ansoff's product / market matrix
Introduction
The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth
strategy.
Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether
it markets new or existing products in new or existing markets.
The output from the Ansoff product/market matrix is a series of suggested growth strategies that set
the direction for the business strategy. These are described below:
Market penetration
Market penetration is the name given to a growth strategy where the business focuses on selling
existing products into existing markets.
Market penetration seeks to achieve four main objectives:
• Maintain or increase the market share of current products – this can be achieved by a combination of
competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to
personal selling
• Secure dominance of growth markets
• Restructure a mature market by driving out competitors; this would require a much more aggressive
promotional campaign, supported by a pricing strategy designed to make the market unattractive for
competitors
• Increase usage by existing customers – for example by introducing loyalty schemes
A market penetration marketing strategy is very much about “business as usual”. The business is
focusing on markets and products it knows well. It is likely to have good information on competitors
and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new
market research.
Market development
Market development is the name given to a growth strategy where the business seeks to sell its existing
products into new markets.
There are many possible ways of approaching this strategy, including:
• New geographical markets; for example exporting the product to a new country
• New product dimensions or packaging: for example
• New distribution channels
• Different pricing policies to attract different customers or create new market segments
Product development
Product development is the name given to a growth strategy where a business aims to introduce new
products into existing markets. This strategy may require the development of new competencies and
requires the business to develop modified products which can appeal to existing markets.
Diversification
Diversification is the name given to the growth strategy where a business markets new products in new
markets.
This is an inherently more risk strategy because the business is moving into markets in which it has
little or no experience.
For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it
expects to gain from the strategy and an honest assessment of the risks.
BRAND EXTENTION
Brand Extension is the use of an established brand name in new product categories. This new category to which the
brand is extended can be related or unrelated to the existing product categories. A renowned/successful brand helps
an organization to launch products in new categories more easily. For instance, Nike’s brand core product is shoes.
But it is now extended to sunglasses, soccer balls, basketballs, and golf equipments. An existing brand that gives rise
to a brand extension is referred to as parent brand. If the customers of the new business have values and
aspirations synchronizing/matching those of the core business, and if these values and aspirations are embodied in
the brand, it is likely to be accepted by customers in the new business.
Extending a brand outside its core product category can be beneficial in a sense that it helps evaluating product
category opportunities, identifies resource requirements, lowers risk, and measures brand’s relevance and appeal.
Brand extension may be successful or unsuccessful.
Instances where brand extension has been a success are-
i. Wipro which was originally into computers has extended into shampoo, powder, and soap.
ii. Mars is no longer a famous bar only, but an ice-cream, chocolate drink and a slab of chocolate.
Instances where brand extension has been a failure are-
i. In case of new Coke, Coca Cola has forgotten what the core brand was meant to stand for. It thought that
taste was the only factor that consumer cared about. It was wrong. The time and money spent on research
on new Coca Cola could not evaluate the deep emotional attachment to the original Coca- Cola.
ii. Rasna Ltd. - Is among the famous soft drink companies in India. But when it tried to move away from its
niche, it hasn’t had much success. When it experimented with fizzy fruit drink “Oranjolt”, the brand bombed
even before it could take off. Oranjolt was a fruit drink in which carbonates were used as preservative. It
didn’t work out because it was out of synchronization with retail practices. Oranjolt need to be refrigerated
and it also faced quality problems. It has a shelf life of three-four weeks, while other soft- drinks assured life
of five months.
Advantages of Brand Extension
Brand Extension has following advantages:
1. It makes acceptance of new product easy.
a. It increases brand image.
b. The risk perceived by the customers reduces.
c. The likelihood of gaining distribution and trial increases. An established brand name increases consumer interest and
willingness to try new product having the established brand name.
d. The efficiency of promotional expenditure increases. Advertising, selling and promotional costs are reduced. There are
economies of scale as advertising for core brand and its extension reinforces each other.
e. Cost of developing new brand is saved.
f. Consumers can now seek for a variety.
g. There are packaging and labeling efficiencies.
h. The expense of introductory and follow up marketing programs is reduced.
2. There are feedback benefits to the parent brand and the organization.
a. The image of parent brand is enhanced.
b. It revives the brand.
c. It allows subsequent extension.
d. Brand meaning is clarified.
e. It increases market coverage as it brings new customers into brand franchise.
f. Customers associate original/core brand to new product, hence they also have quality associations.
Disadvantages of Brand Extension
1. Brand extension in unrelated markets may lead to loss of reliability if a brand name is extended too far. An organization must
the product categories in which the established brand name will work.
2. There is a risk that the new product may generate implications that damage the image of the core/original brand.
3. There are chances of less awareness and trial because the management may not provide enough investment for the introduc
product assuming that the spin-off effects from the original brand name will compensate.
4. If the brand extensions have no advantage over competitive brands in the new category, then it will fail
BRAND PORTFOLIO
Brand Portfolio Strategy
By David Aaker
In this long-awaited book from the world's premier brand expert, David Aaker, Vice Chairman of Prophet,
shows executives how to construct a brand portfolio strategy that will support a company's business
strategy and profoundly affect the firm's profitability.
Understanding and managing the brand portfolio can be a key to both the development of a winning
business strategy and its successful implementation. The first key element of brand portfolio management
is to make sure that each brand has a well-defined scope and role or set of roles to play in each context in
which it is expected to contribute.
Second, a portfolio view can ensure that the brands of the future get the resources they need to succeed.
In a silo organization, high potential brands are often starved of resources, in part because their business
is still small.
Third, strategic growth challenges can be addressed through portfolio. Usually that means entering new
markets, offering new products or moving into upscale or value arenas. The portfolio task is to design the
optimal brand strategy which can include leveraging existing brands to support such growth options.
Fifth, an offering can get complex and confusing both the customers and even employees. In the face of
competitive pressure, a cohesive, well-defined brand portfolio becomes imperative.”
BRAND EQITY