this is where you can use an approach like the ansoff matrix to think about the potential risks of each option, and to help you devise the most suitable plan for your situation. it has given generations of marketers and business leaders a quick and simple way to think about the risks of growth. it can help you weigh up the risks of your career decisions, and choose the best option as a result. product development, in the lower right quadrant, is slightly more risky, because you’re introducing a new product into your existing market. you can do this by finding a new use for the product, or by adding new features or benefits to it.
you’re trying to sell more of the same things to different people. conduct a risk analysis to gain a better understanding of the dangers associated with each option. you can make sure it really is the best one with one last step: use decision matrix analysis to weigh up the different factors in each option, and make the best choice. this is useful as it shows the difference between product extension and true product development, and also between market expansion and venturing into genuinely new markets (see figure 2, below). next, look at the risks associated with each one, and develop a contingency plan to address the most likely risks. subscribe to our free newsletter, or join the mind tools club and really supercharge your career!
it is a core business strategy tool, taught in business schools to mba students and utilised throughout businesses globally. when combined with the ansoff matrix detailed above, it delivers four strategic options, each with a differing level of risk. the lowest risk strategy is for a company to sell its existing products into existing markets as it knows its customers, has established channels and so on. this is only possible where markets are still growing, or where organisations are prepared to use other elements of the marketing mix (such as price discounting and additional promotional activity) to penetrate the market at the expense of competitors. the second strategic option in the ansoff matrix is to develop new products for existing markets (customers), through a ‘product development’ strategy. the success of this strategy is dependent on the organisation being able to effectively conduct research and insight into their customer and market needs as well as their own internal capabilities and competencies for driving innovation.
this is also considered to be risker than market penetration as it can be difficult to understand the complexities of new markets. the final strategy in the ansoff matrix is ‘diversification’, which is developing new products for new markets. the ansoff matrix is used in the strategy stage of the marketing planning process. it is used to identify which overarching strategy the business should use and then informs which tactics should be used in the marketing activity. if you wish to further your knowledge on how to develop successful marketing strategies, the cim diploma in professional marketing may be of interest to you. watch our video to see how… twitter.com/i/web/status/1… want to improve your #digitalmarketing campaigns?
the ansoff matrix was developed by h. igor ansoff and first published in the harvard business review in 1957, in an important work in the academic history of strategic management. recent schools of thought rightly challenge the ansoff matrix was developed by igor ansoff and initially published in the harvard business, ansoff matrix, ansoff matrix, ansoff matrix examples, ansoff matrix harvard business review, ansoff matrix theory. the four strategies of the ansoff matrix are: market penetration: this focuses on increasing sales of existing products to an existing market. product development: focuses on introducing new products to an existing market. market development: this strategy focuses on entering a new market using existing products.
corporate strategy: an analytic approach to business policy for growth and expansion. front cover. h. igor ansoff. the ansoff matrix is a strategic planning tool that provides a framework it is named after russian american using the ansoff matrix to identify your business growth opportunities in a challenging market., ansoff model, ansoff matrix explained, ansoff matrix reference, ansoff matrix – product development, ansoff matrix template, importance of ansoff matrix, ansoff matrix advantages and disadvantages, how to use ansoff matrix
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