UNIT 6: Ansoff's Matrix (BMT)
ANSOFF MATRIX
WHAT IS THE ANSOFF MATRIX?
A BALANCED PORTFOLIO
APPLE'S PORTFOLIO
WHAT'S ALL THIS DOG AND COW STUFF?
Market Penetration
This growth strategy concentrates on expanding sales revenue and market share by developing existing markets with existing products. It is relatively low risk because the hard work is done in entering markets!
The effort here is marketing to existing customers within the market to increase repeat purchases. The major expenditure is marketing to make this happen.
The objective is to increase market share and increase domination, perhaps like Coca Cola, where they effectively deter new competitors from entering by erecting barriers.
Examples include implementing more competitive pricing, utilizing customer loyalty programs, expanding distribution channels (e.g., delivery services), and enhancing advertising campaigns.
#2 Market development
Market Development: This growth strategy revolves around selling existing products in new or untapped markets.
The idea is to use customer loyalty (those that are familiar with the brand) to encourage both existing and potential customers to adopt a new product.
Market development is riskier and more costly as failure is an option! Tastes and habits can change. Advertising can fail, like Ok Cola! Never heard of them? Maybe this is why!
Expanding overseas may need increased use of supply chains and carry more cost!
#3 Product development
Product Development: This growth strategy involves introducing new products to existing customers, focusing on product differentiation to stay competitive or enhance competitiveness. Typically, new products are developed either to replace existing ones (e.g., the latest iPhone) or to extend the product range (e.g., iTunes, iPads, and Apple Watch), targeting current customers. Product development is considered a medium-risk growth strategy as it may involve substantial investment costs, including expenditures on market research (to understand customer preferences), prototyping, and
#4 Diversification
- Diversification involves organizations moving into new markets with new products, e.g., Honda lawnmowers, Lenovo smartwatches, IKEA’s infamous meatballs, or the Golden Arch Hotel of McDonald’s in Switzerland. Lego also has several Legoland Hotels around the world, with its different themed hotel rooms.
#1 CASE STUDY: JOHN VON SHORT
#1 JOHN VON SHORT QUESTIONS
- Explain (
#2 CASE STUDY: CHINA DRIVE (CD)
Jimmy Achoo floated the idea of launching a new product, that would be named, D-Shock! It would be a cheaper model, targeted at students and a lower income bracket. Production of the scooter could be outsourced to a less economically developed (LEDC) country with lower wages and lower production costs!
The CEO recognises that move would be without problems! The management of CD understands that problems with communication and culture may be an issue initially wherever they move to!
#2 CHINA DRIVE QUESTIONS
- Interpret (using information from the case study) whether or not CD has a balanced portfolio) [4]
- Recommend (using data from the tables and information from the case study in addition to the BCG Matrix) which e-scooter China Drive should remove from their portfolio to remain profitable [10]
