20/9/16 – Business- Ansoff’s Matrix, Boston Matrix…..

Marketing Strategies – How to choose? Strategy is about the future… Strategy must be achievable… Strategy is company specific…

Ansoff’s Matrix Igor Ansoff sought to categories strategies His model outlines potential growth strategies by increasing sales in existing or new markets using existing or new products Model provides four main strategy types to choose between Considers high risk / high reward / vs. lower risk / lower reward

The Ansoff Growth matrix is another marketing planning tool that helps a business determine its product and market growth strategy

Ansoff’s Matrix – short film from Tutor4u http://www.tutor2u.net/business/reference/ansoffs-matrix In groups – referencing the above link - discuss the terms: Market Penetration Product Development Market Development Diversification

The 4 quadrants: Market Penetration Focus on building sales of existing products within existing markets – increase market share  known market, established product simplest and most predictable least risky  may be least potential for growth not stretching the scope of the firm

The 4 quadrants: Market Development Find a new market for an existing product  knowledge of the product know what works, who likes it, etc  don’t know about new market requires a lot of research to reduce risk can dilute the efficacy of the product to the previous markets if firm isn’t careful

The 4 quadrants: Product Development Launching a new or improved product to an existing market  known customers & market useful when extension strategies are required for an older product it may take little to inject new energy into an old product  any new product carries risks requires significant research & testing

The 4 quadrants: Diversification Targeting a new market with a new product  potential reward is very high, esp. if it’s an untapped market helps when existing products and markets offer little opportunity helps firm to diversify, potentially reducing risk helps firms move away from markets in decline  risky!! lots of unknowns - new product and new market

Diversification High risk and low risk Related diversification is lower risk, eg integration (merger/takeover) With a firm in the same industry but at a different stage of production Tesco buying a food manufacturer Apple buying PC World Unrelated is higher risk The business will have no experience of the new product and market

Diversification Firms may seek to mitigate the risk Buy an existing firm in the industry Asda buying B&Q is less risky than starting from scratch Enter only successful and growing markets Particularly if the firm has a strong brand, the risks are reduced

Review of Strategy Matrices Porter’s GENERIC Matrix (Low Cost vs Differentiation; Niche vs Mass Market) Market Positioning – Remember Porter’s recommendation toward either a low cost and differentiation strategy (“deliberately choosing to be different”) -> Aldi stores have c. 1200 stock units, a large Tesco will have 75,000 Ansoff’s matrix explores the risks involved in strategic decisions Ansoff Matrix examines New and Current Product and Market combinations, in context of Risk and Reward

Growth Rate vs Market Share Boston Matrix – allocating investment / resources across a product portfolio Growth Rate vs Market Share http://www.tutor2u.net/business/reference/boston-matrix-and-product-portfolios

Boston Matrix – In groups, consider what are: Cash Cows Dogs Question Marks (also known as Problem Child) Stars Can you think of any practical examples?

Boston Matrix – What are the assumptions that underpin the matrix idea?

Kay’s distinctive capabilities (1993) (Not found in Marcouse but required by Edexcel) How have firms developed a Competitive Advantage? http://www.johnkay.com/1993/06/01/the-structure-of-strategy- business-strategy-review-1993/ https://www.youtube.com/watch?v=1WKfBp-lrrM Architecture Innovation Reputation Examples?