Global marketing - Application and adaptation of Ansoff's Matrix to global markets 4.3.1

Ansoff Matrix - The Ansoff matrix is a famous strategic marketing planning tool that helps a business determine its product and market growth strategy. It suggests that a business's attempts to grow depends on whether it markets new or existing products in new or existing markets.

MARKET PENETRATION

A business might wish to pursue a strategy of market penetration targeting the same customer base in its current global markets.  To do this it will look at its EPG (Ethnocentric, Polycentric and Geocentric) marketing approach and decide where and how to invest. This will be dependent on the forecast return on investment from each market that it already operates in. It will look to see if it should continue its current approach e.g. ethnocentric or adapt it to meet the changing requirements of the marker e.g. to one of geocentricity. 

MARKET DEVELOPMENT

Global businesses will always be looking to pursue a strategy of new market development. As markets grow and disposable incomes increase, then there is an increased attractiveness for global businesses. Again, using the EPG (Ethnocentric, Polycentric and Geocentric) model, how they approach this is dependent on the type of business and the type of market. 

PRODUCT DEVELOPMENT 

New product development will take into account the needs of global and international markets. Global businesses spend billions on research and development in order to innovate and constantly bring out new products, particularly when old products are in decline (mature stage of product life cycle). However, whether this is a standardised product or caters for specific national needs is dependent on the type of product. For example, Asian skincare often requires different products than European skincare. Therefore, businesses such as L'Oreal will design specific products for different countries. 

DIVERSIFICATION

Diversification for a global business is a risky strategy. often, this will be undertaken through takeovers and mergers. Here the global business can use its core functional skills such as finance, marketing and distribution. However, it gains the skills of the business taken over. For example, a business might take over a highly skilled workforce and allow it to continue product innovation. However, the business will use its global marketing and distribution expertise to gain greater access to markets.