Ansoff Matrix | McDonald's Business Strategy

Summary

This video explains the Ansoff Matrix, a strategic planning tool used to identify business growth strategies. It covers four key strategies applied by McDonald's: market penetration (boosting existing product sales in current markets), product development (introducing new products like vegan burgers in existing markets), market development (selling existing products through new channels, such as delivery), and diversification (selling new products in new markets). The video highlights the varying risk levels of each strategy, with diversification being the riskiest and market penetration the least risky.

Takeaways

• 📈 The Ansoff Matrix is a strategic planning tool used to identify growth strategies for businesses.
• 🍔 Market Penetration involves selling existing products in existing markets, like McDonald's promoting Big Macs.
• 🚀 Product Development is about introducing new products in existing markets, exemplified by McDonald's vegan burger.
• 🔍 Market Development is selling existing products in new markets, such as McDonald's delivery services.
• 🌐 Diversification is the riskiest strategy, involving new products in new markets.
• 💡 McDonald's uses market penetration to increase frequency of use and drive out competition.
• 🏆 Being first to market is crucial for McDonald's in product development.
• 🔑 Understanding customer needs is key for McDonald's to implement new products.
• 🛍️ Market Development involves selling via new channels, like online sales or delivery services.
• 🌍 Geographical expansion is a part of McDonald's market development strategy.
• ⚠️ Diversification requires significant research and development and carries the highest risk.

Q & A

What is the Ansoff Matrix?

The Ansoff Matrix is a strategic planning tool that helps managers and marketers identify potential growth strategies for a business. It includes four strategies: market penetration, product development, market development, and diversification.

What are the four growth strategies in the Ansoff Matrix?

The four growth strategies in the Ansoff Matrix are market penetration, product development, market development, and diversification.

How does McDonald's use the market penetration strategy?

McDonald's uses the market penetration strategy by selling its existing products, like the Big Mac, in its existing market. They ramp up marketing efforts to increase customer frequency, grow market share, and drive out competitors like Burger King, KFC, and Taco Bell.

What is an example of product development at McDonald's?

An example of product development at McDonald's is the introduction of the vegan burger. This involves creating new products to meet customer needs within existing markets.

Why is being first to market important in product development?

Being first to market is important in product development because it gives the company a competitive advantage. If McDonald's were late in introducing the vegan burger after competitors like Burger King, it would lose potential growth opportunities.

How does McDonald's conduct research for product development?

McDonald's conducts research for product development by understanding customer needs through extensive research and development efforts. They aim to create products that meet specific customer demands.

What is market development and how has McDonald's applied it?

Market development involves selling an existing product in a new market. McDonald's applied this strategy by offering delivery services through platforms like Uber Eats, which introduced their products to customers in new ways.

What are some key features of the market development strategy?

Key features of the market development strategy include selling through new channels (such as online delivery), targeting new demographics, changing pricing strategies, or expanding to new geographical areas.

What makes diversification the riskiest strategy in the Ansoff Matrix?

Diversification is the riskiest strategy because it involves selling new products in entirely new markets. This carries higher risk since both the product and market are untested for the business, increasing the likelihood of failure.

How does McDonald's minimize risk when implementing the Ansoff Matrix strategies?

McDonald's minimizes risk by using a combination of strategies, such as market penetration with existing products in familiar markets, and gradually moving toward riskier strategies like product development, market development, and diversification.