QuestionWhat are the key concepts involved within Ansoff’s Matrix?
AnswerThe Ansoff growth matrix is a marketing planning tool that helps a business determine its product and market growth strategy. The four key elements or suggested growth strategies involved within the matrix are market penetration, market development, product development and diversification. Market penetration – refers to the growth strategy where the organisation focuses on selling existing products into existing markets. One of the main objectives of market penetration aims to gain competitive advantage or secure a dominance over a particular market. Market development – refers to the growth strategy where the organisation attempts to sell its existing products into new markets. This can be a much riskier strategy than market penetration, purely because the organisation is targeting new and unknown markets to them. Product development – refers to the growth strategy where the organisation aims to introduce new products into existing markets. In order to implement a successful product development strategy and achieve competitive advantage, the marketing needs to focus on research, development and innovation, along with being first to market. Diversification – refers to the growth strategy, where an organisation markets new products in new markets. This strategy can be the riskiest, however if the organisation has a clear idea about what it expects to achieve from the strategy, it can be exceedingly rewarding.
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