Ansoff Matrix (DP IB Business Management)
Revision Note
Development of Corporate Strategy
Ansoff’s Matrix is a tool for businesses who want to grow quickly and have a growth objective
It is used to identify an appropriate corporate strategy and identify the level of risk associated with the chosen strategy
The model considers four elements, which are broken down into two categories
The market - existing and new markets
The product - existing and new products
Diagram: Ansoff's matrix
Market penetration
The least risky strategy to achieve growth is to pursue a strategy of market penetration
This involves selling more products to existing customers by encouraging
More regular use of the product
Increased usage of the product
Brand loyalty of customers
Market development involves finding and exploiting new market opportunities for existing products by
Entering new markets abroad
Repositioning the product by selling to different customer profiles (selling to other businesses as well as direct to consumers)
Seeking complementary locations
E.g. M&S Food has achieved significant growth since teaming up with fuel retailers such as BP and Applegreen and providing express retail outlets
Product development
Product Development involves selling new or improved products to existing customers by
Developing new versions or upgrades of existing successful products
Redesigning packaging and aesthetic features
Relaunching heritage products at commercially convenient intervals
E.g. Lindt relaunches Christmas-themed products each year, often with a subtle design change, to recapture the interest of customers
Diversification
Diversification is the most risky growth strategy as it involves targeting new customers with entirely new or redeveloped products
Examples of diversification include
UK supermarket Tesco launching a range of financial products including current accounts and credit cards
Café chain Greggs launching a range of themed clothing products
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