2. Theory of Ansoff’s Matrix 2.1 Ansoff’s Matrix Ansoff’s matrix, also known as "2 x 2 growth vector component matrix", was first published in arvard !usiness eview #1$%&' in the article ()trategies for *iversification+. )ince then this matrix has been repeatedl tried out and proved its efficienc in choosing marketing growth strategies%. Ansoff’s model of product-market growth suggests that it is possible to use several strategies simultaneousl. /t is based on a supposition that the most appropriate growth strateg is appointed b the decision to sell old or new products on old o orr new markets. 0he Ansoff’s Ansoff’s matrix represents a scheme used u sed b managers for decision making and forecasting. /t was supposed to describe optional strategies in the growing econom. 0he marketing attraction of one or another strateg from Ansoff’s matrix is determined b the amount of sales and probable risk. 0he productmarket matrix consists of four growth vectors. 0he first vector is to penetrate existing product markets. 0he second growth vector involves product expansion while remaining in the existing market. 0he next growth vector is to appl the same products in new markets, while the fourth growth vector is to diversif into new products. /n addition, there is a third dimension to the matrix based on vertical integration. illustration not visible in this excerpt 3igure 1 Ansoff’s product-market growth. )ource4 /gor Ansoff #1$&5' (6orporate )trateg+, Mc7rawill, Mc7rawill, Middlesex 0he advantage of Ansoff’s matrix is its simplicit. 0he 0he main limitation of planning based on Ansoff’s Ansoff’s matrix is the onesided orientation on growth and the use of onl two factors4 product and market. /t does not take into account indexes determining the efficienc of the compan’s functioning #li8uidit, financial stabilit, profit, etc.' &.
2.1.1 First growth vector: Market Penetration "0his is the de facto strateg4 change nothing and sell more of the same to existing customers. 9hen a business does not consciousl select a growth or diversification strateg, it is doing this" 5. /n an existing existing market is selling of new products much more difficult than selling old products. /t is easier to sell old products to traditional customers then to explore new markets. /n this case, a firm can use the market penetration strateg if the compan tries to increase the share of its product in the overseas markets, which are alread served b emploing several tpes of tactics$4 :roductline stretching4 the compan adds new products to its existing product line in an alread penetrated market segment with the ob;ective of attracting new and competitor’s customers from rivals< :roduct proliferation4 the firm offers man different product tpes<
:roduct improvement4 this involves updating and augmenting the existing products, and can entail the application of the latest technolog to improve the product’s capabilities, improving customer services, etc. 0he market penetration is the safest strateg of all because it leverages man of the compan=s existing resources and capabilities. /n a growing market environment, simpl holding market share is bound to result in growth. 0here ma be chances to increase market share if competitors approach capacit limits. )till, this marketing strateg has limits. As soon as the market reaches a saturation point, some other marketing strateg must be chosen if the compan is to continue to grow1>.
2.1.2 Second growth vector: Product eve!o"#ent 0he second growth vector of the Ansoff’s matrix shows the product development strateg. /t is characteri?ed b offering new products to existing markets. Marketers are well aware of the importance of a positive customer relationship and the goodwill and trust that accompan it 11. /f such a relationship exists, a compan is able to present for sale new products more effectivel and less expensivel to existing customers than to new ones. "0he advantages of this must be weighed against the possible damage resulting from negative spillover from the new to the existing product experience should it not be entirel satisfactor"12. 0his strateg ma be approached in the following was1@4 Modification /mproving of product 8ualit.
ew of
product
/nnovations, brand, range,
:roduct development strateg should be chosen if the compan=s strengths are related to its specific customers rather than to the specific product itself. /n this case, it can enhance its strengths b developing a new product targeted to its existing customers 1B. )imilar to the case of new market development, new product development is more risk than simpl tring to increase market share.
2.1.$ Third growth vector: Market eve!o"#ent Market development strateg as the third growth vector is oriented toward the search of new market or new market segment for alread familiar products. 0he profit is ensured due to the market extension within a certain geographical area and outside. 0his strateg entails considerable expenditure and is more risk than the previous two strategies 1%. Market development strateg ma be successful if the compan=s basic competencies are related more to the specific product than to its experience with a specific market segment. owever, it is extremel difficult to enter new geographical markets since other companies occup them.
2.1.% Fourth growth vector: iversification *iversification strateg entails both product, market development, and involves the compan entering new product markets outside its present business or related product market. 3irms could enter the
conglomerate or unrelated diversification strateg. /t means expanding into products and markets, which have no relationship to the compan’s current product, market or technolog. Cxpanding incurs higher risks, because the organi?ation enters unknown markets and products. 6ompan can ;ustif such strategies on financial and management snergies. 9hen there is some existing connection with the firm’s current value chain activities, it could enter a related diversification strateg. 0his can be divided into two tpes14 Dertical or forward - backward integration4 the outlets or sources of suppliers are ;ointed with the firm< ori?ontal integration4 consists of moves within the economic environment of the compan 1&, where are some complementarities in terms of the market and technolog. evertheless, this marketing strateg ma be an appropriate option if the high risk is made up for b the chance of a high rate of return. *iversification strateg has also other advantages, like the potential to gain a foothold in an attractive industr and the reduction of general business portfolio risk15.
$. Pe"si&o 'nc. @.1 )ome ke facts about the compan :epsi6o #:epsi6ola', /nc. is a global snack and beverage compan. *onald M. Eendall, :resident and 6hief Cxecutive Ffficer of :epsi6ola and erman 9. Ga, 6hairman and 6hief Cxecutive Ffficer of 3rito Ga founded it, through the merger of the two companies. 0he pharmacist 6aleb !radham created :epsi 6ola in the late 15$>s. 0he 1$1 merger of the 3rito 6ompan and the . 9. Ga 6ompan formed 3rito Ga, /nc. /n a bid to generate faster growth for the compan, :epsi6o diversified into the restaurant business through a series of takeovers. /t purchased :i??a ut in 1$&&, 0aco !ell in 1$&5 and Eentuck 3ried 6hicken in 1$5. ow, the new compan reports sales of H@$ billion and has more than 15%,>>> emploees1$
