Ansoff's Matrix

  
         H. Igor Ansoff (December 12.1918- July 14,2002) was a Russian American. He is known as the father of strategic management. Ansoff Matrix is his most famous work.       

         There are three levels of strategy: corporate level,business level and operational level. In this blogger I will introduce the choices of making strategy at the corporate level---ANSOFF'S MATRIX, which sounds quite complex at the first time I heard it.

         After attended the lecture, I found the Ansoff's Matrix was useful for managers to consider how to grow their business through existing or new products or in existing or new markets and it can also help managers to assess the different degrees of risk when they making decisions.

   

        AS is illustrated in the picture, its obvious that Ansoff suggests four different strategies based on whether products are existing or new and focus on whether a market is existing or new. Within each strategy, there is a different level of risk. In this blogger I will focus on one of the strategies-----Market Penetration.

                                                
  
                                                 Market Penetration (Generic Growth)

        Market penetration means to increase the market share by launching existing products in an existing market, which usually achieved by selling more products or by finding more customers. For example, Home Plus (Tesco changed its name in Korea), increased market sales 130% using online technology. Here is a video I found from youtube, its a genius marketing idea in Home Plus, which helps Tesco increased online sales 130% by using online technology.

                             


People can shop at Tesco wherever they are without having to visit the actual store, this idea changed the customers waiting time to shopping time, as a result,through this campaign 10,287 customers visited the online Tesco using smart pone,the number of new registered number rose by 76% and online sales increased 130%. Currently Home Plus has become NO.1 in online market in korea,its obvious that market penetration indicates that a produce has become established and the company is a market leader.

To increase sales and market share, Tesco relaunched its Clubcard, provides the grocer with detailed information about its shoppers. Which gave it a second boost when it doubled the points awarded to shoppers. 

TNS (A market research firm )said Tesco would get another boost from the loyalty card in the coming weeks as Clubcard vouchers are currently being mailed out, putting "coupons in shoppers' hands in the run-up to Christmas".

The latest data from t TNS shows Tesco's market share rose to 30.7% in the three months to november, from 30% in the same period last year. Tesco's sales growth rate was 4.7%, compared with market grow of 4.4% .

But nothing is always blessing, especially when everybody wants to win market share,a price war may be started if competitors cut prices and others follow. This may result in no profit and a failure to successfully penetrate the market.

For example, in 2009 Walmart marks down the prices of 10 bestsellers to 10 dollars when Amazon matched, Walmart went to 9 dollars. Amazon matched again ,Walmart went to 8.99 dollars. Amazon is not able to match.Though target joins the price war and sets 8.99 dollars as well. And then Walmart dropped the price of the oven from 28 dollars to 17 dollars, later the same day, Amazon cut its price also from 28 dollars to 18 dollars. More products Amazon and Walmart sold more they lost actually.

To summarize, the penetration market has advantages and disadvantages,it may create goodwill among first customers and may create customer referrals. It may also discourage new entrances and increase the market share at the same time.But in another hand,it may cause price war and too aggressive price may effect you bran image.