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Strategy Choice: Ansof 

Igor Ansof in 1957, developed a matrix based upon markets and products to show the

possible options that organisation have to ll the planning gap !"ater added #geograph$%

as a third dimension& 'e can also relate these to the compan$(strategist%s attitude to

)I*+ with diversication 1 times more risk$ than penetration A-. /anual pages 110

11 are excellent

 2he Ansof /atrix identies 3our possible combinations4

1 existing products which the$ can sell to existing markets existing products which the$ can sell to new markets new products which the$ can sell to existing markets6 new products which the$ can sell to new markets

sing these combinations gives a choice o3 3our possible basic strategies4

Market Penetration Strategies

Increase existing market share 0 appropriate when a market is growing and is not $et

saturated

Market Development Strategies

*ame product(new market such as a regional supermarket going national or i3 new

markets are emerging because o3 changes in consumer habits It can also occur when a

new use has been discovered 3or an existing product 8 and :illette )a;ors 3or ladiesrenement> ? 3or example, a change o3 packaging or taste ? or a completel$ new

product which aims to satis3$ the same consumers Product development is most

prevalent when strong branding e!ists  8romotional aspects will emphasise the

added @ualities o3 the >new> product and link it specicall$ to the securit$ o3, and

condence in, the brand 2his strategy builds on customer loyalty and the

bene"ts to be gained b$ purchase ther marketing mix elements, such as

distribution, ma$ remain unchanged +odak, saw its annual sales o3 lm decline 3rom 15

billion dollars to BB million dollars in the ve $ears to B1B and were late into the digital

camera market, but have success3ull$ used their technolog$ in the development o3

printers

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Diversi"cation Strategies

Cew product(new market is the most risk$ strateg$ but also ofers considerable gains It

is sometimes introduced so that a compan$ does not become too dependent on its

existing *-s, in which case it is a 3orm o3 >insurance> against potential disasters that

could occur in the event o3 drastic environmental changes It can also simpl$ be a means

o3 growth and expansion o3 power %elated&unrelated is key 'uestion here

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)isk and the Ansof /odel

Durrent product to the current market is the sa3est position All key actors such

as( buyers) distribution) competition) are known nce the compan$ begins

to change some aspect, risks occur 2he risk element can var$ according to the

competences o3 the organisation Eor example, i3 it has proven expertise in new productdevelopment, particularl$ with regard to innovation, then the risk element connected

with new products will be lessened ? the Apple Dorporation is a good example with

products such as the I8od

*imilarl$ i3 an organisation has proven international market entr$ capabilities, then the

new market risk element will be reduced As has been noted earlier, there have been

convergences in many markets) so that whilst the Indian $outh market, 3or

example, ma$ at rst seem @uite diferent to the Erench $outh market, it has some ke$

similarities 2hese will lead to the same, or ver$ similar, bu$er behaviours and hence the

Fnew marketG element o3 risk will be low

*he +nternational Dimension

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Eigure 74 2he Ansof growth matrix using an incremental scale page 11

 2he idea o3 this matrix is that it is possible to assess diferent degrees o3 risk in entering new international

markets b$ considering degrees o3 market newness and product newness *o, 3or example) it will be

more risky to launch a product into a new country with considerable distance)

both geographically and culturally) rom the country markets that the company

is used to  Eor example, a + compan$ that has developed markets in the . will experience higher risksin marketing to "atin American countries or to Hapan and Dhina than it would to 2urke$ and *wit;erland All the

countries mentioned would be new markets, but *wit;erland and 2urke$ are closer geographicall$ and culturall$

than the high context and geographicall$ distant "atin America, Hapan and Dhina .ntering these markets

there3ore would be a ver$ high0risk strateg$, particularl$ i3 it were combined with the need to produce entirel$

new products

!a& 'hen a compan$ develops be$ond its present product and market whilst remaining in

the same area, this is described as related diversication Strategy development

beyond current products and markets, but within the capabilities or value

network of the organisation

Eor example, a newspaper expanding b$ taking over a radio station remains within the

media sector It has built on its present strengths b$ using its expertise to develop new

interests in the same sector arious 3orms o3 integration shown below

!b& 2he term unrelated diversication is used to describe a compan$ moving be$ond its

present interests into unrelated markets or products. Development of

 products/services beyond the current capabilities or value network 

Eor example, when it considered diversication targets, 8hilip /orris believed that the

core competence it had developed in marketing cigarettes could appl$ to other, similar

markets -ased on this belie3, the compan$ purchased /iller -rewing and then used the

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8hilip /orris marketing skills to move the /iller brand 3rom seventh place to second in its

market Another example is that o3 :eneral .lectric Hack 'elch, the 3ounder o3 :.

trans3ormed the organisation 3rom a purel$ manu3acturing compan$ into a more

diversied compan$ with an increasingl$ important service component

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