Question

Topic: Strategy

Relationship Of Ansoff's Matrix And The Plc

Posted by Anonymous on 2/19/2008 at 10:45 AM ET 500 Points
I was wondering if somebody could help me finding a linkage between the PLC (preferable the international PLC) and Ansoff's matrix. This means I would like to know which stages of the PLC would best apply to Ansoff's strategies.

I mean in my opinion when looking at the international PLC I would for instance say that a penetration strategy would be most appropriate during the growth phase. However I feel that product diversification could be applied for products in their declining stage as this could give businesses competitive advantage, but this means higher risk due to the need of new skills.

Many thanks in advance for some input and ideas.

Enrico
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  • Posted by steven.alker on 2/19/2008 at 11:54 AM Member
    Dear Enrico

    It’s always good to see someone who has been a subscriber for a long time deciding to participate. Welcome to the forum and I hope that we can provide some decent insights.

    Before we plough in, did you have a plc in mind?

    The point of positioning any enterprise within the matrix can be for many different reasons. There’s a non-inclusive list and examples on one of my favourite tutorial sites: https://tutor2u.net/business/presentations/strategy/ansoff/default.html

    And a more basic introduction on their Ansoff page:

    https://tutor2u.net/business/strategy/ansoff_matrix.htm

    The point is that it is possible and perhaps desirable for a given company to have interests in all 4 quadrants. Analysed product by product, you will discover that many companies have cash cows, loss leaders, wild-cards and really speculative attempts to make a new product succeed in a new market. You might even find that there are plc's which go beyond Ansoff by coming up with unknown products with unexpected applications which are expected to sell in as yet unknown markets. (In 1966, the Laser was such a product, looking for an application, looking for a market and yet in production)

    I’ll have to stop that one right there lest I end up sounding like Donald Rumsfeld with his known unknowns and unknown unknowns!

    Please clarify, perhaps with an example of a plc and some of its products so that I can see where you are coming from.

    Best wishes



    Steve Alker
    Unimax Solutions

    PS - PLC stands for Programmable Logic Controller. I think that the Public Limited Company is meant to be un-capitalised.



  • Posted by Chris Blackman on 2/21/2008 at 7:30 AM Accepted
    Enrico

    That's the trouble with TLAs (Three-Letter Acronyms). They mean different things to different people.

    There's a good description on Wikipedia at https://en.wikipedia.org/wiki/Product-Market_Growth_Matrix, although I prefer the way Malcolm McDonald describes it in "Marketing, a complete Guide" (ISBN 0-333-99436-X) p151 et seq where he refers first to the PLC and then to Ansoff.

    The linkages between PLC and Ansoff are, in summary (my take on this):

    1. Marketing objectives variously demand different responses to different segments of the matrix.
    2. The term "new products" implies technical innovation, while "new markets" implies an unfamiliar, or untapped market segment or geographic territory.
    3. The newness or lack of familiarity with the product/market combination implies the level of risk the company is going to be taking.
    4. Pursuing strategies of new products in new markets is the riskiest strategy of all
    5. When a company launches a new product in a known market, and the product reaches the maturity/saturation phase, that's the time to look for new markets to grow further off the existing IP and sunk development costs.
    6. Sometimes a product doesn't make it past the innovator/early adoption phase before it is superseded by a better faster cheaper product - this is typical in high technology consumer products - where early versions fail to deliver on their promised performance, and are never going to achieve the required return on investment for the company. That's when the company brings out the new model and drops the old one, effectively updating the portfolio before it is time, to avoid a market failure.
    7. Sometimes older technology can be introduced to a new market where it can be distributed far more cheaply (due to sunk development investment costs) than a new version, which might be sold in better developed markets which have been saturated by the product's predecessor. Some manufacturers use this technique as a way of justifying different pricing in different markets. Although with globalisation (and eBay), it's getting harder to maintain such artificial barriers.


    Hope that helps. Definitely read the McDonald book, especially Chapter 8 where he describes the Product Portfolio Management Process.

    Cheers

    ChrisB




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