PRODUCT/MARKETEXISTINGNEW EXISTING MARKET PENETRATION PRODUCT DEVELOPMENT NEW MARKET DEVELOPMENT DIVERSIFICATI ON THE ANSOFF MATRIX

Market penetration is a low risk growth strategy for businesses that choose to focus on selling existing products in existing markets(to increase their market share of current products)This can be done by better advertising to enhance the desirability of the product or by offering more competitive prices.In addition to trying to attract new customers,firms may also attempt to entice existing customers to make more frequent purchases Product development is a medium risk growth strategy that involves b.aiming to sell new products in existing markets(Apple’s launch of the iPhone).P.d.is suitable for products that have reached the saturation(product extension strategies are needed then)or decline stage of their product life cycle(new product development needed then)in order to prolong their life and hence their ability to earn revenues for the b. This strategy is also useful for businesses that use brand extension strategies.A well established firm,such as Sony or Nike,can use its brand to introduce new products to the market. Market development is the medium risk growth strategy that relates to businesses selling existing products in new markets Diversification refers to the high risk growth strategy that involves a business marketing new products in new markets.A key driving force for this strategy is that the b.can spread its risks. One way to diversify is to become a holding company(parent company).This is a b.that owns enough shares to be able to take control and management of other businesses.Subsidiaries are firms owned by a holding company(Time Warner the parent company of subsidiaries such as Warners Brothers,CNN,Fortune magazine)

Another similar method is to establish SBU-strategic business units. These are similar to subsidiaries in that they have separate vision and mission statement and are independently run from their parent company.However, SBU do not have to be a whole company but can include different product lines or individual brands.(Toyota,Nissan and Honda all have SBUs that cater for higher income customers-Lexus,Infiniti,Acura)