[Music] okay welcome to taking the beiz this is a YouTube channel dedicated to a-level business students and providing them with tutorials to help them out with their Revision in this topic we are going to have a look at an absolute Godfather he is known as ANS soft's Matrix and this is a superb tool or model for helping businesses to decide their strategic positioning or to formulate their strategic plans so strategic planning is all about how your business is going to compete how it's going to try and attract customers and out compete Rivals and succeed in the marketplace and this bad boy is an absolute Rascal when it comes to assisting businesses in the strategic planning process as you'll see it's laid out in the form of a foursided grid Matrix whenever we have these business topics that are presented like this it's important to understand what they're showing us by examining the axi so let's get rolling anof was a a Russian immigrant into America working in the 1950s investigating lots of business organizations and trying to work out which ones had the most successful strategies and through all of the studies that he did he worked out that there was four different strategies that were really really making firms effective in the marketplace four kind of strategic plans that firms were utilizing in order to out compete Rivals and what he noticed was was that what separated these four different strategies or these four different positions was first of all whether the business was offering consumers new products in order to be competitive or whether they were continuing to try and push their existing products but trying to go further with them trying to attract more customers for them so the first thing that we can see on ansoft Matrix is that these four different strategic positions that firms can adopt vary according to whether you want to try and bring out new products to be successful and Target consumers with or you want you continue to push your existing product range and just be more successful by selling more of your existing range of products but if we have a look on the other axes here the other thing that separates these four different strategies that ansoft developed for firms was the markets that the businesses were targeting so some firms might try to continue to Target their existing markets the same market segments or groups of customers that have always been buying their products but other firms might seek success by trying to find new markets to buy those products that could be new geographical markets or it could be new market segments that they were getting to try and purchase their goods and so those two different distinctions there between existing a new products and existing a new markets gave rise to four different strategies that ansoft said firms could adopt in order to be successful so let's talk you through them one at a time starting with the one that ansoft said involve the least risk it's a strategy known as penetration or Market penetration and as you can see from our AES here that strategy involves trying to continue to sell your existing range of products to your existing markets so staying in the same Geographic markets as you're competing in right now or targeting the same market segments that you have targeted historically and trying to Target them with your existing product range so you're not bringing out anything new for them now that's why it is the least risky of ansoft strategies because you're not targeting any new customers so you don't need to invest Lots in market research to find out the needs of new groups of people that you've not targeted before so that strips some of the risk out of this strategy but also you're not developing any new products either so don't have to invest in the new product development and the research and development needed to develop new product lines so again it strips some of the risk out of this strategy that said potentially it's the least rewarding as well it's got the least potential for growth because you're not finding any new customers for your products and you're not bringing out anything new for consumers to buy you're literally either trying to sustain your existing position to maintain your existing market share or if you are using this to try and grow your organization you've got to try and find ways of getting your existing Market to just purchase more or purchase more frequently the existing products that you are selling that can be a tricky thing to do certainly involves the least risk but it can be difficult to accomplish give you perhaps an example of a firm a couple of firms that have done that there's a very successful serial manufacturer that every year runs a promotion encouraging consumers not to eat their cereal once a day but instead to substitute one of their other meals for a second bowl of cereal and it will assist consumers with their weight loss they're meant to be able to drop a dress size doing this TW we seral challenge now look they're not targeting anybody new with that promotion and they're certainly not launching new cereals to make it work but for that 2 week period consumers will be buying twice as much of the cereal CU they're eating it twice a day in order to fit in with this promotion and try and lose weight so they've penetrated their Market there I've sold more of that product to their existing consumers and for a short period at least they have achieved growth there's also a very very famous fast food restaurant that tries to do this again through their promotions so when they run promotions uh perhaps involving a famous Monopoly board games they are not bringing out any new products for consumers to buy and they're not really targeting any new types of consumers but for that month the Monopoly competition is running those consumers will buy more of that product or they will visit that restaurant more frequently than they would ordinarily and that firm is then able to penetrate the market increase their sales by selling more of their existing product range to their existing Target customers and it's the least risky of the strategies the only down side of it is it's difficult to do and it doesn't have as much longevity so those examples that we just quoted there were both examples that might last for a fortnight or last for a month and then the firm has to think of new ways of penetrating that market so a different strategy might be to go with what's called a product development or a new product development strategy instead so with this strategy we're still targeting the existing market so the firm isn't changing the geographic markets that it's targeting or the market seg ments that it is trying to aim its products at but what it is doing is bringing out new product offerings targeted at that same group of customers that the firm has targeted historically now a great example of firms that use this would be Electronics firms phones are constantly being updated so they'll bring out the latest model the latest version of that phone it's targeted at the same groups of customers that probably bought earli version versions of their phone but this new updated model might encourage consumers to replace their old version by this latest one and then the firm has increased its sales and it has grown its uh its sales its Revenue its profits potentially by bringing out new product offerings but targeting the same group of people now this is a more moderately risky strategy CU although we will know our customers we're not targeting anybody new so we know those Market seg ments we've researched them in the past we know their consumer behaviors we know the needs and the wants of this market so in terms of market research we might strip some of the risk and the expense out this strategy we are going to have product development and research and development costs associated with this strategy and you've got no way of knowing that new products that you're bringing out are going to appeal to these customers even though you know them well there's always that element of risk involved in bringing out something new for them so as a games console manufacturer brings out the latest game console they are fairly confident that they know that consumer but they've had to undergo the expense and the cost of researching and developing new Innovations and new technologies and uh new specifications for this new product and there's a risk that when consumers experience those new product offerings they may not appeal to them as much as the firm thought so it's more of a moderately risky strategy we got go down to the bottom here what the firm could do is continue to launch or continue to sell its existing product range so it doesn't have the research and development costs of inventing new Innovations and adding new specifications to its products so it keeps its product offerings exactly the same doesn't add to its product portfolio but what it does do is to try and seek out new markets new customers that might want to buy this product portfolio now that could be new Geographic markets so they could find new countries that they haven't launched their product range in before they could Target their existing product range to maybe they've never targeted Spain before so they take their product range and they start selling it to Spanish consumers now there's an element of risk attached to that because you're going to have to invest in market research to find out the needs of these Spanish customers and check that they would be willing to buy your existing product range and you're going to have to research how they want to be promoted to and where they might purchase these goods from so there's that risk attached with having to do market research to learn about the needs of this new group of customers but this could also be not just targeting new Geographic markets but targeting new market segments with your products as well so sometimes firms realize that they can take their existing product portfolio and they might be able to find different market segments that might actually enjoy and purchase this product now a lovely example of of this would be something like Lucas a which just keeps evolving in terms of the markets of customers that might buy it so traditionally this was launched as a medicinal product that consumers might purchase if they had colds or ailments or flu and it was meant to rejuvenate them it's meant to have medicinal qualities but from that Lucas a realized that they could also add other market segments that might appeal to it so rather than people just going to a chemist to purchase it if they could change their distribution strategy and then start advertising it marketing it as a sports supplement as an energy drink something that athletes might consume then they found a new market that might purchase this product and so the sales of it will grow now look there is an element of risk to that because you've got to learn about the needs of these new markets but the risk of having to develop new products for them is eliminated because you're selling your existing product range so Market development again another strategy that ansoft developed the strategy developed that has the most risk attached to it is known as diversification the risk comes because of what this strategy entails in terms of products we're going to develop new product offerings so that's going to involve research and development and we know that that's expensive and with expense comes risk but the risk is heightened because as we're developing those new products we're also going to Target them at New Markets either new G Geographic markets or new market segments either way that's going to involve not just the research and development of developing these new product lines but the market research costs of learning about these new Geographic or market segments so this is the most risky of the strategies but think about it for one second it's also potentially the most lucrative think about the potential that the strategy has got to stimulate growth for an organization we're bringing out brand new product line so we're adding to the firm's portfolio so there's growth potential straight away but we're actually bringing this business into new markets targeting new consumers untapped audiences so the potential for growth is much larger than it is with ANS soft's other strategies crucially neither of these strategies are better than the other the firmm has got to find the one that fits in with their Vision so if they're just trying to maintain their current position Maybe to hold on to their market share maybe in response to economic climates firms might choose penetration firms that have objectives to do with growth and expansion diversification might fit in very well with that strategy firms that are trying to balance risk and rewards a little bit more might go for market development or product development as their strategies but these are four great strategies firms can use in order to try and be successful we're going to go throw links in the comment section section below to other strategy videos that we've got we've put links to them in the top hand corner for you as well hopefully that one will help you out when it comes to ansoft Matrix in the meantime good luck with your revision hope it's all going well keep on taking the biz