MARKETING STRATEGY USING ANSOFF GROWTH MODEL (MARKET PENETRATION STRATEGY)

Ansoff’s growth model is a marketing planning model to boost market share (revenue) of a firm.
Managers explore Product/Market strategy to make a choice of market for company’s products.
The model considers risk appetite, the product, and the market in deciding which market to
compete.
It is about four quadrants (Market penetration, market development, product development and
diversification). I am limiting my write-up today to market penetration.
The challenge with Ansoff growth model is it is inward looking- It does not consider business’
environment. Therefore, it should be explored with other models like Porter’s five forces, PESTEL,
Porter’s generic, Boston Consulting Group (BCG). Moreover, it emphasizes markets and products
without consideration for the stage of a product in its lifecycle (lifecycle model).

Market Penetration strategy -An entity operates in the existing market with the existing product. It
intends to increase the market share through selling more into the existing market.

To succeed in penetration strategy, the firm must have a successful product and good understanding
of the market. It is important to understand your competitors too.

Aim: To increase the market share.

Risk Level- Low. This is a least risk strategy among the four strategies in Ansoff’s growth model.

How to achieve this:

 More aggressive marketing
 Special offers such as promotion
 Application of technology
 Royalty rewards
 Reduction in price
 Drive out competitors

Suitability:
 Growing market- where the market size for the product is expanding
 Cost leader- In case a firm is to compete on price, it must be able to produce at lower cost
per unit and sell at a cheaper price. However, this strategy may lead to price war. Also, there
is a reputational risk attached.

The product:
 Product at its growth stage or at maturity stage of its lifecycle.

Application:
Coca-Cola apply penetration strategy through advertisement (e.g. TV commercials) to capture more
customers within the existing market.