Companies today must develop many skills in order to be more competitive. All industries are subject to fierce competition, and developing more relevant long-term marketing strategies is a top priority for companies. To do this, a series of tools are made available to them, including the ANSOFF matrix, which helps them more specifically define a growth strategy.
Definition
The Ansoff matrix was created in 1957. It is a decision support tool. It allows for a more in-depth analysis of the company's strategic directions with the objective of profitability and growth.
It operates under two different axes, the degree of product innovation and the degree of market knowledge. The matrix is represented in tabular form with four boxes: market penetration, market development, product development and diversification.
| | Existing markets | New markets |
| Existing products | Market penetration | Market development |
| New products | Product development | Diversification |
Explanations of the matrix
Market penetration
Market penetration is a strategy whose risks remain very limited. In this case, the company is indeed marketing its products in markets that already exist. The margin of error is, therefore, rather low. The primary goal is to expand a customer base and encourage existing customers to buy more. There is generally a very good knowledge of the competition, which allows companies always to be more in line with the expectations and needs of consumers.
Market development
In this case, it is about selling its products in new markets. Usually, it's about finding a new target or expanding geographically. This is not about showcasing new products but rather about keeping the products and services that already exist in the company. This strategy can be applied when a company that sells only to professionals decides to also sell to individuals, and vice versa.
Product development
This is about highlighting innovations in an existing market. With this in mind, it is necessary to improve the functions of products in order to develop them and make them ever more efficient. In this strategy, the emphasis is on innovation, and new things are very important in companies. They help keep customers and attract new consumers. They also make businesses more competitive.
Diversification
It is about developing new products or services in a new market.
Example with Apple
| Existing markets | New markets | |
| Existing products | Penetration | Market development |
| New products | Development of products | Diversification |
In this matrix, it is possible to see that Apple is trying to align itself more or less with its competitors, by offering less expensive ranges, such as the first price iPads, in particular, which are very popular with consumers. Marketing is focused on attracting new customers with the importance of the event as a way to get known around the world. Apple wants to be a top-of-the-range brand and wishes to develop the services that go with the broadest community of consumers.
The development of new products is also very important for the group since the ranges are renewed every year in almost all areas. Innovations make it possible to win new customers and make the group's products ever more essential.
There has been a desire for diversification on the part of Apple for several years, with a desire to establish itself more formally in emerging countries. In addition, little by little, the group wants to reduce the dependence they have on the iPhone, which is still the best-selling product today, but which still only represents 53% of sales. The services have diversified, music, films, payments and even Cloud, which allows the company to generate other types of income. Note that the competition here is also very large and that the other groups are gradually catching up with the Apple brand in the hearts of consumers (Samsung, Xiaomi, Huawei, etc.).
Finally, Apple is trying to forge a safer path in China, despite the difficult relations between the two countries. China remains a country where the development potential is enormous and Apple is enjoying great success in the Chinese market. Despite the difficulties, the apple brand has managed to break into this market.