2. IGOR ANSOFF’s MATRIX
Market
Produ EXISTING NEW
ct
EXIST
MARKET MARKET
PENETRATION DEVELOPMENT
•Increase sales to existing market •Existing products sold to new
•Penetrate existing market more markets
deeply
NEW
NEW PRODUCT DIVERSIFICATION
•New Products sold to new
DEVELOPMENT markets
•New products developed for existing
markets
3. IGOR ANSOFF MATRIX
MKT
PROD EXISTING NEW
UCT
EXIST MARKET PENETRATION MARKET
•Little risk DEVELOPMENT
•Moderate Risk
NEW NEW PRODUCT DIVERSIFICATION
DEVELOPMENT •High Risk
•Moderate Risk
4. IGOR ANSOFF MATRIX – Growth
of TESCO
MKT
PROD EXISTING NEW
UCT
EXIST MARKET PENETRATION MARKET DEVELOPMENT
•Increase in share of grocery •Move into convenience
business at the expense of store market
Sainsbury •Expansion abroad
NEW NEW PRODUCT DEVELOPMENT DIVERSIFICATION
•Expansion into Petrol Sales •High Risk
•Development of financial services
5. Market Penetration
Maintain increase market share in current
market with current products
Selling more of the same to the same people
In saturated market - Difficult
In stagnant market – grab market share from
others – intense competition
6. Market Penetration
Increase usage by existing customers
Encourage increase in frequency of use
Attract customers away from rivals / Gain
market share at expense of rivals
Devise and encourage new applications
Encourage non-users to buy
8. Use Market Penetration when -
When the market is not saturated
When there is potential of growth
When competitors share is falling
When increase in volume leads to economies
of scale
When there is scope to sell more to existing
users
9. Market-Penetration Strategy
Why ? To dominate market
How ? To increase usage or get new
customers; reduce price; expand distribution or
increase promotional activities
When ? When market is growing
What to look out for ? Competitive reaction;
cost of conversion
Example: Airlines used reduced fares &
promotion various family travel packages to
penetrate market
10. PRODUCT-MARKET STRATEGIES
A product- (new offering-) development
strategy dictates that an organization create
new offerings existing markets.
11. PRODUCT-DEVELOPMENT STRATEGY
This strategy involves:
Product
Developing totally new offerings.
Innovation
Product Enhancing the value to customers
Augmentation of existing offerings.
Product Adding different features, sizes, etc. to broaden the
Line Extension existing line.
12. Product Development Strategy
New product to replace old product
New innovative products
Product improvements
Product line-extensions
New products to complement existing
Products at a different quality level from
existing product
13. PRODUCT-DEVELOPMENT STRATEGY
Factors to consider when adopting this strategy:
The market size and volume needed for profitability.
The magnitude and timing of competitors’ responses.
The impact of the new product on the sales of
existing offerings (cannibalization).
The capacity of the organization to deliver the
offerings to the market(s).
14. Product-Development
Strategy
Why ? To satisfy buyer’s need
How ? New or improved product; innovate or
augment product
When ? Customer has a need or a problem
What to look out for ?
Market size/volume
competitor reaction
effect on existing products
resources to deliver new products
15. IGOR ANSOFF MATRIX
MKT
PROD EXISTING NEW
UCT
EXIST MARKET PENETRATION MARKET
•Little risk DEVELOPMENT
•Moderate Risk
NEW PRODUCT DEVELOPMENT DIVERSIFICATION
•Moderate Risk •High Risk
16. PRODUCT-MARKET STRATEGIES
A market-development strategy
dictates that an organization introduce its
existing offerings to markets other than
those it is currently serving
(existing offerings new markets).
17. Market Development Strategy
Selling the same product to different market
Entering new markets, segments with existing
products
Gaining new customers, new segments, new
markets
Requires changes in marketing
strategy, distribution, pricing
policy, promotional strategy
18. Use market development when
Untapped market is beckoning
The firm has excess capacity
Attractive channels to access new markets
19. MARKET-DEVELOPMENT STRATEGY
This strategy involves:
Adjusting the marketing mix, such as:
• Modifying the basic product offering
• Using different distribution outlets
• Changing the sales effort or advertising
Analyzing competitors’ strengths,
weaknesses, and potential for retaliation.
20. MARKET-DEVELOPMENT STRATEGY
This strategy involves (continued):
Identifying the number, motivation, and
buying patterns of new buyers.
Determining the organization’s ability to
adapt to new markets to evaluate success.
22. MARKET-DEVELOPMENT STRATEGY
Involves marketing the same offering in another
Exporting
country through sales offices or intermediaries.
Is a contract where one firm (licensee) is given the
Licensing rights to patents, trademarks, etc. by the owner
(licensor) in turn for a royalty or fee.
Involves investment by both a foreign firm and a
Joint Venture/ local company to create a new entity in the host
Strategic Alliance country. The two forms share ownership, control,
and profits of the entity.
Involves investing in a manufacturing and/or
Direct
assembly facility in a foreign market. Is the most
Investment
risky and requires the most commitment.
23. Market-Development Strategy
Why ? To venture into new markets
How ? Sell existing products in new markets;
modify product; use different distribution; use
different advertising/sales strategy
When ? Present market is saturated
What to look out for ? Competitive reaction;
understand new buyers; adaptability
24. IGOR ANSOFF MATRIX
MKT
PROD EXISTING NEW
UCT
EXIST MARKET PENETRATION MARKET
•Little risk DEVELOPMENT
•Moderate Risk
NEW PRODUCT DEVELOPMENT DIVERSIFICATION
•Moderate Risk •High Risk
25. Diversification
New products sold to new markets
New products sold to new customers
Select based on growth prospects which the
two new variables offer that the present
product-market does not
26. Diversification Types
Related Unrelated
Beyond present Entirely new product
product –market, but and market
within present Conglomerate
industry diversification
Synergistic
diversification
Lesser risk
27. Related Diversification
Horizontal – new products introduced to
current markets (new product development)
Vertical – when an organization moves into its
supplier’s or customer’s business
Concentric – when new products closely
related to existing products are introduced in
new markets
28. Diversification Strategy (cont’d)
Three types of diversification
Concentric, horizontal and conglomerate
Three essential tests of success
Attractiveness
Cost-of-entry
Better-off
29. Vertical Integration
Why?
To gain operating economies i.e. to lower costs
To gain access to or control supply demand
To enhance technological innovation
How? Integrate backward and forward
When? Basic industry is in a growth stage
What to look out for? Problems in managing
very different businesses; increase risk, reduced
flexibility; cost of excessive in-growing
30. Example of Vertical Integration
Airlines integrate backward to in-flight
kitchens; forward to travel agencies
31. Related Diversification
Development beyond present product market
mix but within the broad confines of the
industry
32. Diversification Strategy
Why ? Growth opportunities outside current
business
How ? New products for new markets
When ? Distinctive competencies available
What to look out for ? High risks, resources
required, need to understand new markets, fit with
distinctive competencies
33. Uses of Ansoff’s Matrix
A framework to explore directions for strategic
growth
Most commonly used model for strategic
growth
Identify and analyze growth opportunities
Considers expected returns and risks
35. Market Penetration
Advertise - to encourage more people within
your existing market to choose your
product, or to use more of it
Introduce a loyalty scheme
Launch a price or other special offer
promotions
Increase your sales force activities
Buy a competitor company (particularly in
mature markets)
36. Product Development
Extend your product by producing different
variants, or packaging existing products it in
new ways
Develop related products or services
In a service industry, shorten your time to
market, or improve customer service or quality
37. Market Development
Target different geographical markets at home
or abroad
Use different sales channels, such as online or
direct sales if you are currently selling through
the trade
Target different groups of people, perhaps with
different age, gender or demographic profiles
from your normal customers.
38. Modified Ansoff Matrix – 9 Box Grid
Product – Existing Modified New
Market
Existing
Market Product Product
Penetration Extension Development
Modified Partial
Limited
Market Diversificatio
Diversificatio
Expansion n
n
New Partial
Market Diversificatio
Diversificatio
Development n
n
40. STRATEGY SELECTION
Product-market strategies are evaluated
based on:
The organization’s business definition,
mission, and capabilities.
Market capacity and behavior.
Environmental forces.
Competitive activities.
41. STRATEGY SELECTION
Product-market strategies are chosen based
on:
Costs and benefits of a strategy.
Probabilities of success for a strategy.
Analysis of competitive structure, market
dynamics, and opportunity costs.
The product itself.
43. EXHIBIT 1.4: SAMPLE DECISION-TREE
Action Response Outcome
Aggressive Estimated profit
Market- competition of $2 million
penetration
strategy Passive Estimated profit
competition of $3 million
Aggressive Estimated profit
Market- competition of $1 million
development
strategy Passive Estimated profit
competition of $4 million
44. THE MARKETING MIX
Communication
Aggressive
Strategy
competition
Product Channel
Customer
Strategy Aggressive Strategy
competition
Passive
competition
Price
Strategy
45. THE MARKETING MIX
Product
Kind of product, service, or idea offered.
Strategy
How the product, service, or idea will be profit
Estimated
Communication
communicated to buyers. Informsof$3 assures
and million
Strategy
buyers that the offering will meet their needs.
Method for distributing the product or service to
Channel buyers. Satisfies buyers’ shopping patterns and
Aggressive
Strategy competition
purchase requirements. Provides information and
offering availability.
Estimated profit
Price of $4 million
Amount buyers will pay for the offering.
Strategy Represents the value or benefits provided.
46. FORMULATING THE MARKETING MIX
Depends on the success requirements of the
market.
Delivers customer value in Estimated profit
marketspace, the
of$3 million
new interactive capabilities of the Internet.
Aggressive
Must be consistent with both the needs of the
competition
markets and the organization’s capacity. profit
Estimated
of $4 million
Is as much art and science.
47. CHAPTER 1: FOUNDATIONS OF STRATEGIC
MARKETING MANAGEMENT
BUDGETING MARKETING,
FINANCIAL, AND
PRODUCTION RESOURCES
48. BUDGETING
A budget is a
formal, quantitative expression
of an organization’s planning
and strategy initiatives
expressed in financial terms.
49. BUDGETING
A master budget consists of:
Focuses on the income statement.
Operating
Also referred to as a pro forma income statement or profit
Budget
plan.
Financial Focuses on the effect the operating budget has on the
Budget organization’s cash position.
Focuses on developing advertising,
Special
sales, and other budgets that support
Budgets
the master budget.
50. CHAPTER 1: FOUNDATIONS OF STRATEGIC
MARKETING MANAGEMENT
DEVELOPING
REFORMULATION AND
RECOVERY STRATEGIES
51. MARKETING AUDIT
A marketing audit is a comprehensive,
systematic, and periodic examination of a
firm’s or business unit’s marketing
environment, objectives, strategies, and
activities to determine problem areas and
opportunities and recommend a plan of
action to improve the firm’s marketing
performance.
52. MARKETING AUDIT
Addresses the following questions:
Strategic Are we doing the right things?
Operational Are we doing things right?
53. REFORMULATION AND RECOVERY
STRATEGIES
Have the following purposes:
Forces marketing managers to ask
“What if…?” questions.
Allows for contingency plans, preplanning of
reformulation and recovery strategies that lead
to faster reaction time in implementing
remedial action.
55. MARKETING PLAN
A marketing plan is a formal,
written document that describes the
context and scope of an
organization’s marketing effort to
achieve defined goals or objectives
within a specific future time period.
56. MARKETING PLAN
Consists of:
Business Marketing Product
Plan Plan Plan
Each has these time dimensions:
Short-term Focuses on a 1-year period.
Long-term Focuses on a 3- to 5-year period.
Editor's Notes
Productivity improvements in the things we sell, the processes we use to sell themIncrease productivity by market share growthServing customers betterIncrease productivity by market growth
Eg: tata cars after tata heavy vehiclesBanks developing insurance products
Develop related products or services (for example, a domestic plumbing company might add a tiling service – after all, if customers who want a new kitchen plumbed in are quite likely to need tiling as well!)