where the business entire new markets, with new products. This involves a huge element of risk and experience as to make sure that the market being entered can spontaneously reject or accept the business idea.