Marketing planning is essential for companies willing to grow and expand their market share. Market research is necessary part of planning as it allows companies to find such vital information as what the main features of the market are and what potential customers want.  There are several tools designed to help businesses develop successful marketing plans and use them in order to grow. Among them is Ansoff Box, which was suggested by an American strategist Igor Ansoff in 1957.
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A purpose of this paper is to analyse the Ansoff Box and show how it works using a company as an example. The company that was chosen is Amazon.com. Being one of the most successful companies of our time, it represents the perfect business and marketing strategies in action. Strategies suggested in the Ansoff matrix are able to help Amazon increase its market share as well as attract new customers to the company’s products and services.
In his matrix, as we can see from Figure 1, Ansoff explains a product-market strategy, dividing it into four parts which are based on two types of products and markets: existing and new products, and existing and new markets respectively().
Figure 1. Ansoff box (matrix)
Description and analysis of the model
First strategy, called Market penetration, is to help companies increase their share of an existing market for existing products. This can be done through different ways. The easiest way is to attract occasional customers and transform them into regular customers. Another ways are to attract consumers of competitors and customers who should be buying this product but are not buying it for some reasons. In order to do so, a company needs to pay more attention on marketing promotion and create more customer value.  For example, Keylogg’s have found that consumption of cornflakes increases during Christmas. Hence, they decided to increase their sales during this period through advertisement. Another example is Starbucks. They sell more coffee to customers who have reloadable Starbucks cards. Its loyalty program encourages customers to buy more to reach different levels of ‘membership’.
Market penetration is very important part of marketing strategy because keeping existing customers is cheaper than finding new ones. However, this strategy has its downsides. If a company has a high market share, it is possible that growth opportunities are limited. Another example is that aggressive market penetration strategies increase competitive rivalries and lead to a price war, which may reduce industry’s profitability.
Market development is a strategy which defines the ways of market expanding through adapting company’s existing product to new markets. This often requires changing of some product’s characteristics so the product is able to satisfy demands of the new markets, which may be different from those of the existing one. Several ways of entering new markets may include new geographical markets, new ways of using the products. Lucozade sport drink is a good example of finding new ways of using old products. It was created as a remedy for colds and flu. However, nowadays it is a well-known sports drink. Another example of market development is British ‘Tesco’ opening chain stores in the USA called ‘Fresh and Easy’.
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Next strategy is called Product development. This strategy is useful in case of launching new products for existing market. These products can either be similar to ones being produced or completely different products. In this strategy, companies continue to focus on the demands of existing customers but they also try to understand what else customers might want based on what they purchase. By doing so, they can see opportunities for new products, such as complementary products for existing products (phone cases, laptop bags, etc.) or new products that are better and are able to replace the old ones. One example of this strategy is McDonalds introducing new salads in their menu in order to keep people who prefer healthier food. Other examples are Starbucks selling cakes and sandwiches for breakfast in addition to coffee and Apple selling covers and cases for its iPads and iPhones.
The last strategy is Diversification. This strategy is designed for companies planning on launching new products into new markets. This strategy entails the highest risk and requires deep market research. It often leads to changing company’s business structure in order to succeed. There are two types of diversification: concentric and conglomerate.
Concentric diversification is a type of diversification in which a company operates in a related market and launches products that have similar characteristics with the products already being produced. The strong side of concentric diversification is that a company is able to use existing resources and may rely on its experience. Thus, this type of diversification is less risky than another one. Computer manufacturers starting to produce laptops and tablets are examples of concentric diversification.
Conglomerate diversification is for companies producing new products that are unrelated to existing ones or have little relation to them. This strategy entails a higher risk as it is hard to predict its outcome. If a new product fails it may lead to reducing the overall brand’s reputation. Among not successful examples is Microsoft with its Zune music player. Being successful in software market, Microsoft ventured to enter the hardware market. Launching Zune Microsoft planned to attack Apple’s iPod market share. Despite its decent characteristics in terms of configuration, some of which could outperform the iPod, due to the wrong marketing strategy sales of Zune failed and Microsoft closed the project. Nokia, in contrast, is a successful example. The company started as a paper manufacturer and eventually became the biggest mobile phone manufacturer in Europe. Conglomerate diversification, albeit risky, may lead to rapid growth and profit.
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