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Ansoff's matrix

Q: Explain market penetration from the Ansoff matrix

Market penetration is about selling more of the company’s existing products to existing markets. To penetrate and grow the customer base in the existing market, a company may cut prices, improve its distribution network, invest more in marketing and increase existing production capacity. For example, Coca-Cola is known for spending a lot on marketing in order to penetrate their markets. In addition, it tries to maximize the use of distribution channels by making attractive deals with a large variety of distributors (e.g. McDonalds).

Q: Explain new products and services from the Ansoff matrix

New products and services is about developing and selling new products in existing markets. An example is Apple launching a brand new iPhone every few years.

Q: Explain conglomerate diversification from the Ansoff matrix

Conglomerate diversification is about entering new markets with new products that are completely unrelated to a company’s existing offering. For example, Samsung which is operating in businesses varying from computers, phones and refrigerators to chemicals, insurances and hotel chains.

4 important questions on Ansoff's matrix

What is Ansoff's matrix?

It is a two-by-two framework used by management teams and the analyst community to help plan and evaluate growth initiatives. In particular, the tool helps stakeholders conceptualize the level of risk associated with different growth strategies.

Explain market penetration from the Ansoff matrix

Market penetration is about selling more of the company’s existing products to existing markets. To penetrate and grow the customer base in the existing market, a company may cut prices, improve its distribution network, invest more in marketing and increase existing production capacity.

For example, Coca-Cola is known for spending a lot on marketing in order to penetrate their markets. In addition, it tries to maximize the use of distribution channels by making attractive deals with a large variety of distributors (e.g. McDonalds).