In: Economics
2a) Explain in your own words what Ansoff’s generic strategy model (shown below) is useful for. [5 marks]
Ansoff’s generic strategy model is essential for strategic
market planning which used to find the opportunities to increase
the revenue by using new products and services. It is also known as
“Product-market Matrix”. This model is widely used in marketing
strategies. Here the company earned profit through showing
alternative combinations of new markets. The firm mainly used four
strategies under this; (i) market penetration, (ii) Product
development strategy, (iii) Market development strategy and (iv)
Diversification strategy.
Market penetration; the strategy to sell existing products for
existing customers. This can be attained through changing the
opening hours of the store or company, reducing the order
processing time and showing or exhibiting the entire product
portfolio. New customers were attracted to the market through
reducing the price level. The firms tried to acquire the
competitors in same market place.
Market development; strategies regarding the entry to a new market.
Proper measures were taken to increase the demand and confidence
among the customers. The structure of the firms will be changed
with respect to this to attract new customers to the firm. This
development of market will increase the level of revenue and this
will also made a structural change in the market.
Product development; developing the existing product or services.
Development of new products using cheaper manufactures. This will
improve the quality and update the packaging also. This will
influence the existing customer’s feedbacks also. There is a high
rate of investment in R&D by the existing market. Merging of
the resources to create new products by existing
market.
Diversification; movement of firms to new markets with new products
will increase the sales with existing base customers as well as
acquisition. The overall structure and the market facilities were
changed.