IB Business & IB Business & ManagementManagement

Ansoff and his MatrixAnsoff and his Matrix

Topic objectivesTopic objectives

Explain the value of Ansoff’s matrix as a Explain the value of Ansoff’s matrix as a decision making tool.decision making tool.

Apply the matrix growth strategies to a given Apply the matrix growth strategies to a given situationsituation

First a little something to get First a little something to get you thinkingyou thinking

Some might say this is Liam Some might say this is Liam Gallagher (former Oasis Gallagher (former Oasis frontman) looking back in anger, frontman) looking back in anger, but has he finally found but has he finally found something worth living for?something worth living for?

What Business Studies ideas What Business Studies ideas can you get from the up and can you get from the up and coming clip?coming clip?

Is it my imagination or is this Is it my imagination or is this Business Studies?Business Studies?

You’ll be mad for this one!You’ll be mad for this one!

Warning Very Strong Language!Warning Very Strong Language!

So what did you get?So what did you get?

Reasons for starting a Reasons for starting a business?business?

Marketing strategies?Marketing strategies? Niche Vs Mass?Niche Vs Mass? Diversification?Diversification?

Which leads on to Ansoff and Which leads on to Ansoff and his matrix…his matrix…

What is it?What is it?

A tool to help a business decide A tool to help a business decide their product and growth their product and growth strategystrategy

N.B. It will not make the N.B. It will not make the decision for you!decision for you!

2 sets of categories = 4 options2 sets of categories = 4 options

We look at either new or existing We look at either new or existing productsproducts

andand New or existing marketsNew or existing markets

He then gave a name to each of He then gave a name to each of the four options this threw up.the four options this threw up.

Ansoff’s Matrix…Ansoff’s Matrix…

Market PenetrationMarket Penetration

Here we market our existing Here we market our existing products to our existing customers. products to our existing customers.

This means increasing our revenue This means increasing our revenue by, for example, promoting the by, for example, promoting the product, repositioning the brand, and product, repositioning the brand, and so on.so on.

However, the product is not altered However, the product is not altered and we do not seek any new and we do not seek any new customers. customers.

Often a low risk, low return option.Often a low risk, low return option.

Market DevelopmentMarket Development

Here we market our existing product Here we market our existing product range in a new market. range in a new market.

This means that the product remains This means that the product remains the same, but it is marketed to a new the same, but it is marketed to a new audience. audience.

Exporting the product, or marketing it Exporting the product, or marketing it in a new region, are examples of in a new region, are examples of market development.market development.

Medium risk/returnMedium risk/return

Product DevelopmentProduct Development This is a new product to be marketed to This is a new product to be marketed to

our existing customers. our existing customers. Here we develop and innovate new Here we develop and innovate new

product offerings to replace existing product offerings to replace existing ones. ones.

Such products are then marketed to our Such products are then marketed to our existing customers. existing customers.

This often happens with the cars where This often happens with the cars where existing models are updated or replaced existing models are updated or replaced and then marketed to existing and then marketed to existing customers. customers.

Medium risk/returnMedium risk/return

DiversificationDiversification

This is where we market This is where we market completely new products to new completely new products to new customers. customers.

This can be broken down into This can be broken down into two further subsetstwo further subsets

Diversification: relatedDiversification: related

Related diversification means Related diversification means that we remain in a market or that we remain in a market or industry with which we are industry with which we are familiar. familiar.

For example, a soup For example, a soup manufacturer diversifies into manufacturer diversifies into cake manufacture (i.e. the food cake manufacture (i.e. the food industry). industry).

The most risky optionThe most risky option

Diversification UnrelatedDiversification Unrelated

Unrelated diversification is Unrelated diversification is where we have no previous where we have no previous industry nor market experience. industry nor market experience.

For example a music company For example a music company invests in the rail business. invests in the rail business.

How would you use it?How would you use it?

It helps companies put the It helps companies put the options in the right box and then options in the right box and then focus on what is the best for focus on what is the best for themthem

Try not to look at it as 4 Try not to look at it as 4 categories, but as scale. categories, but as scale.

For example, it is never going to For example, it is never going to be exactly the same customersbe exactly the same customers

Quick test to see if you’re awakeQuick test to see if you’re awake

If you were Microsoft, where If you were Microsoft, where would you put the x-box in the would you put the x-box in the matrixmatrix

Quick test to see if you are awakeQuick test to see if you are awake

If you were Apple, where would If you were Apple, where would you put the i-phone?you put the i-phone?

School lunchesSchool lunches

School lunches provided to the School lunches provided to the whole communitywhole community

Nice example of……?Nice example of……?