As discussing about the market development,Ansoff's matrix is always popped up in my mind,but i'm not quite clear about it.So let's refer to the explanition as below.
This Matrix is kind of strategy which provides your 4 approaches to meet the company
development purpose. That is you can develop your company and grow your enterprise by choosing any of the 4 combination between the products and markets.
The growth strategies are 1.Market penetration. 2.Market development 3.Product development 4.Diversification.
1.Market penetration means the firm seeks to achieve growth by promoting the existing products into the existing market segmentation and shares.Increase the customer quantities in the promoted areas,cities or countries.
2.Market development means the company targets its existing products into the new market.For example,the same brand Nokia phone.N71 is an existing product in UK,but there's no Nokia brand mobile is selling in China. Therefore, China is a new market for the existing product,NokiE71.Develp Chinese market is the key apporach to grow,that is"Market Development."
3.Product development denotes the firm develop a new product in the existing market.For example,Nokia brand recognition is existing in UK,but Nokia is still researching and develping new mobiles for the UK customers to achieve Nokia's growth.
4.Diversification denotes a totally new business is adopted by one company,new group of customers and new products. This new is to the company,for example, Virgin was a company majored in CD markets,but he wanna make the company grow,the Richard Branson sold Vigin Meida and invested in the new products and new market he never touched before, for example,"Virgin Mobile" "Virgin Air"and even "Virgin Orange Juice".It's diversification strategy.Richard is marvellously smart and creative in his business strategy.
Listing on the riskness degree,
1.Marketing penetration is the least risky approach to grow a compnay,however,the market will be satuarated someday,you have to further grow by adopting another approach.
2.Market development is the medium risky method to develop.This method suits for the company whose core competence is the product or technology itself,but not the experience(personal service,ie.massage) or the specific market. That's suitable for the product transfer to another market.
3.Product development,it's the 3rd developing method, promote the new product for the existing customers. As european market is existing market for Nokia.And it demands new investments on R&D,
4. Diversification is most risky which gives up the core competence in both product and market.however it does lower the overall business porfolio risk and achieve high rate of return.a foothold in an attractive industry.Therefore,the risk is worthwhile to firm's growth as well.
Reference: http://www.quickmba.com/strategy/matrix/ansoff/
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