GROWTH STRATEGIES

ANSOFF MATRIX is a strategic planning tool which provides for future framework of growth of company and development of its products.The  matrix focused on the firm's present and future customers and markets. By considering ways to grow present and products in customers in new and existing markets, there are 4 possible product market combinations:

                                         

Market penetration

In market penetration strategy, the organization tries to grow using its existing products and services in existing markets.It tries to increase its market share in current market.This involves increasing market share within existing market segments. This can be achieved by selling more products or services to established customers or by finding new customers within existing markets  through more aggressive promotion and distribution.

This can be accomplished by: (i) Price decrease; (ii) Increase in promotion and distribution support; (iii) Acquisition of a rival in the same market; (iv) Modest product refinements

Market development

In market development strategy, a firm tries to expand into new markets using its existing offerings.

This can be accomplished by (i) Different customer segments (ii) Industrial buyers for a good that was previously sold only to the households; (iii) New areas or regions about of the country (iv) Foreign markets. This strategy is more likely to be successful where:- (i) The firm has a unique product technology it can leverage in the new market; (ii) It benefits from economies of scale if it increases output; (iii) The new market is not too different from the one it has experience of

Product development

In product development strategy, a company tries to create new products and services targeted at its existing markets to achieve growth.

This involves extending the product range available to the firm's existing markets. These products may be obtained by: (i) Investment in research and development of additional products; (ii) Acquisition of rights to produce someone else's product; (iii) Buying in the product and "branding" it; (iv) Joint development with ownership of another company who need access to the firm's distribution channels or brands.

Diversification

In diversification an organization tries to grow its market share by introducing new offerings in new markets. It is the most risky strategy because both product and market development is required. (i) Related Diversification - Here there is relationship and, therefore, potential synergy, between the firms in existing business and the new product/market space. (a) Concentric diversification, and (b) Vertical integration. (ii) Unrelated Diversification: This is otherwise termed conglomerate growth because the resulting corporation is a conglomerate, i.e. a collection of businesses without any relationship to one another.A strategy for company growth through starting up or acquiring businesses outside the company’s current products and markets

Ansoff Matrix presents a clear view to the firm of the strategy it should follow in order to capture more markets and reach out to more consumers.