Roots of the Ansoff strategy… The revolutionary Ansoff Matrix is the birth child of H.Igor Ansoff a famed Mathematician. Its usage dates back to 1957 when it was first printed in the Harvard Business Review. Following which H.Igor Ansoff printed it in his own book called Corporate Strategy in 1965. What is Ansoff Matrix? Survival in today’s competitive market is tough for almost any venture. To stay in the league, ventures must analyze the potential of their commodities as well as how well their commodities fair with customers as well as clients. Ansoff is the very medium through which the future of current and new products can be effectively determined.
Another name for this strategy tool Product/ Market Expansion Grid. It boasts of four dimensions namely: Market Penetration Market Enhancement Heterogeneity Commodity Advancement These dimensions combined together in a grid framework. Each quadrant is influenced by several external and internal factors. Thus, a thorough analysis of each quadrant helps business owners to forecast and implement their next strategy. In addition, it also helps to spot the risks and opportunities associated with each strategy. Dimensions of Ansoff Framework: Market Penetration: Under this dimension, the primary objective is to attain growth by selling current commodities in their current markets only. It involves the following strategies: Using a mixture of sales and promotional techniques to boost the percentage and usage of present commodities. These include lowering the price of commodities, offering loyalty schemes and focusing more towards one to one selling. Let’s say for example The consumers in a market include women aged between 15 to 35.
Then the firm would devise ways which would help to sell the commodities to these women. Gaining market dominance by acquiring data and doing research on the customer requirements and strengths of competitors. Though it is least risky of all dimensions firms should still it a considerable thought if they don’t have enough funding options available. Market Enhancement: This is the second dimension and here the core aim is to sell an current commodity into a new market zone. It involves the following strategies: Exploring new customer territories: It would include selling to a new client in a new country. There is a lot of risks involved as more capital will be invested in promotion and finding suitable channel partners. New commodity packaging and variants: For example, a venture sold aerated drinks in 2-liter bottles. To gain more domestic coverage it could start selling the aerated drink into smaller 150 ml bottles.
Shifting to new methods of distribution: Many firms have shifted from retail distribution to e-commerce selling. Offering alternate versions of the commodity at different prices: This helps to engage diverse clientele. One of the best examples is IT firms they usually develop professional and home versions of a software so that it can be used by firms as well as in homes. Heterogeneity: Under this dimension, the primary objective of growth is attained by launching new commodities into a new market zone. It is known to be the riskiest out of all the dimensions as ventures have near to zero knowledge about the new market zone. Apart from this, they need to ascertain the amount of investment which will be required to carry out promotions of the new commodities. To successfully implement this tactic ventures must have a clear blueprint of the merits and demerits linked with this dimension.
Commodity Advancement: The Commodity advancement dimension deals with launching new commodities into the current customer base. Here modified and improved versions of a current commodity are created so that they can appeal existing clientele. It is most suitable for firms that wish to provide different commodities than its competitors. An effective commodity advancement strategy focuses on the following areas: Research & advancement- Involves studying and locating resources and methods necessary for implementing the strategy. In addition, it identifies technological advancements which will help to accelerate production of the commodity. Studying customer requirements and what causes them to change: Customer insights are usually collected by a firm’s marketing team through tools like questionnaires and focused groups. But they can also be ascertained through the process of personal selling. As personal sellers can directly get feedback and responses from the customers. Feedback and negative information will be useful intel to improve the new commodity for a better customer experience.
Launching a new commodity under a current brand entity: Here a new commodity is launched under a current brand entity. It’s highly risky and if it fails then it could reduce the genuinity of the current brand.