How To Make Profit With Ansoff?

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The ABC Cheese Factory is located in the heart of historical Central Tilba and is the home of the famous Tilba Club Cheese. The ABC Cheese Factory was established in 1891 and was the first very first Cheese Co-op in New South Wales.

The Ansoff’s product-market matrix helps to understand and assess marketing or business development strategy.

Any business, or part of a business can choose which strategy to employ, or which mix of strategic options to use. This is one simple way of looking at strategic development options. The Ansoff’s product market growth matrix uses a business’s current products and markets, and provides the option for growth by moving horizontally or vertically through the model.

There are four types of intensive growth such as market penetration, market development, product development and integrative and diversification growth.

A business logically should maximize its possibilities for growth using market penetration first. This will give the business added resources which further growth options may be pursued. After market penetration strategies may be either product development or market development depending on the circumstances of the business and the market in which it operates.

Ansoff’s Model

At this stage, a company is pursuing in achieving maximum sales/profit using the business current product range within the current market.

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The best way to achieve this is by gaining competitors’ customers (part of their market share), attracting non-users of the product or convincing current clients to use more of the product, with advertising or other promotions. Often marketing mix (4Ps) are being use to achieved the strategy. The objective of market penetration is to attract new customers either the new adopters, brand switchers or competitor’s customers. It would also increase the current usage rates of the company product.

In ABC Cheese Factory case, the existing product is the Tilba cheese and existing market referring to the market inside NSW area. In order to compete with their competitor and acquired more market share, ABC Cheese can use the marketing mix (4Ps).

Product

ABC Cheese needs to change the packaging of the product to be more presentable and noticeable in order to set a new image and to attract customers to purchase the product. They can opt to give a new look for the packaging by making colorful packaging either for loose packaging or vacuum packaging. By doing this, it would attract the customers and can differentiate ABC Cheese Factory product range.

Besides that, they can also introduce the grained cheese packaged in a nice container. This will allow the customer to maintain the current storage without having the hassle to put the cheese into other container.

ABC Cheese can create a point of recognition through means such as a logo, or slogan, a company can convey the essence of what their brand stands for. ABC Cheese Factory can labels all products in a way that promotes a boutique, high quality and specialty vibe that separates the company not only from main stream competitors such as Kraft and Coon, but also further promotes the boutique nature of the brand. They can put the slogan such as ingredients are 100% breed in NSW.

Price

The company may choose the pricing factor in order to increase the market penetration. This can be directed at either customers or distribution channel members. However, it depends on the objective whether to adjust up or down for a short time or longer-term strategy. It is stressed that before the price adjustment is implemented, the company should calculate the break-even effect of the price change and determines whether the change will achieve the objective.

ABC Cheese Factory can give discounts to the retailers or suppliers for purchasing large quantities of the product. This will attract the retailers or suppliers to continue purchase large quantities in the future considering the discounts that they will enjoy. Hence, this will increase the market penetration of ABC Cheese Factory.

Promotion

Promotion is the most flexible and diverse option for market penetration. In general, the promotion aimed at the customers but may also be directed towards distribution channel members. The promotion can be the most expensive of the marketing mix options. ABC Cheese Factory can provide the advertising support to the retailers. By providing the posters, display stands and brochure of the 15 lines of ABC Cheese product would increase the notice of the target audience toward their products.

ABC Cheese Factory can also negotiate with the retailer in the supermarkets to display the product at a specific place such as end of aisle displays. ABC Cheese Factory can display the entire product there and the customer will notice and remember the exact place if they want to repurchase again in the future.

Place

The less common method of increasing the market penetration is by distribution as the change must occur within the current market definition. ABC Cheese Factory can increase the exposure in their current distribution outlets. With the combination of discount for large quantities purchaser will indeed make an impact to the market penetration.

The market development is to increase either sales or profit potential by directing the current products towards new markets of any segmentation description. It can provide a newer pool of potential customers in addition to the existing markets. ABC Cheese Factory can create new demographic markets by producing cheese products which is targeting the young kids. In addition, ABC Cheese Factory can spread the distribution areas across the state borders such as Sydney and Melbourne.

Product development is another alternative to expand into new markets. It would increase sales or profit potential by developing new products, usually within the same broad product category, which should appeal to existing customers. ABC Cheese Factory can introduce new flavor to their product range such as strawberry, chocolates and orange. This will indeed increase the sales or profit.

Integrative growth is aiming at the increment sales or profit through establishing or acquiring business within the current industry or industries connected at the external value chain. There are three options for this method such as backward, horizontal and forward integration. The backward integration is acquiring suppliers, forward is acquiring resellers and horizontal is acquiring competition. ABC Cheese Factory should set their own retail outlet and sell their own product label. This will give the customer a better access to their product.

By choosing the diversification growth option, the company can increase the sales or profit potential by creating new combined new product and new strategy, and broadens the scope and potential of the business. General methods used are to establish or acquire businesses outside the current industry. There are three levels of diversification such as concentric, horizontal and conglomerate strategies. Diversification is the most costly and risky strategy. Introduction to new products such as jams and preserves, honey, coffee, wine and even established a new cafe can be a profitable move towards acquiring market share. ABC Cheese Factory also can enter strategic alliance with a bakery company in order to produce cheese cakes and cheese bread. The major advantage by doing this is to share the risk and pooling resources and systems to reduce costs.