{"id":5860,"date":"2023-03-20T11:25:51","date_gmt":"2023-03-20T04:25:51","guid":{"rendered":"https:\/\/cleverads.com.ph\/blog\/?p=5860"},"modified":"2023-03-20T11:25:51","modified_gmt":"2023-03-20T04:25:51","slug":"ansoff-matrix","status":"publish","type":"post","link":"https:\/\/cleverads.com.ph\/blog\/ansoff-matrix\/","title":{"rendered":"Ansoff Matrix: What is it and How to apply to your business"},"content":{"rendered":"<p><em>In the current development era, grasping product development and market expansion strategies is essential for businesses. But how to know which <a href=\"https:\/\/cleverads.com.ph\/blog\/overall-marketing-and-strategy-building-methods\/\" target=\"_blank\" rel=\"noopener\">strategy<\/a> is the best direction for your organization? The Ansoff matrix will be a great tool to help set the direction of development through the marketing strategy planning model for each business.<\/em><\/p>\n<h2><strong><span data-preserver-spaces=\"true\">1. What is Ansoff Matrix?<\/span><\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">The Ansoff Matrix is \u200b\u200ba tool created in 1957 by Russian-American Igor Ansoff (mathematician and business manager) and used by companies and organizations to strategize to increase their <a href=\"https:\/\/cleverads.com.ph\/blog\/communication-plan\/\" target=\"_blank\" rel=\"noopener\">business<\/a>.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">The Ansoff Matrix, also known as the product and market expansion grid, the model is based on the assumption that there are two main ways to grow a business: by selling new products (product development) or by targeting new markets (market development). In particular, the tool helps people understand the risks associated with different expansion plans.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-5861\" src=\"https:\/\/cleverads.com.ph\/blog\/wp-content\/uploads\/2023\/03\/Ansoff-Matrix.png\" alt=\"Ansoff Matrix\" width=\"813\" height=\"574\" srcset=\"https:\/\/cleverads.com.ph\/blog\/wp-content\/uploads\/2023\/03\/Ansoff-Matrix.png 813w, https:\/\/cleverads.com.ph\/blog\/wp-content\/uploads\/2023\/03\/Ansoff-Matrix-300x212.png 300w, https:\/\/cleverads.com.ph\/blog\/wp-content\/uploads\/2023\/03\/Ansoff-Matrix-768x542.png 768w\" sizes=\"auto, (max-width: 813px) 100vw, 813px\" \/><\/p>\n<h2><strong><span data-preserver-spaces=\"true\">2. Four strategies of the Ansoff matrix<\/span><\/strong><\/h2>\n<h3><span data-preserver-spaces=\"true\">Market <strong>penetration:<\/strong><\/span><\/h3>\n<p><span data-preserver-spaces=\"true\">This is considered a low-risk growth strategy as it does not involve the development of new products or markets. Instead, market penetration revolves around improving existing products and their promotion strategies to expand to a larger market share. Typical execution strategies include:<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Enhance marketing efforts or streamline distribution processes<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Discounts to attract new customers in the market segment<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Acquiring competitors in the same market<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">Brands such as Coca-Cola, Pepsi &amp; Heineken spend much of their <a href=\"https:\/\/cleverads.com.ph\/blog\/steps-to-building-an-effective-marketing-budget-for-your-business\/\" target=\"_blank\" rel=\"noopener\">marketing budget<\/a> on market penetration. In addition, they also utilize their distribution channels by making attractive deals with various distributors, such as supermarkets, restaurants, bars, etc.<\/span><\/p>\n<h3><span data-preserver-spaces=\"true\">Market development:<\/span><\/h3>\n<p><span data-preserver-spaces=\"true\">Market development is one business growth strategy with a moderate risk level in the matrix. The goal of market development is to sell existing products in new markets. This strategy can be implemented in several ways, such as:<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Cater to a different customer segment or target demographic<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Entering a new domestic market (regional expansion)<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Entering foreign markets (international expansion)<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">For example, sports companies like Nike and Adidas have recently entered the Chinese market to expand. The two companies are offering similar products to a new demographic.<\/span><\/p>\n<h3><span data-preserver-spaces=\"true\">Product development:<\/span><\/h3>\n<p><span data-preserver-spaces=\"true\">This growth strategy revolves around selling new products to existing markets. Again, it is considered risky, as it often involves significant investment in developing and launching new products. Other product development techniques include:<\/span><\/p>\n<ul>\n<li><span data-preserver-spaces=\"true\">Invest in R&amp;D to develop a brand new product.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Obtain the right to manufacture and sell another company&#8217;s product.<\/span><\/li>\n<li><span data-preserver-spaces=\"true\">Create new products by branding a white-label product manufactured by a third party.<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">Coca-Cola launched Cherry Coke in 1985 \u2013 the company&#8217;s first expansion beyond the original recipe. The product was Coca-Cola&#8217;s strategic response to small-scale competitors who had identified a profitable opportunity to add cherry syrup to Coca-Cola and resell it. In addition, the company has successfully launched other flavor variations, including lemon, lime, and vanilla.<\/span><\/p>\n<p><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-full wp-image-5862\" src=\"https:\/\/cleverads.com.ph\/blog\/wp-content\/uploads\/2023\/03\/Ansoff-Matrix-1.png\" alt=\"Ansoff Matrix\" width=\"595\" height=\"333\" srcset=\"https:\/\/cleverads.com.ph\/blog\/wp-content\/uploads\/2023\/03\/Ansoff-Matrix-1.png 595w, https:\/\/cleverads.com.ph\/blog\/wp-content\/uploads\/2023\/03\/Ansoff-Matrix-1-300x168.png 300w\" sizes=\"auto, (max-width: 595px) 100vw, 595px\" \/><\/p>\n<h3><span data-preserver-spaces=\"true\">Diversification:<\/span><\/h3>\n<p><span data-preserver-spaces=\"true\">The riskiest business growth strategy in the Ansoff Matrix is \u200b\u200bdiversification. Diversification involves selling new products to new markets, product diversification and market development.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">In general, there are two types of diversification strategies that the management team can consider:<\/span><\/p>\n<ul>\n<li><strong><span data-preserver-spaces=\"true\">Relevant diversification:\u00a0<\/span><\/strong><span data-preserver-spaces=\"true\">A potential synergy between the existing business and the new product\/market can be made.<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">An example is a leather shoe manufacturer that also decides to produce leather car seats. There will likely be synergies in the sourcing of raw materials, but the product and manufacturing process will require significant investment in research and production.<\/span><\/p>\n<ul>\n<li><strong><span data-preserver-spaces=\"true\">Irrelevant Diversification<\/span><\/strong><span data-preserver-spaces=\"true\">: A synergy between the existing business and the new product\/market.<\/span><\/li>\n<\/ul>\n<p><span data-preserver-spaces=\"true\">Let&#8217;s go back to the example of a leather shoe manufacturer. A company&#8217;s management diversifies into the luxury shoe market to survive. As a result, they may choose to invest extensively in packaged consumer goods products.<\/span><\/p>\n<h2><strong><span data-preserver-spaces=\"true\">3. Why is the Ansoff matrix necessary for businesses?<\/span><\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">The Ansoff Matrix is \u200b\u200ba framework to help companies know which of the four strategic directions they must take to develop their business successfully. It is often used during the <a href=\"https:\/\/cleverads.com.ph\/blog\/sale-off\/\" target=\"_blank\" rel=\"noopener\">strategic<\/a> development phase of the marketing planning process.<\/span><\/p>\n<p><span data-preserver-spaces=\"true\">From the matrix, management in the company will determine the most appropriate strategies. Then they come up with the tactics they should use in their following marketing activities. They can apply many techniques to reach different markets.<\/span><\/p>\n<h3><span data-preserver-spaces=\"true\">Vinamilk succeeds when applying the Ansoff matrix<\/span><\/h3>\n<p><span data-preserver-spaces=\"true\">Vinamilk is currently the leading enterprise in the industry of producing and trading milk and dairy products and related equipment and machinery, accounting for more than 75% of the dairy market share in Vietnam, with revenue exceeding 60 trillion VND. VND ( 2021). Applying the Ansoff matrix to analyze Vinamilk&#8217;s business strategy shows that:<\/span><\/p>\n<ul>\n<li><strong><span data-preserver-spaces=\"true\">Market penetration:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0Vinamilk expanded distribution with 125,000 points of sale across 64 provinces and cities in the country. In addition, it is also exported to countries such as Australia, Cambodia, Iraq, the Philippines, and the United States. Use the AIDA model to attract customers and increase PR activities.<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Market development:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0Besides the main products of fresh milk, condensed milk, powdered milk, and yogurt, vinamlik has launched new product lines, such as ice cream, nut milk, juice, etc., to diversify the target audience and market segment.<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Product development:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0Vinamilk creates more diversified products in the existing market, such as fresh milk with flavors of strawberry, chocolate, and orange, rich in calcium, no sugar, etc.<\/span><\/li>\n<li><strong><span data-preserver-spaces=\"true\">Diversification:<\/span><\/strong><span data-preserver-spaces=\"true\">\u00a0In addition to developing the existing market, Vinamilk also creates more in the field of auto transport business, real estate, securities investment, opening a clinic, etc.<\/span><\/li>\n<\/ul>\n<h2><strong><span data-preserver-spaces=\"true\">6. Conclusion<\/span><\/strong><\/h2>\n<p><span data-preserver-spaces=\"true\">So through the article, we have an overview of the Ansoff matrix. As well as better understand the strategies included in the Ansoff matrix and how the Ansoff matrix works in today&#8217;s businesses. Building a specific Ansoff matrix will help companies to develop sales and better future development orientation.<\/span><\/p>\n<p>&nbsp;<\/p>\n<p>&nbsp;<\/p>\n<h3 style=\"text-align: center;\"><span data-preserver-spaces=\"true\">If your business requires Digital Marketing solutions, <\/span><span data-preserver-spaces=\"true\">contact us at <a href=\"cleverads.com.ph.\" target=\"_blank\" rel=\"noopener\">cleverads.com.ph.<\/a> for the fastest support.<\/span><\/h3>\n","protected":false},"excerpt":{"rendered":"<p>In the current development era, grasping product development and market expansion strategies is essential for<\/p>\n","protected":false},"author":4,"featured_media":5864,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[],"class_list":["post-5860","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-marketing"],"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/posts\/5860","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/comments?post=5860"}],"version-history":[{"count":1,"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/posts\/5860\/revisions"}],"predecessor-version":[{"id":5865,"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/posts\/5860\/revisions\/5865"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/media\/5864"}],"wp:attachment":[{"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/media?parent=5860"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/categories?post=5860"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/cleverads.com.ph\/blog\/wp-json\/wp\/v2\/tags?post=5860"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}