Explain How the ‘Ansoff Matrix’ Can Be Applied to Help Develop Strategic Marketing Options for an Enterprise.

Explain how the Ansoff ground substance bath be utilise to religious service bust strategicalal trade options for an enterprise. Whatother analytical tools and techniques fundament be go fored to develop alternative commercialiseing strategies? Table of circumscribe 1. portal 2. The Ansoff Matrix 3. commercialise Penetration 4. Product cultivation 5. trade Development 6. variegation 7. Limitations of the Ansoff intercellular substance 8. former(a) analytical tools and techniques 9. Conclusion 10. References IntroductionFrom my working experience I have discovered, an geological formation that knows its shortcomings, and evoke impart relatively strategic decisions to meet the right objectives, will give its lust to become successful and remain relevant. Successful compositions in Nigeria al shipway judge their success to unique strategies which they employed efficiently. Strategies argon developed at various levels inwardly an organisation, it therefore fo l impressions that objectives (what it wants to achieve) are in care manner set at the divergent levels.The setting of these objectives will usually produce a discrepancy mingled with what is circulating(prenominal)ly being achieved and what demand to be achieved. trade strategies are the hi recital of how this gap is going to be closed and the objectives realized. Ansoff matrix is a utile framework for looking at possible strategies to reduce the gap betwixt where the beau monde may be without a change in organization and where the gild aspires to be (Proctor, 1997).The Ansoff matrix which is the center of this work is one of the models on base others like the gatekeeper matrix, BCG, drudgery, PESTEL, DPM matrix and Gap synopsis etc utilise by tradeers to set objectives which assist strategic decision making. The Ansoff matrix is also employ in marting audits (Li et al, 1999). I will attempt to explain within the limitation of word content, how the Ansoff can be applied to help develop strategic foodstuffing options for an enterprise.Some of these other analytical tools and techniques will also be discussed in the second section this work. The Ansoff Matrix The Ansoff matrix presents the convergence and grocery store place choices available to an organisation. Herein grocerys may be defined as customers, and harvest-festivals as items sold to customers (Lynch, 2003). This matrix helps companies decide what course of action should be taken given current performance. The Ansoff matrix is also apply in commercializeing audits (Li et al, 1999).The Ansoff matrix entails four possible product/ commercialise combinations Market sharpness, product organic evolution, foodstuff development and diversification (Ansoff 1957, 1989). Ansoff Product-Market Growth Matrix pic antecedent Ansoff (1957, 1989) A market penetration schema is single-valued functiond when and organization wants to achieve and increased share in the market. A mark et development scheme in contrast involves the organization searching for un mappingd markets in which to sell its current product.A product development dodging involves identifying new needs within the be market and developing products to meet these needs enchantment the diversification dodging involves the organisation entering new markets with new products. I will now elaborate on these four strategies to show how they help develop strategic selling options for an enterprise. Market Penetration Market penetration occurs when a confederation penetrates a market with its current products.It is important to tincture that the market penetrations system begins with the subsisting customers of the organization. This strategy is used by companies in order to increase sales without drifting from the genuine product-market strategy (Ansoff, 1957). Companies practically penetrate markets in one of these three ways by gaining competitors customers, modify the product quality or level of service, attracting non-users of the products or convincing current customers to use more of the corporations product, with the use of marketing communion tools like advertising etc. Ansoff, 1989, Lynch, 2003). This strategy is important for feares because retaining existing customers is cheaper than attracting new ones, which is why companies like BMW and Toyota (Lynch, 2003) and coin banks like HSBC engage in relationship marketing activities to retain their high lifetime value customers very(prenominal) applies to Diamond bank in Nigeria which won the award for Bank of the Year in Thisday Awards 2009 (Thisday tendency magazine).Diamond bank is one of the market challengers in Nigerias banking sedulousness and has consistently increased its market share by penetrating the market with targeted special promotions, very low interest rates on loans, and maintaining a highly receptive and comfortable atmosphere in its banking halls. Product Development Product develo pment occurs when a company develops new products catering to the akin market. noe that product development refers to significant new product developments and non minor changes in an existing product of the firm.The reasons that justify the use of this strategy overwhelm one or more of the following to utilise of overabundance production capacity, counter emulous entry, maintain the companys nature as a product innovator, exploit new technology, and to protect boilersuit market share (Lynch, 2003). Often one such strategy moves the company into markets and towards customers that are currently non being catered for. For example, McDonalds is always within the fast-food exertion, still frequently markets new burgers.Another good example of the product development strategy is the constant innovation within the home computer market where products can become obsolete within a matter of years. Frequently, when a firm creates new products, it can gain new customers for these prod ucts. Hence, new product development can be a pivotal business development strategy for firms to stay competitive. Market Development When a company follows the market development strategy, it moves beyond its immediate customer base towards attracting new customers for its existing products.This strategy often involves the sale of existing products in new worldwide markets. This may entail exploration of new segments of a market, new uses for the companys products and services, or new geographical areas in order to charm new customers (Lynch, 2003). For example, Arm & Hammer was able to attract new customers when existing consumers identified new uses of their baking soda (Christensen et al, 2005). Lucozade was first marketed for sick children and thus re- markinged to target athletes.Also, an organisation found that the gel they produced for removing residual oil from strained machinery could also be used to clean domestic ovens and baking tins. This disclosure enabled them to target a new market of professional cooks and baking enthusiast. These are good examples of developing a new market for an existing product. Diversification Diversification strategy is distinct in the sense that when a company diversifies, it essentially moves out of its current products and markets into new areas. It is important to dividing line that diversification may be into related and unrelated areas.Related diversification may be in the form of backward, forward, and horizontal integration. Backward integration takes regularize when the company extends its activities towards its inputs such as suppliers of raw materials etc. in the same business. Forward integration differs from backward integration, in that the company extends its activities towards its outputs such as distri scarceion etc. in the same business. Horizontal integration takes focalise when a company moves into businesses that are related to its existing activities (Lynch, 2003 Macmillan et al, 2000).It is important to note that even unrelated diversification often has some synergy with the original business of the company. The risk of one such manoeuvre is that detailed experience of the key success occurrenceors may be limited to the company (Lynch, 2003). tour diversified businesses seem to grow faster in cases where diversification is unrelated, it is crucial to note that the track record of diversification remains poor as in many cases diversifications have been divested ( usher, 1987).Scholars have argued that related diversification is primarily more profitable (Macmillan et al, 2000 Pearson, 1999). Therefore, diversification is a high-risk strategy as it involves taking a step into a territory where the parameters are apart(p) to the company. The risks of diversification can be minimised by moving into related markets (Ansoff, 1989). unadulterated dumbbell, complete(a) Megastores, saturated Airlines, Virgin Telecommunications are examples of new products created b y the Virgin Group of UK, to leverage the Virgin send.This resulted in the company entering new markets where it had no presence before. Limitations of Ansoff Matrix While Ansoff summary helps in map the strategic options for companies, it is important to note that like all models, it has some limitations. By itself, the matrix can tell one part of the strategy story tho it is imperative to look at other strategic models like deck out analysis and PESTLE in order to view how the strategy of an organisation is formulating and might change in the course of its hereafter.For example, the Ansoff analysis of Virgin Cola shows that the brand has been launched in the UK and USA using a market penetration strategy, which essentially reflects that the brand needs to increase its brand knowledge (Vignali, 2001). The SWOT analysis conducted by Vignali (2001) showed an opportunity that Virgin Cola could research diversification into new ranges of Virgin Cola products.PESTEL analysis of Virgin Cola showed that there was need to constantly evaluate the soft drinks industry in all countries, in order to reflect customer trends, thereby allowing the brand to gain market share and also predict trends faster than the competition. Therefore, the go to be taken while conducting a strategic analysis of an organisation include SWOT analysis, PESTEL and Ansoff matrix as fundamental models of analyses, which should be used in conjunction and not in isolation, to view the complete strategic scenario.Also, recommendations made on the basis on only one of the models are not concrete and lack in depth. While the role of analysis in making strategic choices cannot be undermined, it is imperative to note that model plays a crucial role in making critical strategic choices that may change the future of the firm (Macmillan et al, 2000). Lastly, the use of Ansoff matrix as a marketing tool may not be genuinely useful as the matrix is critical for analysing the strategic path that t he brand may be following, and does not essentially identify marketing options. Other Analytic ToolsAs mentioned earlier Ansoff matrix is not all exhaustive and so there are other analytical tools and techniques which are valuable to marketers for strategic decision making and can actually be used alongside Ansoff matrix. I will just throw some lightsome on SWOT, BCG matrix and Porters Generic Strategy. SWOT swot analysis is a simple framework for generating strategic alternatives from a speckle analysis. Swot (sometimes reffered to as TOWS) stands for Strengths, Weaknesses Opportunities and Threats. It is applicable to either integrated level or business unit level and frequently appears in marketing lans. Its advocates grade it can be used to gauge the degree of fit between the organisations strategy and its environment, and to suggest ways suggest ways in which the organisation can profit from strengths and opportunities and shield itself against weaknesses and threats (Ad ams, 2005). The intimate and outdoor(a) situation analysis can produce a large hail of entropy, much of which may not be highly relevant. The SWOT analysis can serve as an interpretative filter to reduce the information to a manageable quantity of key issues.The SWOT analysis classifies the internal aspect of the company as strengths or weaknesses and the external situational factors as opportunities or threats. Strengths can serve as a foundation for building a competitive advantage, and weaknesses may hinder it. By understanding these four aspects of its situation, a firm can better leverage its strengths, correct its weaknesses, capitalize on golden opportunities, and deter potentially devastating threats. Because SWOT is such as familiar and comforting tool, many students use it at the start of their analysis. This is a mistake.In order to arrive at a proper SWOT appraisal, other analyses need to be carrier out first. BCG Matrix BCG matrix is a wariness tool that serves fou r distinct purposes (McDonald 2003 Kotler 2003 Cipher 2006) it can be used to classify product portfolio in four business types based on four graphic labels including Stars (Stars are leaders in high appendage markets. They tend to/should grow large amounts of money but also use a lot of cash because of growth market conditions) Cash Cows (), Question Mark (Question Marks have not achieved a dominant market position, and hence do not generate much cash.They tend to use a lot of cash because of growth market conditions) and Dogs (Dogs often have lilliputian future and are gargantuan cash drainers on the company as they generate very little cash by virtue of their low market share in a highly low growth market). pic According to experts (Drummond & Ensor 2004 Kotler 2003 McDonald 2003), surplus cash from cash cow products should be channeled into Stars and Questions in order to create the future Cash Cows.The BCG matrix can be used to determine what priorities should be given in the product portfolio of a company to classify an organisations product portfolio according to their cash usage and generation and offers management available strategies to tackle various product lines. It is based on two dimensional variables relative market share and market growth. They often are pointers to healthiness of a business (Kotler 2003 McDonald 2003). In other words, products with greater market share or within a fast growing market are expected to wield relatively greater profit margins.Porters Generic Strategy Companies can achieve competitive advantages essentially by differentiating their products and services from those of competitors and through low costs. Firms can target their products by a broad target, thereby covering most of the marketplace, or they can point on a narrow target in the market (Lynch, 2003). According to Porter, there are three generic strategies that a company can undertake to attain competitive advantage cost lead, eminence, and focus. p ic line of descent Porter (1985)Cost Leadership The companies that attempt to become the lowest-cost producers in an industry can be referred to as those following a cost leadership strategy. The company with the lowest costs would earn the highest profits in the issuance when the competing products are essentially undifferentiated, and selling at a standard market footing. Companies following this strategy place emphasis on cost decrease in every activity in the value chain. Differentiation When a company differentiates its products, it is often able to charge a premium price for its products or services in the market.Some general examples of differentiation include better service levels to customers, better product performance etc. in comparison with the existing competitors. Porter (1980) has argued that for a company employing a differentiation strategy, there would be extra costs that the company would have to incur. such(prenominal) extra costs may include high advertising expending to promote a differentiated brand image for the product, which in fact can be considered as a cost and an investment. Focus Porter initially presented focus as one of the three generic strategies, but later identified focus as a moderator of the two strategies.Companies employ this strategy by focusing on the areas in a market where there is the least amount of competition (Pearson, 1999). Organisations can make use of the focus strategy by focusing on a specialised niche in the market and offering specialised products for that niche. This is why the focus strategy is also sometimes referred to as the niche strategy (Lynch, 2003). Therefore, competitive advantage can be achieved only in the companys target segments by employing the focus strategy. The company can make use of the cost leadership or differentiation approach with regard to the focus strategy.Conclusion In conclusion, it has to be restated that the Ansoff matrix is a useful, though not an exhaustive, framew ork for an organisations objective setting process and marketing audits. The differences in strategic choices of organisations can often be attributed to the type of market in which the company operates. Changes in business environment play a crucial role in the strategic options that an organisation may mesh over its life stages. There are risks associated with all of the four strategic options entailed in the Ansoff matrix.Market penetration is generally considered as a low risk strategy while diversification, on the other hand, is deemed as a high risk growth strategy as it involves moving concurrently into new products and new markets. Diversification remains a popular strategic option for firms in todays competitive business arena. Lastly, Ansoff matrix as a strategic model has certain limitations. The use of SWOT and PESTEL analysis is recommended, along with Ansoff analysis, to be able to capture a holistic view of the strategic scenario of an organisation.I would have elab orated more on other analytic tools but for the word limit given me. 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