Ansoff model

Other advantages of diversification include the potential to gain a foothold in an attractive industry and the reduction of overall business portfolio risk.

ansoff matrix reference

For a business to take a step into diversification, they need to have their facts right regarding what it expects to gain from the strategy and have a clear assessment of the risks involved.

For a smaller enterprise, this strategy entails expanding from a current market to another market where its product does not currently compete.

Nike ansoff matrix

Diversification This strategy focuses on reaching new markets with new products. A strategy of product development is particularly suitable for a business where the product needs to be differentiated in order to remain competitive. This group initially started with one product - a black-and-white television set. This can be made possible through further market segmentation to aid in identifying a new clientele base. Igor Ansoff. Market Development Diversification Here, you're targeting new markets, or new areas of your existing market. Market development Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets. This is also considered to be risker than market penetration as it can be difficult to understand the complexities of new markets. In a growing market, simply maintaining market share will result in growth, and there may exist opportunities to increase market share if competitors reach capacity limits. Market Development is a far much risky strategy as compared to Market Penetration. This is considered a high risk strategy.

If one assumes a new product really is new to the firm, in many cases a new product will simultaneously take the firm into a new, unfamiliar market.

Thus if the head of the toothbrush is bigger it will mean that more toothpaste will be used thus promoting the usage of the toothpaste and eventually leading to more purchase of the toothpaste.

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Though diversification may be risky, with an equal balance between risk and reward, then the strategy can be highly rewarding. It entered the telecom market in developing telephone switchboards, then later into telephones, fax machines, and mobile phones. Product development Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets.

Sometimes an organisation will adopt two strategies to reach different markets. Product Development.

Ansoff matrix theory

An example of diversification is Samsung. The Ansoff Matrix has four alternatives of marketing strategies; Market Penetration, product development, market development and diversification. However, for the right balance between risk and reward, a marketing strategy of diversification can be highly rewarding. Market Penetration Product Development With this approach, you're trying to sell more of the same things to the same market. Product Development. This beer had originally been made to be sold in countries that have a colder climate, but now it is also being sold in African countries. In Market Penetration, the risk involved in its marketing strategies is usually the least since the products are already familiar to the consumers and so is the established market. The lowest risk strategy is for a company to sell its existing products into existing markets as it knows its customers, has established channels and so on. This diversification is in the same industry which is the food industry. When displayed visually, these four areas create the Ansoff Growth Matrix. Related Diversification: The organisation stays within a market they have familiarity with. For a business to take a step into diversification, they need to have their facts right regarding what it expects to gain from the strategy and have a clear assessment of the risks involved. A good example is Guinness. This involves extending the product range available to the firm's existing markets.

Alternatively, if a new product does not necessarily take the firm into a new market, then the combination of new products into new markets does not always equate to diversification, in the sense of venturing into a completely unknown business. The success of this strategy is dependent on the organisation being able to effectively conduct research and insight into their customer and market needs as well as their own internal capabilities and competencies for driving innovation.

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In this case, the market penetration strategy is no longer practical.

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The Ansoff Matrix