Question

In: Economics

2a) Explain in your own words what Ansoff’s generic strategy model (shown below) is useful for....

2a) Explain in your own words what Ansoff’s generic strategy model (shown below) is useful for. [5 marks]

Solutions

Expert Solution

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.


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