1. IB Business and Management
1.6 Ansoff Matrix

2. Learning Outcome
Explain the value of the Ansoff Matrix as a decision-making tool
Apply the Ansoff Matrix to a given situation

3. Who is Ansoff?
H. Igor Ansoff (December 12, 1918 – July 14, 2002) was a Russian American, applied mathematician and business manager.
He is known as the father of Strategic management.

4. Ansoff Matrix
The Ansoff Growth matrix is another marketing planning tool that helps a business determine its product and market growth strategy.
Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.

5. Ansoffs matrix consists of four ‘cells’ that provide a company with a range of options or strategic choices, each with a different degree of risk involved

6. Ansoffs Matrix PRODUCTS Existing New Market Penetration Consolidation
Withdrawal
Do Nothing
Product Development
Existing
Increasing risk
MARKETS
Market Development
Diversification
New
Increasing risk

7. Market Penetration: Existing Products, Existing Markets
Strategies in this cell are usually referred to as:
MARKET PENETRATION means promoting growth in existing markets with existing products.
What type of things could this involve?
Although also involves:
CONSOLIDATION by concentrating activities on those areas where the firm has established a competitive advantage or competence and focussing its attention on maintaining its market share
WITHDRAW through the sale of all or part of the business
This is a low risk strategy- why?
What would be the down side of this strategy?

8. Market Development: Existing Products, New Markets
This means taking the companies existing product and selling them to new customers. This could be:
New geographical areas
New uses being promoted for the product
Entering new market segments
Why could this strategy be considered as risky?
What can a firm do to minimise the risk?

9. Product Development: New products, Existing markets
This strategy is known as Product Development
It involves substantial modifications or new additions to the product range.
The business targets the same target markets as its existing products
Investment in R&D will be needed
Is this a risky strategy?
What must firms do to minimise the risk?

10. Diversification: New Products, New Markets
This could be a move into a completely different market
or new but related markets by:
vertical backward integration
vertical forward integration
horizontal integration
Diversification is a high risk strategy
How could a business reduce the risks of a diversification strategy?
What are the benefits of a diversification strategy?

11. Which of Ansoff’s strategies have these firms used?
For each one…. Enter onto the matrix

12. Innocent
Innocent was founded in It sold individual smoothie drinks through supermarkets, cafes and independent retailers:
Innocent launches larger pack sizes
Innocent starts exporting it’s products to other European countries
Innocent introduces ‘Veg Pots’
Innocent introduces it’s innovative ‘Tweet and eat’ campaign

13. Reggae Reggae Sauce
Levi Roots started selling the original Reggae Reggae sauce through Sainsbury’s after an appearance on Dragons Den:
A range of flavoured ketchups is launched
A range of cooking sauces is introduced
The company starts selling Reggae Reggae sauce to Subway and JD Wetherspoon who include it on their menus
A partnership with Birdseye sees the launch of Reggae Reggae frozen chicken grills
A range of branded soft drinks is launched

14. Starbucks Starbucks was launched in Seattle in 1971 with one store:
Starbucks originally expanded by opening more stores in the USA
Starbucks expanded internationally and is now in 55 countries around the world
Starbucks sells merchandise such as branded mugs and t-shirts through it’s stores
Starbucks started to sell its drinks bottled through retailers
Starbucks introduce promotional Christmas drinks
Starbucks sells coffee beans and ice cream through supermarkets and convenience stores

15. Virgin 1970 - Starts selling records by mail-order
Opens his first record shop on Oxford Street
Branson starts Virgin Holidays
Branson takes Virgin Records to the United States
Richard Branson launched Mates condoms in the UK to promote condoms to young adults
Virgin Brides launches
Virgin Trains is launched
Virgin Cosmetics launches
Virgin Mobile launches Virgin's first telecoms venture
Virgin Active Launches in South Africa, UK and Italy
Virgin Active Spain is Launched
Virgin Active Portugal is Launched

16. Task
Complete the ‘Ansoff- Cadbury’ Sheet

17. Ansoff matrix in the IB exam….
Often the IB will include questions which directly ask you to refer to Ansoff Matrix
However…..
They also expect you to refer to Ansoff Matrix in other questions where growth strategies are being evaluated.
So….. Don’t assume that they will mention Ansoff directly in the question

18. IB Question time….15 mins
Answer the 9 minute ‘Yum!’ IB question.