Question

what levels of risk are associated with each of Ansoff's strategies?

Explain the concept of thr product life cycle and comment on its usefulness in managing the other elements of the marketing mix?

Answer 1

The Ansoff matrix explain about how a company can develop its products and markets to grow further. It not only explains how to grow but also helps company identify risks associated with it.

With every change in the quadrant risk level changes.

• Market penetration or the left most quadrant is usually considered to be the most safe option out of all as the company deals in existing product and known existing market.
• Next comes product development which has additional risks by introducing new product whereas the market is the same.
• Similar levels of risks can be detected in market development phase where the market is new but with the existing product.
• The maximum risk is associated with the Diversification phase where the company delves into new market with new product.

Product Life Cycle

The product’s life cycle is usually divided in 4 stages :

1. Introduction : where the new product is introduced in the market.

2. Growth : The new product market grows in this stage. The marketer tries to cover maximum market share.

3. Maturity : This is the time when product is at its maximum level post which its sales start to decline.

4. Decline : This is the stage the product sales start falling and eventually the product demand diminishes. The company can either diversify or bring some innovation to revive the product.

Marketing Strategies are based on the PLC analysis of a product. The marketer uses various techniques like skimming or penetration to introduce the new product. The promotion part of the marketing mix is at high.

Further, in growth stage, the marketer innovates product further and reaches the market coverage, maximises on the advertising/promotion expense.

In the mature stage the marketer keeps the prices at their lowest level,, he tries product modification, redefines target market.

In the end during decline, it minimises the promotional expense, cuts price permanently to clear the shelf and in the end plans to discontinue the product.