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Ansoffs model is one of the best tool which companies to develop market and product expansion strategies. Ansoffs model is based upon four type of strategies namely market penetration strategy, market development strategy, product development strategy and diversification strategy. The strategy is also dependent on company objectives include increasing sales, increasing profit, enter into new market, develop new product and enter into new business.
Ansoffs model
Intensive Strategies
Market Penetration strategy Market Development strategy Product Development strategy
Those three strategies are sometimes referred to as intensive strategies because they require intensive efforts if a firms competitive position with existing products is to improve.
The aim of intensive strategies is to broaden the market share and to increase the profit by making the existing products more effective and by introducing new and various sets of products in order to increase the market share too.
Developing a new market for the existing company product is called market development strategy.This is the process of finding new market for the new customer to increase company performance by increasing sales and profits. Companies can develop market on geographical such as city,country,region,state etc. ex: Pakistan State Oil(PSO) developing new market by exporting oil to Afghanistan. Chinese products developed new market for their product worldwide.
Product development is a strategy that seeks increased sales by improving or modifying present products or services.
The best thing about this strategy is youve already established yourself in your current markets and you know what your customers want. You have the distribution channels, and you know how to reach them.
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Diversification Strategies
Diversification Strategy is the development of new products in the new market. Diversification strategy is adopted by the company if the current market is saturated due to which revenues and profits are lower. At the corporate level, it is generally and its also very interesting entering a promising business outside of the scope of the existing business unit.
Diversification Strategies
concentric diversification The company come up with a new product that are similar to its core business/technology for new group of customers Example Sonic company which was originally producing audio cassettes in Pakistan decided to come up with tape backup device for computer using similar technology
Diversification Strategies
Horizontal Diversification Company can come up with product which is technology unrelated to its current product line for its current customers For Example sonic company started making cassette holding trays
Conglomerate Diversification
Company decided to come up with product that is not related to its current technology, products and markets For example Sonic decided to manufacture software's
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