SIP Workshop

Maumita Roy
Assessing Growth Opportunities
 The Ansoff’s Growth Matrix
Increasing Risk

Increasing
Risk
As part of a larger strategic planning initiative,
the Ansoff’s matrix is a communication tool
which helps you see the possible growth
strategies for your organization.
 Market Penetration
• It is often adopted as a strategy when the organization
has an existing product with a known market and
needs a growth strategy within that market.

• It leverages many of firm’s existing resources and

capabilities.

• This is considered as the lowest risk strategy for a

company as it sells its existing products into existing
markets and it knows its customers, has established
channels and so on.
 This can be accomplished by:
• Increasing Market Share
Distribution and service improvements
Cutting costs and prices
Outspending competitors on advertisements

• Increasing Product Usage

Increase frequency of use
Increase quantity used
New applications
 Product Development
• Product development in the Ansoff matrix refers to firms which
have a good market share in an existing market and therefore might
need to introduce new products for expansion.

• Product development is needed when the company has a good

customer base and knows that the market for its existing product
has reached saturation.

• The development of new products may be a good strategy if the

firm’s core competences are related more to the specific product.

• 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 can be accomplished by:

• Product Improvement
• Product – line Extensions
• New products for same market
 Market Development
• This strategy is used when the firm targets a new
market with existing products.

• This is also considered to be riskier than market

penetration as it can be difficult to understand
the complexities of new markets.

• Key changes in the marketing mix are likely to be

‘Place’, with consideration of new channels and
routes to market, as well as ‘Promotion’, through
promoting to new target segments.
 This can be accomplished by:

• Different customer segments

• Industrial buyers for a good that was
previously sold only to the households;
• New areas or regions about of the country
• Foreign markets.
 This strategy is more likely to be
successful where:
• The firm has a unique product technology it can
leverage in the new market

• It benefits from economies of scale if it increases

output

• The new market is not too different from the one it has
experience of

• The buyers in the market are intrinsically profitable

 Diversification
• The diversification strategy in the Ansoff matrix
applies when the product is completely new and
is being introduced into a new market.

• This is seen as the riskiest strategy of all four, as

the organisation is moving into an unfamiliar
market. However, this risk can be mitigated by
undertaking ‘related’ diversification and it could
have the potential to gain the highest returns.
 Benefits of using Ansoff’s Matrix
as a decision-making tool
• Ansoff’s Matrix can be used as part of a marketing audit.

• It is a useful tool for management to help analyse the

strategic position of the firm and set objectives for the
way forward.

• The Matrix sub-divides the options into four specific

strategies that management could consider for long term
growth.

• It indicates the level of risk associated with each strategy

thus encouraging management to focus carefully on the
impact of any decision made.
 Limitations of using Ansoff’s Matrix as a
decision-making tool
• Ansoff’s Matrix is often criticised for being too simplistic as it
doesn’t taken into consideration the external environment.

• The Matrix outlines strategies for growth so its usefulness will

be very limited to a firm whose objective is survival.

• Information relating to future growth will be based on forecasts

regardless of which strategy the firm chooses and this is a
further risk.

• Ansoff’s Matrix only tells part of a story so it is necessary for

other decision-making tools to be used in conjunction with it so
an informed decision can be made by management.
Coca Cola Growth Strategies
Market Penetration
Product Development
 Market development
• Coca Cola’s operational reach encompasses
200 + countries worldwide across 5 operating
regions: Asia Pacific; Europe, Middle East &
Africa; Latin America; North America;
• Coca Cola in India
Diversification