1. PRODUCT MARKET EXPANSION GRID
Product market expansion grid was created by the father of
strategic planning IGOR ANSOFF and it most commonly called as ANSOFF’S MATRIX.
The product market expansion grid has four strategies
The first strategy companies looks into is focusing on
increasing their sales and profit margins. Marketing efforts of the firm is to
accelerate their existing product line in the current markets is called market
penetration strategy. The best way to carry out this is to attract
competitors and customer and looking for potential customer to purchase the
Example: According to Samsung Company, in terms of market penetration HD and LCD televisions were
present in only 23%
percent of households of Oman in the year 2008, that
number has grown to 55% in 2013 and It will grow to 62% by the end of 2017.
Samsung company hopes to increase their sales of television by more
local advertising rather, by means of flyers, brochures etc.
an entirely new market for the existing product of the firm is called market
development strategy. The main purpose of this is to find new market for the
new customers to increase the company’s performance by increasing
sales and profits margins. Companies can develop market on geographical and
demographical factors such as age, sex, gender, class, city, regions etc.
manager needs to rethink this over and come to a conclusion as whether it is
profitable or should they introduce an entirely new product.
Example: Pakistan Oil
Company is developing new market by exporting oil to Ahmedabad.
concerned with innovating or modifying new products and making an offer of
these products to the existing market is called product development strategy.
It takes relatively much time and money investment for developing a new
product. Marketing Manager of the firm must carry out a detailed survey to
establish if it is feasible to introduce new products in the current market or
Example: Google Incorporation
a new browser called Google Chrome for
the existing Internet user and platform
Diversification Strategy is the modification
and innovation of new products in an entirely new market. Diversification
strategy is chosen by the firm if the current market is saturated due to which
revenues and profits margins are falling or decreasing. At the corporate level,
it is considered to be very risky but a challenging strategy for making an
entrance in a promising business outside of the vicinity of the existing
Disney Pictures shifted from producing animation movies to
theme parks and vacation properties business
are three diversification strategies: concentric diversification, horizontal
diversification, and conglomerate diversification.
Concentric Diversification is
about making an entrance into new markets with a new products that is
related to the company’s existing or current product offering.
Diversification – the introduction of products that are entirely unrelated
to a company’s existing products to existing markets
unrelated diversification) is about making an entrance in new markets with
a new products that has no relation to a company’s existing offering.
rolling out new grilled chicken line to add its traditional fried chicken line
up’. The strategy undertaken by KFC here is Product Development since it is
making an introduction or addition of Grilled chicken to its already existing
line of fried chicken.
2. BOSTONS CONSULTING
GROUP APPROACH FOR PROTFOLIO ANALYSIS.
The Boston Growth-Share
Matrix was developed by the Boston Consulting Group (BCG). It’s a leading
management consulting group and most popular portfolio analysis. The Boston
Matrix classifies all the companies’ strategic business units according to the
choice of the market of SBU’s, which is quantified in terms or market growth
rate, and the position of that market, measured in terms of relative market
share of the firms. On the Y axis, market growth rate shows the attractiveness
of the SBUs market. On the X axis, relative market share shows the company’s
strength in that market. (PORTFOLIO ANALYSIS: DESIGNING THE
BUSINESS PORTFOLIO – BOSTON MATRIX, n.d.)
Stars: These are business units that has the good
and large market market shares and generates cash are considered stars. Monopolies
are commonly referred to as stars. Stars have high growth rate due to which it
requires large and heavy investment and hence it consumes a lot of cash. Due to
this stars can generate both inflows but more of outflow of cash. Stars
eventually turns into cash cows if they are able to sustain their success in market
by maintaining growth rate. Companies are often advised that it’s better
to invest in stars.
Cash cows: Cash cows are the ultimate leaders in the
high growth market and generates enough and more cash than they invest for
businesses. These are business units that have the highest of market shares but
low growth. Companies consider to invest in cash cows to maintain a stable yet
larger level of productivity from market or to “milk” the gains.
Dogs: Dogs are units that has the lowest market share and
a low growth rate compared to the rest of the matrix. They either reap low
profits or in some cases generate losses for the business unit. Dogs usually
undergoes divesture process as businesses think it is better to invest
Question marks: They are businesses that
have high growth prospects but relatively low market share. They consume a lot
of cash because they are just making their entry into the high growth market
and tends to bring low return. However, business units grows quite rapidly and
so they have the potential to turn into stars and ultimately cash cows.
Companies invest in question marks only if the product has potential for growth
and if not the marketing manager decides whether to continue to stay in high
growth market because they require huge investments.
Firms usually find it hard to
dispose of question marks since they have invested lot of money into it and
don’t want to waste it. Their main aim is to establish the best possible
utilization for which they are spending. They wouldn’t want the money invested
in businesses to go into complete waste and so before the business is in the
middle stage, company must make the decision whether to continue investing or
stop investing in question marks so as to make use of those funds for better
purposes for which they are best utilized. (Divesture)