Companies management looking for the new opportunities to increase their sales and profits. Ansoff’s has proposed a useful framework for detecting new intensive growth strategies called “product-market expansion grid”.
Company first preference to check whether they can gain more market share with their current products in their current markets (Market penetration). Next it will find whether they can find new market for the current products ( Market Development).Then it consider their is a place to get share by introducing new products in the current market(Product Development). At last if all the strategies are not feasible in current company environment then produce new products for new market which needs lot of budget and efforts (Diversification).
Ansoff’s Product-Market Expansion Grid
Now we’ll discuss the four intensive growth strategies in detail.
Market penetration strategy
The first strategy company is looking to adapt for increasing their sales and profits. Marketing efforts of the company to offer their existing products in the current markets is called market penetration strategy. The best way to do is to attract competitors customer and looking for potential customer for the existing products.
Market Penetration Figure
The penetration that brands and products have can be recorded by companies such as ACNielsen and TNS who offer panel measurement services to calculate this and other consumer measures. In these cases penetration is given as a percentage of a country’s households who have bought that particular brand or product at least once within a defined period of time.
Examples of Market penetration strategy
Recognizing that software as a service can be a potent market penetration tool, Dell is assembling a services portfolio that now includes e-mail disaster recovery, spam/virus filtering and archiving via its MessageOne acquisition.
Southwest airline in the current market by offering flights for the small distance cities.
According to Peter Wilson of High Definition & Digital Cinema Ltd., in terms of market penetration HD televisions were present in only 17
percent of U.S. households last year, a number that will grow to 22 percent this year and will exceed 55 percent in 2008.
Pakistan State Oil penetrate in Pakistan market from 40% to 65% in the duration of 4 years by developing new retail outlets.
Market development Strategy
Developing a new market for the existing company product is called market development strategy.This is the process of finding new market for the new customer to increase company performance by increasing sales and profits. Companies can develop market on geographical such as city,country,region,state etc and demographical such as age,sex,gender,class etc.
Market Development Figure
A marketing manager has to think about the following questions before implementing a market development strategy: Is it profitable? Will it require the introduction of new or modified products? Is the customer and channel well enough researched and understood? The marketing manager uses these four groups to give more focus to the market segment decision: existing customers, competitor customers, non-buying in current segments, new segments.
Market development strategy examples
Pakistan State Oil(PSO) developing new market by exporting oil to Afghanistan.
Chinese products developed new market for their product worldwide.
Product Development Strategy
Developing or modifying new products and offering to the existing market is called product development strategy. This strategy takes time and money for developing a new product. Marketing Manager must conduct a detailed survey to find out whether it is feasible to introduce new product in the current market.
Product Development Figure
Product development strategy examples
Google developed a new browser Chrome for the existing Internet user.
McDonalds is always within the fast-food industry, but frequently markets new burgers.
Diversification Strategy is the development of new products in the new market. Diversification strategy is adopted by the company if the current market is saturated due to which revenues and profits are lower. At the corporate level, it is generally very risky and interesting strategy for entering a promising business outside of the scope of the existing business unit.
Diversification Strategy Figure
Diversification strategy examples
Virgin Media moved from music producing to travels and mobile phones
Walt Disney moved from producing animated movies to theme parks and vacation properties
Canon diversified from a camera-making company into producing whole new range of office equipment.