ANSOFF’S PRODUCT-MARKET GROWTH MATRIX

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  ANSOFF’S PRODUCT-MARKET GROWTH MATRIX WITH EXAMPLES
  STRATEGIC MANAGEMENT
  ANSOFF’S PRODUCT –MARKET GROWTH MATRIX
• DESCRIBES THE FIRM’S EXISTING AND NEW PRODUCTS TO BE MARKETED IN EXISTING AND NEW MARKETS. THE MARKET EMPHASIZES ON GROWTH BUT FIRMS IN DECLINING INDUSTRIES MAY WISH TO SCALE DOWN THEIR OPERATIONS IN EXISTING MARKET OR PRODUCT AREA.
• IDENTIFIED FOUR MAIN STRATEGIES BY THE NAME OF PRODUCT MARKET COMPONENTS THAT ARE OPEN TO COMPANY.
• THESE ARE :-

1. MARKET PENETRATION
2. MARKET DEVELOPMENT
3. PRODUCT DEVELOPMENT
4. DIVERSIFICATION

• ANSOFF’S PRODUCT MARKET EXPANSION MATRIX
• MARKET PENETRATION

1. SELLING MORE PRODUCTS TO THE SAME MARKET
2. TRYING TO MILK MORE FROM EXISTING PRODUCTS AND EXISTING MARKETS AND  SUITABLE FOR THE GROWING MARKET
3. IF THE MARKET IS STAGNANT,MARKET PENETRATION MIGHT INVOLVE MARKET SHARE AT THE EXPENSE OF THE OTHER PLAYERS
4. STRATEGIES TO MAINTAIN CURRENT SHARE WITH THE EXISTING PRODUCTS:

1. ADVERTSING
2. SALES PROMOTION
3. COMPETITIVE PRICING
4. SPENDING MORE ON DISTRIBUTION

• MARKET PENETRATION

1. INCREASING MARKET SHARE
2. INCREASING PRODUCT USAGE
3. INCREASING THE FREQUENCY OF USAGE
4. INCREASING THE QUANITY USED
5. FINDING NEW APPLICATIN FOR CURRENT USERS

·         BY MARKET PENETRATION:-

1. FOR GETTING DOMINANT SHARE IN THE GROWTH MARKET
2. RESTRUCTURING OF MATURE MARKET BY DRIVING OUT THE COMPETITOR
3. INCREASED USAGE OF EXISTING PRODUCTS BY THE CURRENT CUSTOMER

• EXAMPLE
• BRANDS SUCH AS COCA COLA AND HEINEKEN ARE KNOWN FOR SPENDING A LOT ON MARKETING IN ORDER TO PENETRATE  THEIR MARKET. IN ADDITION THEY TRY TO MAXIMIZE THE USE OF DISTRIBUTION CHANNELS BY MAKING ATTRACTIVE DEALS WITH LARGE VARIETY OF DISTRIBUTORS SUCH AS SUPERMARKETS,RESTAURANTS,BARS AND FOOTBALL STADIUMS ETC
• MARKET DEVELOPMENT

1. SELL EXISTING PRODUCTS INTO NEW MARKETS
2. TRY TO ATTRACT NEW USERS FOR EXISTING PRODUCTS
3. EXPORTING
4. FOR UTILIZATION OF CAPACITY

• ACHIEVED THROUGH:-

1. NEW GEOGRAPHICAL MARKETS
2. NEW DISTRIBTUION CHANNELS
3. DIFFERENT PACKING SIZES
4. DIFFERENT QUALITY LEVEL
5. DIFFERENT PRICES TO DIFFERENT CUSTOMERS
6. CREATING NEW MARKET SEGMENTS

• BENEFITS OF STRATEGY

1. INCREASED ECONOMIES OF SCALE
2. PUTTING COMPETITION OFF
3. HIGH SALES VOLUME UTILIZATION OF CAPACITY EFFECTIVELY

• EXAMPLE
• IKEA STARTED EXPANDING TO MARKET RELATIVELY CLOSE IN     AS TO ITS HOME COUNTRY SWEDEN BEFORE TARGETING CHINA AND MIDDLE EAST
• PRODUCT DEVELOPMENT
• OFFERING NEW PRODUCTS TO EXISTING MARKET I.E NEW PRODUCTS ARE LAUNCHED AT EXISTING MARKETS
• STRATEGY IS AIMED THROUGH:-

1. ADDING PRODUCT FEATURES,PRODUCT REFINEMENT
2. INTRODUCING A NEW GENERATION PRODUCT
3. DEVELOPING A NEW PRODUCT FOR THE SAME MARKET

·         BENEFITS:

1. PRODUCT DEVELOPMENT FORCES COMPETITORS TO INNOVATE
2. NEW COMERS TO THE MARKET MIGHT MAY BE DISCOURAGED
3.  A FIRM MIGHT LOSE OUT IF ITS EXISTING PRODUCTS FALL IN PRICE

• EXAMPLE
• APPLE LAUNCHING A BRAND I PHONE EVERY FEW YEARS
• PHARMACEUTICAL COMPANIES SUCH AS PFIZER,MERECK AND BAYERS ARE HEAVILY INVESTING IN RESEARCH AND DEVELOPMENT IN ORDER TO COME UP WITH NEW AND INNOVATIVE DRUGS
• DIVERSIFICATION

1. MOVING INTO NEW MARKET WITH NEW PRODUCTS
2. TO SELL NEW PRODUCTS IN NEW MARKETS
3. MORE RISKY
4. ANSOFF SUGGESTED AT LAST RESORT STRATEGY

• BENEFITS

1. OFFERS PROSPECTS FOR GROWTH
2. INVESTMENT OF SURPLUS FUNDS
3. ACHIEVING GREATER PROFITABILITY
4. PROVIDING A MORE COMPREHENSIVE SERVICES TO CUSTOMERS

• EXAMPLE
• GREAT EXAMPLE OF A CONGLOMERATE IS SAMSUNG WHICH IS OPERATING IN BUSINESS VARYING FROM COMPUTERS,PHONES AND REFRIGERATORS TO CHEMICAL,INSURANCE AND HOTEL CHAINS
• EVALUATION OF ANSOFF’S PRODUCT MARKET GROWTH MATRIX

1. ANSOFF MATRIX IS ONLY A FRAMEWORK FOR  IDENTIFYING PRODUCT MARKET OPPORTUNITIES
2. BUT DOES NOT PROVIDE ANY CHOICE
3. FIRM HAS RESOURCES CAN USE ALL THE STRATEGIES SIMULTANEOUSLY
4. MAJOR LIMITATION IS OF OVERLOOKING OF NEW TECHNOLOGIES AND MANUFACTURING TECHNIQUES
5. DOES NOT ADDRESS THE PROBLEM OF DEGREE OF CHANGE IN EACH PRODUCT  MARKET AREA AND DOES NOT IDENTIFY THE ROLE PROFIT
6. DOES NOT SUGGEST A WITHDRAWAL STRATEGY IN CASE OF NECESSITY