This is the detailed Ansoff model of renowned fast food company McDonald’s. Market penetration, market development, product development and diversification are the strategies which McDonald’s have been utilizing to increase market share.
A Russian pioneer of strategic management and corporate planning “Igor Ansoff” has introduced the Ansoff Matrix that helps the managers to decide and implement requisite strategies to achieve the target objective. The significance of competitive advantage in the competitive market was also identified by Igor Ansoff. The Ansoff matrix determines the major binary aspects of the market that includes, what is sold and to whom it is sold (Varadarajan and Dillon, 1982).
The marketing objectives are based on four actions that involve;
• Selling the same product in the current market
• Introducing current goods into fresh markets
• launching new products for the current market or
• Introducing new products into new markets.
Market Penetration
Market penetration is a primary rigorous growth plan of MacDonald’s. By using this strategy, MacDonald’s can cater to a large number of customers in the existing market. For instance, Macdonald’s has started operating its activities in North America and Europe through franchising, joint ventures or sole proprietorship. Global expansion through new locations is the main strategic objective associated with the intensive growth strategy of Market Penetration. It has been observed that a low price strategy helps the companies to easily penetrate the market for intensive growth (MacDonald’s Corporation, 2015).
Market Development
Selling and production of Existing products in new markets to increase market share by attracting new customers of the new market is called market development. Since the time of the establishment of business, MacDonald’s is using a market development strategy for the expansion of the business. Although, market development has become a peripheral growth plan because MacDonald’s is operating its business across the world except for Magnolia, and few regions of the Middle East, west Asia, and Africa. The strategic purpose of this plan is to create new locations in fresh markets like the introduction of MacDonald’s in Africa or the Middle East because currently, it is not providing its products and services over there. MacDonald’s is now executing a generic strategy based on cost leadership to support an intensive growth plan through the selling of products and services at low prices to attain competitive advantage by competing for its competitors (Millar, 1992).
Product Development
It is the tertiary plan used by MacDonald’s to achieve its intensive growth. MacDonald’s can produce and offer the latest products to its customers by using this strategy. For example, McCafe products are the biggest example of product development. In the process of product development, the new product may be different from an existing product or it may be completely changed into a fresh product. The actual purpose of executing this plan is to grab the attraction of a large number of customers by offering them new products. This plan is approved by the differentiation strategy of MacDonald’s irrespective of the latest goods that differentiate the company from its competitors.
Product development is a method of introducing new products in existing markets to provide additional benefits to customers. MacDonald’s would be the best example to discuss product development because they are offering special burgers every week, which means MacDonald’s is bringing something new every week. There is a slight risk involved in this strategy because it cannot be ensured by the company that customers would like special burgers or not. But, if the strategy goes successful then there is a great chance to increase sales because consumers will come back every week to tray special burgers.
The introduction of new products and services for the existing customers is called “market development”. For instance, MacDonald’s is constantly focused on changes in the taste of the consumer. It has been done through supplementation of their mainstream food products into a new one. The purpose of this strategy is to satisfy those consumers who are bored with high-fat junk food but prefers to eat MacDonald’s low-cost products. McSalad is a great example of MacDonald’s market development because it changes from normal fries and burgers. The introduction of McSalad in the Maccas menu has bound the health-conscious customers to remain stick with MacDonald’s (Gargasas and Mugiene, 2012).
Diversification
Selling and production of new and unique products in fresh markets. It is one of the most high-risk intensive growth strategies. For example, MacDonald’s has introduced McCafe. Most often, the firm does not offer good/decent quality drinks but the launch of McCafe has enabled the firm to sell a variety of hot drinks like tea, doughnuts, muffins, and cakes. Due to this fact, customers will not only go there for coffee only (MacDonald’s corporation, 2015)
References
Gargasas, A., &Mugiene, I. (2012). Intensive growth strategy development trends in logistics services for agricultural organization providing companies. Management Theory and Studies for Rural Business and Infrastructure Development, 34(5), 47-53.
McDonald’s Corporation (2015). International Franchising.
McDonald’s Corporation (2015). McCafé.
Miller, D. (1992). The generic strategy trap. Journal of Business Strategy, 13(1), 37-41.
Varadarajan, P., & Dillon, W. R. (1982). Intensive growth strategies: A closer examination. Journal of Business Research, 10(4), 503-522.