The Ansoff’s model is one of the best tool which companies to develop market and product expansion strategies.Ansoff’s 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.
Ansoff’s Product-Market Expansion Grid
Now we’ll discuss the four intensive growth strategies in detail.
Market penetration strategy
The first strategy company is looking to adapt for increasing there sales and profits. Marketing efforts of the company to offer their existing products in the current markets is called market penetration strategy. The best way to do this to attract competitors customer and looking for potential customer for the existing products.
Market Penetration Figure
The penetration that brands and products have can be recorded by companies such as ACNielsen and TNS who offer panel measurement services to calculate this and other consumer measures. In these cases penetration is given as a percentage of a country’s households who have bought that particular brand or product at least once within a defined period of time.
Examples of Market penetration strategy
Recognizing that software as a service can be a potent market penetration tool, Dell is assembling a services portfolio that now includes e-mail disaster recovery, spam/virus filtering and archiving via its MessageOne acquisition.
Southwest airline in the current market by offering flights for the small distance cities.
According to Peter Wilson of High Definition & Digital Cinema Ltd., in terms of market penetration HD televisions were present in only 17
percent of U.S. households last year, a number that will grow to 22 percent this year and will exceed 55 percent in 2008.
Pakistan State Oil penetrate in Pakistan market from 40% to 65% in the duration of 4 years by developing new retail outlets.
Market development Strategy
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 and demographical such as age,sex,gender,class etc.
Market Development Figure
A marketing manager has to think about the following questions before implementing a market development strategy: Is it profitable? Will it require the introduction of new or modified products? Is the customer and channel well enough researched and understood? The marketing manager uses these four groups to give more focus to the market segment decision: existing customers, competitor customers, non-buying in current segments, new segments.