Page 242 - GLOBAL STRATEGIC MARKETING

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Ansoff, H. (1957) Strategies for Diversification, Harvard Business Review,
25 (5) p. 113-123

Ansoff (1957) developed the matrix and identifies four different growth

strategies based on existing/new products against existing and new
markets. The four strategies are penetration, new product development,
market development and diversification. Each is discussed in turn.

Penetration

This particular growth strategy focuses on existing products to existing
market segments. Basically, this strategy involves selling more of the
same product or service to the same customers. This can be achieved by

focusing on brand switchers and attracting competitor’s customers
through additional promotional activity or decreasing prices. Other

marketing activities to increase usage of existing customers can be
achieved by introducing loyalty bonuses, schemes and cards. On an
industry basis, high barriers to entry are encouraged as this discourages

new entrants into the market and organisations can even acquire direct
competitors and gain an immediate increase in market share and sales

volume.

New product development

This strategy involves the development of new products for existing
markets - for example, the launch of the new PlayStation 3 and 4 for the

current market base. This is what is known as product replacement, which
involves the replacement of old brands and models with new more
expensive ones. This is also common within the car industry and often

involves upgrading old models to cut costs on a completely new innovative
car. With regards to Bionade, the company developed a new flavour for its

existing markets (pear flavour) and introduced Cranberry Bionade into the
American market to suit consumer tastes in that country.