8.1a - Ansoff Matrix

Question 1

Ansoff Matrix definition

Answer 1

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

Question 2

What are the four growth strategies of the Ansoff Matrix?

Answer 2

• Market penetration
• Product development
• Market development
• Diversification

Question 3

What does a ‘market penetration’ strategy aim to do?

Answer 3

Increase market share by selling more existing products to the same target customers (e.g. Cadbury repackaging chocolates into Christmas box)

Question 4

Advantages of market penetration strategy:

Answer 4

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

Question 5

What situations would result in a market penetration strategy being used?

Answer 5

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

Question 6

What does a product development strategy aim to do?

Answer 6

Sell new products into existing markets (e.g. brand extensions such as Coca-Cola Life)

Question 7

How risky is a product development strategy?

Answer 7

It is an educated risk because it is aimed at existing customers who like similar products

Question 8

What situations would result in a product development strategy being used?

Answer 8

• Its current products are becoming obsolete

- They have a new innovative product

Question 9

Advantages of using a product development strategy:

Answer 9

• Enables business to stay competitive
• Can develop a product portfolio
• Can gain a patent for new products

Question 10

What does a market development strategy aim to do?

Answer 10

Sell existing products into new markets (e.g. Starbucks expansion to China)

Question 11

Advantages of using a market development strategy:

Answer 11

• Usually already a proven product so is attractive to new customers
• It is not changing what it actually does
• Government support as they are keen to encourage international trade

Question 12

What situations would result in a market development strategy being used?

Answer 12

• Market segments that don’t buy their products
• Spare capacity available
• Strong brand name

Question 13

Disadvantages of using a market development strategy:

Answer 13

• Cultural difference can cause successful products to fail in other markets
• Existing products may not suit new markets

Question 14

What are the different approaches to market development?

Answer 14

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

Question 15

What does a diversification strategy aim to do?

Answer 15

Sell new products into new markets

Question 16

What situations would result in a diversification strategy being used?

Answer 16

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

Question 17

Advantages of using a diversification strategy:

Answer 17

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

Question 18

Disadvantages of Ansoff Matrix:

Answer 18

• Can oversimplify risk (diversification may not be that risky if the change is not significant)
• Does not take into account how competitors may react