Ansoff matrix

Question 1

What is market penetration?

Answer 1

This is a growth of strategy that focuses upon how a business can increase sales within their existing market within their current products.

• Encourages new users of your products.
• Target competitor sales.
• Increase usage amongst existing customers.

Question 2

What is market development?

Answer 2

This growth involves identifying new markets for a firm’s existing products.

Question 3

What are two ways that business can market develop?

Answer 3

Identifying new geographical markets
- Some risk as every country’s population hold different tastes, interests and needs.
- Products adapted for the sale in new markets – would increase costs.
- Marketing campaigns might also required adjustment.
Finding new customers and uses for existing products
- Targeting perhaps younger audience or different socio-economic
- Repacking and rebranding goods e.g Lucozade sport
- Opening up new distribution channels

Question 4

What is product development?

Answer 4

Strategy focuses on development of new products which are targeted to existed customers.
- Often involves product extension strategies which extends life cycle of goods.
- Investment in new products takes time and money due to the need of R&D.
- Many new ideas fail in the development phase and never reach the customer.

Question 5

What is diversification?

Answer 5

Considered the highest risk of all four strategies this involves new products being targeted at new markets.
- Diversification does allow a business to spread risk by avoiding only focusing upon their existing products and markets in which sales decline.
- Main risk is uncertainty. They cannot be certain about how product will perform or whether the market will adopt it.