Strategic marketing planning can shine a light on your business – selling new products in a new market sector
Developing your marketing plan strategy options with the Ansoff matrix – ‘diversification’.
In this series of articles, I take a look at an easy-to-use strategic marketing planning tool. Known as the Ansoff Matrix, the enduring popularity of it is probably down to its simplicity. In short, it says a business has only four possible strategic choices – depending on whether you choose to market new or existing products in new or existing markets.
‘Where to play and how to win’ is a great phrase summarising the benefits of using it. In these articles I have provided examples to make particular points and help develop your understanding of it, and how you can apply it to your business when planning its strategic direction.
As a reminder, please click here to see the Ansoff Matrix and the different strategy options.
Diversification is all about launching a new product to a new market.
This can be achieved through organic growth, joint ventures, merger, acquisition/takeover. This strategy involves the highest risk, but can also have the greatest success.
Question – If you were considering diversification, then big questions to answer include can you move into a new market with a new product offering using the existing skills in your business? And do you have a strong management team to support it?
The brand name is important in some industry sectors – for consumer electronics, Apple could launch almost anything and people will want it. People trust the Amazon brand even if they haven’t heard of the manufacturer of an item of consumer electronics – as they know the product can be returned.
On the subject of diversification, Amazon are looking at the pharmacy sector (in January 2020 they filed ‘Amazon Pharmacy ‘ as a trademark in the UK) and have been rumoured to be considering offering insurance for a couple of years.
Another example is Dyson – they have a history of product innovation, such as when they ended production of corded vacuum cleaners in favour of cordless models. More recently they developed an electric car that was expected to launch in 2020, but withdrew due to fast-changing customer tastes and a speedier response from existing car manufacturers.
The huge tech companies achieve success in diversification by simply buying up innovative start-ups – this includes Facebook acquiring WhatsApp and Amazon acquiring the Ring video doorbell company.
Lastly, within diversification strategy there are three options, and one example for a fictitious bakery considering diversification in order of increasing risk are –
- Horizontal diversification – if you made cakes, vegan alternatives
- Vertical diversification – if you made cakes, you open a café
- Lateral diversification – if you made cakes, now manufacture cake candles and decorations.
On a larger scale, on the internet, there is also an Ansoff Matrix about Greggs, the UK bakery chain.
- Their market penetration strategies are focused on acquiring competitors to increase market share and reduce competition
- For Market Development they open new stores in areas where they currently do not have one.
- Their product development innovations have included their well-known vegan sausage roll
- Diversification strategies are explored with new stores and launching new products in them.
Click here to read – Getting started: developing your business strategy with an easy-to-use marketing planning tool.
Click here to read – Developing your marketing plan – basic product/marketing strategy options using the Ansoff matrix.
Click here to read – Marketing planning: strategy options with the Ansoff matrix – ‘market penetration’.
Click here to read – Marketing your business: strategy options using the Ansoff matrix – ‘market development’.
Click here to read – Strategic marketing planning options with the Ansoff matrix – ‘product development’
For a free, no-obligation 30-minute chat about marketing your business in 2021, please get in touch.
Strategic marketing planning can shine a light on your business