8.1 a Ansoff Matrix Flashcards

1
Q

What is the Ansoff Matrix?

A

A marketing planning model that helps a business determine its product and market strategy

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2
Q

What is the output from the matrix?

A

Four suggested growth strategies

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3
Q

What are the four growth strategies of the Ansoff Matrix?

A
  • Market penetration
  • Product development
  • Market development
  • Diversification
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4
Q

Market penetration sells what products into what markets?

A

Existing products into existing markets

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5
Q

What is the aim of market penetration?

A

To increase market share by getting existing customers to buy more

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6
Q

What is the risk level in market penetration?

A

Very low

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7
Q

‘Cadbury’ market penetration example:

A

Cadbury chocolates repackaged into Christmas selection boxes

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8
Q

Situations that might make a business choose market penetration:

A
  • Potential to grow in the market
  • Existing customers would be willing to buy more of the product
  • New customers could be attracted away from competitors
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9
Q

Advantages of market penetration:

A
  • Little risk
  • Change is likely to be small
  • Familiar with market
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10
Q

Product development sells what products into what markets?

A

New products into existing markets

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11
Q

‘Dyson’ product development example:

A

Producing hair-dryers as well as hoovers

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12
Q

What is the risk level of product development?

A

Educated risk - new product aimed at existing customers who like similar products

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13
Q

Situations that might make a business choose product development:

A
  • Its current products are becoming obsolete

- They have a new innovative product

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14
Q

Advantages of product development:

A
  • Enables business to stay competitive
  • Can develop product portfolio
  • Gain a patent for new products
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15
Q

Market development sells what products into what markets?

A

Existing products into new markets

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16
Q

What is the risk level of market development?

A

Fairly high - no guarantee customers will buy new product

17
Q

Why do the government support market development?

A

They are keen to encourage international trade

18
Q

‘Lego’ market development example:

A

Produced new colours to sell into female market

19
Q

Situations that might make a business choose market development:

A
  • Market segments that don’t buy its products
  • Spare capacity to produce additional quantities
  • Strong brand name
20
Q

Advantages of market development:

A
  • Can use popularity of its products to attract a new group of customers
  • Its not changing what it actually does
  • Usually already a proven product
21
Q

What is a risk of market development?

A
  • Cultural difference can cause successful products to fail in other markets e.g. B&Q in China
22
Q

Different approaches to market development:

A
  • New geographical markets
  • New product dimensions or packaging
  • New distribution channels
  • Different pricing policies to attract different customers
23
Q

Diversification sells what products into what markets?

A

New products into new markets

24
Q

‘HMV’ diversification example:

A

Diversified into the live entertainment market with the £40m purchase of several live music venues but exited the market soon after

25
Q

What is the riskiest strategy out of the four?

A

Diversification

26
Q

Situations that might make a business choose diversification:

A
  • Current market is vulnerable
  • Does not want to risk everything on one product
  • Wishes to grow
27
Q

Advantages of diversification:

A
  • Growth
  • Protects business from external influences in one particular market
  • Can create economies of scale
28
Q

What does the Ansoff Matrix look at?

A

The risk associated with a marketing strategy

29
Q

Disadvantages of Ansoff Matrix:

A
  • Can over simplify risk - diversification may not be that risky if the change is not significant
  • Does not take into account how competitors may react