Diagrammo Management theories explained

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Ansoff Matrix

Ansoff matrix

The Ansoff Matrix is a strategic planning tool that was first presented in an article by Igor Ansoff in 1957. It offers a framework to help managers and marketers devise strategies for future growth and diversification. Ansoff describes four growth strategies.

Marketing penetration

A growth strategy based on market penetration is trying to sell more existing products in existing markets. Occasional users of a product should become regular users. Regular users become heavy users. The company seeks increased sales through more aggressive promotion and distribution. Customer loyalty is the motto here. Quantity discounts, loyalty cards, intense and intelligent relationship management and other lock-in tactics prevent that the customer walks away.

Market development

A company that wants to sell its existing products to new customers does so with market development. Sometimes these new customers have to be tempted to leave competitors. In other cases the growth market is abroad. The communication then focuses on the marketing-introduction of a product. This strategy is most likely to be succesful where the company can leverage unique product technology, benefits from economies of scale or when the new market is comparable to the one where there is already experience.

Product development

Product development means that a company seeks to sell loyal customers other, new products. Sometimes this involves additional products, such as accessories or additional software on a laptop. Sometimes this mean totally new products. These new products may be obtained by investment in (joint) research and development or acquiring existing products. The communication here is done via fixed channels.

Diversification

Diversification is the most risky of growth strategies in the Ansoff Matrix. A new product in a new market. If companies choose to do so, it has to do with risk spreading. Communication in this case focuses on consolidating credibility. How to clarify why a company chooses to penetrate a new market ánd new customers. This strategy switch is to be exploited by values such as innovation, daring adventure, wildlife, young and dynamic. By branding products this way, they will appeal to new audiences.

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