Page 16 - Life Insurance Today May 2016
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3.2. Market penetration strategy: company enters/penetrates a market with current
products. The best way to achieve this is by gaining
‘Philip Kotler’ has given a very beautiful marketing model competitors' customers (part of their market share).
called ‘Ansoff's Matrix’ which is diagrammatically Other ways include attracting non-users of your
reproduced below: product or convincing current clients to use more of
your product/service, with advertising or other
‘Ansoff matrix’ is a strategic marketing planning tool (it is promotions. Market penetration is the least risky way
named after its inventor, Igor Ansoff, the father of Strategic for a company to grow.
Management, and was first published in 1957 in Harvard
Business Review) that links a firm's marketing strategy with 2. Product Development (existing markets, new
its general strategic direction and presents four alternative products): A firm with a market for its current
growth strategies. products might embark on a strategy of developing
other products catering to the same market (although
These strategies are seeking growth: (1) Market these new products need not be new to the market;
penetration: by pushing existing products in their current the point is that the product is new to the company).
market segments; (2) Market developments: by developing For example, McDonald's is always within the fast-
new markets for the existing products; (3) Product food industry, but frequently markets new burgers.
developments: by developing new products for the When a firm creates new products, it can gain new
existing markets; (4) Diversification: by developing new customers for these products. Hence, new product
products for new markets. The Ansoff's Growth matrix is development can be a crucial business development
a tool that helps businesses decide their product and strategy for firms to stay competitive.
market growth strategy.
3. Market Development (new markets, existing
Product-market Growth Matrix - To Be products): An established product in the marketplace
Understood Vividly can be tweaked or targeted to a different customer
segment, as a strategy to earn more revenue for the
Product firm. For example, Lucozade was first marketed for sick
children and then re-branded to target athletes. This
Present New is a good example of developing a new market for an
existing product. Again, the market need not be new
Present Market Product itself; the point is that the market is new to the
Penetration Development company.
Markets
Market 4. Diversification (new markets, new products): Virgin
New Development Diversification Cola, Virgin Megastores, Virgin Airlines, Virgin
Telecommunications are examples of new products
The matrix allow marketers to consider ways to grow the created by the Virgin Group of UK, to leverage the
business via existing and/or new products, in existing and/ Virgin brand. This resulted the company in entering
or new markets - there are four possible product/market new markets where it had no presence before.
combinations.
The matrix illustrates, in particular, that the element of risk
This matrix helps Insurance Companies decide what course increases further as the strategy moves away from known
of action should be taken to achieve the required quantities - the existing product and the existing market.
performance. The matrix consists of four strategies: Thus, product development (requiring, in effect, a new
1. Market Penetration (existing markets, existing product) and market extension (a new market) typically
involves a greater risk than "penetration" (existing product
products): Market penetration occurs when a and existing market); and diversification (new product and
new market) generally carries the greatest risk of all. In his
I just want to be able to get on an airplane and enjoy myself in Disneyland, not sit there worrying about all these assassins.
16 May 2016 Life Insurance Today
