Ansoff Matrix (Cambridge (CIE) A Level Business): Revision Note
Exam code: 9609
An introduction to the Ansoff Matrix
Ansoff’s Matrix is a tool for businesses who want to grow quickly and have a growth objective
It is used to identify an appropriate strategic direction and identify the level of risk associated with the chosen strategy
The model considers four elements, which are broken down into two categories
The market - existing and new markets
The product - existing and new products
Ansoff's strategic matrix
Market penetration
Market penetration is the least risky strategy to achieve growth
It involves selling more products to existing customers by encouraging
More regular use of the product
Increased usage of the product
Brand loyalty of customers
Case Study
Coca-Cola’s 'Share a Coke' campaign
Instead of launching a new drink, Coca-Cola ran its “Share a Coke” campaign in existing markets (e.g. the USA, UK, Australia) which involved printing popular first names on Coke bottles
Why it worked
Increased purchase frequency
Customers looked for bottles with their own name or their friends’ names, so they bought more Coke than before
Free publicity and excitement
People shared pictures of personalised bottles on social media, drawing in even more buyers without extra advertising costs
Stronger brand loyalty
Customers felt a personal connection to the brand, which made them choose Coke over other drinks more often
Outcome
Coca-Cola achieved double-digit growth in mature markets
Market development
Market development involves finding and exploiting new market opportunities for existing products by
Entering new markets abroad
Repositioning the product by selling to different customer profiles (selling to other businesses as well as direct to consumers)
Seeking complementary locations
E.g. M&S Food has achieved significant growth since teaming up with fuel retailers such as BP and Applegreen and providing express retail outlets
Case Study
Netflix expanding into new countries
In 2016, Netflix launched its video-streaming service in over 130 new countries at once, using the same platform and content library it had in the US
Why it worked
Known brand and proven model
Customers in new markets trusted a familiar name and understood how streaming worked
Local partnerships
Netflix struck deals to use regional payment systems and worked with local internet providers to ensure smooth playback
Subtitle and dubbing
By adding subtitles and voice-overs in many languages, Netflix made its existing shows accessible to viewers around the world
Outcome
Within a year, Netflix gained millions of subscribers outside the US, turning international customers into a major source of revenue with limited changes to its product
Product development
Product Development involves selling new or improved products to existing customers by
Developing new versions or upgrades of existing successful products
Redesigning packaging and aesthetic features
Relaunching heritage products at commercially convenient intervals
E.g. Lindt relaunches Christmas-themed products each year, often with a subtle design change, to recapture the interest of customers
Case Study
Lego launches Lego Boost
After many families already bought classic Lego bricks, Lego introduced a robotics kit that lets children build and programme moving models using the familiar Lego system
Why it worked
Existing customer base
Parents and children who already own Lego sets were eager to try a new, technology-driven Lego product
Complementary features
Boost combines traditional building with coding lessons, making it both a toy and an educational tool
Brand trust
Lego’s reputation for quality and creativity encouraged buyers to choose Boost over other robotics kits
Outcome
Lego Boost sold strongly to families who already purchased standard Lego sets, increasing overall revenue without needing to find new customers
Diversification
Diversification is the most risky growth strategy as it involves targeting new customers with entirely new or redeveloped products
Examples of diversification include
UK supermarket Tesco launching a range of financial products including current accounts and credit cards
Café chain Greggs launching a range of themed clothing products
Case Study
Tesco goes mobile
In 2003, after becoming a leading supermarket chain, Tesco created Tesco Mobile, a mobile phone network that offers pay-as-you-go and contract plans
Why it worked
Trusted brand
Shoppers who already liked Tesco felt comfortable signing up for a mobile service under the same name
Convenience for customers
Tesco Mobile bills and top‐ups can be managed online or at any Tesco store
This made it easy for customers to handle both groceries and phone service in one place
Cross‐promotion
Tesco used Clubcard points to reward mobile customers, encouraging supermarket shoppers to try its phone plans
Outcome
Tesco Mobile attracted millions of subscribers in the UK and became a successful new income stream from its existing customer base
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