The ‘planning’ school

The ‘planning’ school

The Ansoff Matrix has four alternatives of marketing strategies;
• Achieves a ‘fit’ between the
organisational strategy and the • Market Penetration
environment in which it • Product development
operates. • Market development
• Requires detailed and inflexible • Diversification
planning not suitable in Existing product New product
turbulent markets.
• Uses ‘Product Life Cycle’ and
other marketing theories Present Expansion ie, Product
market increase in market development or
• Based on past trends, penetration innovation
forecasts and stable structures
and environments eg mature
industries, public sector Market
• Uses a very bureaucratic and New development Diversification
rational process market (sometimes called
‘exploration’)
Example: used in mature, stable markets and
industries, public sector. The Ansoff Matrix
 The ‘planning’ school
Main Points of the School The main steps to this model are:
• In the objectives-setting stage, the goals of the 1.the objective setting stage
organization are quantified as best as possible.
2.the external audit stage
• In the external audit stage, the external and internal
conditions of the organization are assessed. 3.the internal audit stage
Forecasts, extensive checklists, and techniques are 4.strategy evaluation stage
used to properly plan.
5.strategy operationalization stage
• In the internal audit stage, the strengths and
weaknesses are analyzed. 6.scheduling the whole process
• In the strategy evaluation state, the strategies are
evaluated using several different techniques. Some
Authors’ Critiques of the School
of these techniques include return-on-investment
calculations, competitive strategy valuation, risk • The Fallacy of Predetermination
analysis, the value curve, and other shareholder
• The environment is so unpredictable, it is unstable.
value methods.
• The Fallacy of Detachment
• In the strategy operationalization stage, the strategy
is broken down into subcategories. There are long- • The Fallacy of Formalization
term, medium-term, and short-term categories.
• An important process is lost when people try to make a
• The entire plan must also be scheduled as to when it process or formalize strategy
will begin implementation.

Existing product
Market penetration
Since its inception, Google has been able to
grow its market share in search, year over
Present year. By simply leveraging on its core product
market (the search engine) the company has been
able to grow consistently to dominate the
search market.
Market development
When Facebook started to roll out, in the early
years. The company followed a gradual
New
market traction model. Where it opened to more and
more universities first, in the US. Then moving
to other niches and markets, until it opened to
anyone.
The Ansoff Matrix: cases
New product
Product development
As Instagram was expanding its market
share in the social media space, it started to
experiment with new features that enabled it
to gain more traction within the same
market, thus growing quickly.
Diversification
When Apple launched the iPhone, back in 2007,
it risked cannibalizing its most successful
product, the iPod. Yet when the iPhone was out,
in a few years would create a whole new
category (smartphone) much bigger than that of
music player devices. Thus, making Apple
develop an entirely new market as a
consequence of launching a whole new product.
The Ansoff Matrix: Colorado Ricardo Mountain Bikes
• Colorado Ricardo Mountain Bikes was founded by Ricardo Francisco in 1992. He was a keen cyclist who
spent his weekends with many friends cycling and having fun in the mountains of Colorado. He was very
competitive and loved to take his bike off-road to test his strength and endurance.

• However he found that the bikes themselves kept on breaking-down under the strain. So Ricardo designed
and built a number of bikes to overcome this problem. Many failed but eventually he came up with the
ultimate in off-road bike, which he called the 'Colorado Ricardo’.

• People liked Ricardo's bike and he was asked to build and sell them to other cyclists in the Colorado region.
It went so well that soon he was able to give up his own job as a DJ to focus on the construction of the
bikes. As the mountain bike sport took off, Ricardo's business grew to produce 10,000 units in 1996.

• However sales have fallen annually since then and forecasted sales for 2000 are only 4,000 units. Ricardo's
company needs strategies for growth before it is too late.

Use Ansoff's matrix to examine the options for Colorado Ricardo

 The Ansoff Matrix: Coca Cola
Diet Coke Coca Cola Vanilla Fanta Icy Lemon Coca Cola Share
Size 1.5l Bottle
• Since being introduced • Having had a successful • The development • Desk research showed Coca
in 1982 as a result of a launch in America, Coca of a new flavour Cola that a growing number
growing trend towards Cola decided to launch it’s sparkling drink by of households contained 1-2
dieting and healthier new Vanilla flavoured Coca Cola was as people, which led them to
living, Diet Coke has version in Great Britain. a direct result of believe that a smaller version
been a highly listening to of the 2 litre family sized
successful product for • Prior to doing so, Coca consumers who bottle would sell well to these
the Coca Cola Cola carried out taste tests called the groups.
company, selling and developed the company’s
millions of units per graphical ‘look’ of the Diet Careline telephone • In launching this product
Coke brand. (simply sell existing brands
year. service.
such as Coca Cola, Diet
• Throughout this time, • When they did this, they • The business Coke etc), Coke did need to
Coca Cola has took great care to conducted taste alter the product itself,
constantly adapted incorporate aspects of the tests prior to the merely different aspects of
aspects of the Coca Cola brand, but still 2001 launch. the marketing mix.
differentiating it so
marketing mix for Diet
Coke in order to consumers would see it as
continually match an alternative to Coke.
customer trends and
fashions.

Winnie the Pooh Roo Juice
• Research informed Coca Cola of the
opportunity to target parents of
children aged 2-5 years with a juice
drink that was packaged in a fun and
colourful manner.
• They chose the characters from
Winnie the Pooh for their universal
appeal to children and made the
product appeal to both children and
their parents.
The Ansoff Matrix: Coca Cola
Powerade
• Coca Cola developed the
energy drink ‘Powerade’ in
response to growth in the
sports drink market.
• Much research was carried
out into potential
competitors within this
segment prior to the drinks
development and launch.
 The Ansoff Matrix: Coca Cola
Existing product New product

Market penetration Product development

Present
market

Market development Diversification

New
market