Thus if the head of the toothbrush is bigger it will mean that more toothpaste will be used thus promoting the usage of the toothpaste and eventually leading to more purchase of the toothpaste. On the other hand, Lucozade has successfully moved its brand from a product associated with infirmity to a sports-related product.
Market Development is a far much risky strategy as compared to Market Penetration. A company might show a preference for product development strategy for the following reasons: As stated above, there are four output options for the Ansoff Matrix.
The strategy of diversification is considered to have a high risk due to the fact that the company will not only be offering a new product, but it will also be entering into a new market. This allowed the company the advantage of attracting new customers. Using the strategy of market development Arm and Hammer was able to attract a new customer set for its baking soda product Christensen et.
By doing so, it can appeal more to the already existing market. A good example is the usage of toothpaste. Other procurement advantages could come from preferential access to raw materials, or backward integration.
Selling through e-commerce will capture a larger clientele base since we are in a digital era where most people access the internet often. A company can choose to engage in product development for several reasons including: Market development strategy would be contemplated for the following reasons: The goal of this strategy is to attract new customers for existing products.
It is the most risky strategy among the others as it involves two unknowns, new products being created and the business does not know the development problems that may occur in the process.
Ansoff was primarily a mathematician with an expert insight into business management. An Integrated Approach, 7th ed.
An example of forward diversification happens when a photographer starts offering picture framing Hitt et. This strategy is used by companies in order to increase sales without drifting from the original product-market strategy Ansoff, If an organisation is able to identify the key factors for success it can then increase its chances of implementing a successful diversification strategy.
This new product development has allowed Google to sustain its competitive advantage in the Internet web browser market.
Consumer Behavior and Eating Habits Consumer Behavior Situational Influences and Eating Habits What and how people choose to eat is not a conscious decision; it is affected by colors, smells, lighting, plate size and culture.
Overheads are kept low by paying low wages, locating premises in low rent areas, establishing a cost-conscious culture, etc. This would entail selling the products via e-commerce or mail order.
This matrix helps companies decide what course of action should be taken given current performance. The associated distribution strategy is to obtain the most extensive distribution possible. For example, a butter manufacturer discovering increased demand for skimmed milk.
It is important to note that diversification may be into related and unrelated areas. The company uses an existing product, namely air travel, and offers this product in an existing market, namely flights for the small distance cities. Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it.
Figure-1 shows a matrix of the three generic competitive strategies and their interrelationship given by Porter. The strategy of diversification entails offering new products in new markets. An established product in the marketplace can be tweaked or targeted to a different customer segment, as a strategy to earn more revenue for the firm.
It may also be known as Market Extension. Backward integration takes place when the company extends its activities towards its inputs such as suppliers of raw materials etc.
One can diversify from a food industry to a mechanical industry for instance. Promotional strategy often involves trying to make a virtue out of low cost product features. A good example is car manufacturers who offer a range of car parts so as to target the car owners in purchasing a replica of the models, clothing and pens.
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. There are risks associated with all of the four strategic options entailed in the Ansoff matrix.
While diversified businesses seem to grow faster in cases where diversification is unrelated, it is crucial to note that the track record of diversification remains poor as in many cases diversifications have been divested Porter, Another successful case study of the market development strategy is that of many Chinese manufacturers offering their products to new markets.
What is Ansoff Analysis?Webpage on Management Functions, Human Resource Management, Economic and Social Environment, Accounting and Finance for Managers, Marketing, Management Information System, Quantitative Analysis, Management Economics, Organisational Design Development & Change, Strategic Management, Social Processes and Behavioural issues, Human Resource Development.
Ansoff's matrix. Ansoff's matrix is a very useful tool for identifying and classifying the range of strategic options available to a firm and thus is used in the "strategic choice" part of the strategic planning process.
The matrix. Ansoff's matrix classifies strategies according to whether they involve new or existing products and new or existing markets. Below is a list of case studies taken from the Marketing section of Business Case Studies.
Choose your sub topic from the list of arrowed links below the Marketing heading. What does it take to succeed in business? Critical Business Skills for Success is a comprehensive guide to the five disciplines--strategy, operations, finance and accounting, organizational behavior, and marketing--that everyone needs to master in today's marketplace.
The Ansoff Matrix also known as the Ansoff product and market growth matrix is a marketing planning tool which usually aids a business in determining its product and market growth.
This is usually determined by focusing on whether the products are new or existing and whether the market is new or existing.Download