Growing Sales Revenue Using Ansoff Matrix

Growing Sales Revenue Using Ansoff Matrix
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Growing Sales Revenue Using Ansoff Matrix
Introduction
In today’s competitive business environment, companies are always looking for ways to grow their sales. Ansoff matrix is one of the tools that business organizations can utilize to grow sales. The four strategies under the tool that can be used to grow sales include market penetration, market development, product development, and diversification. The Coca-Cola Company is one organization that can make use of the tool to boost its sales revenue. The US-based beverage company is one of the largest and most popular companies in the world. Through the application of the concepts and strategies under the Ansoff Matrix tool, the brand can grow its sales revenue and increase its size and popularity even further. This paper uses the tool to make recommendations that can help the brand grow its sales revenue.
Coca-Cola Background
The Coca-Cola Company began operations in 1886 when Dr. John Pemberton served its first drink in Atlanta, Georgia (The Coca-Cola Company, n.d.). The company grew gradually to become arguably the most successful beverage business organization. The acquisition of Minute Maid in 1960 was a significant step by the company to increase the line of beverage products it offers to customers. While the brand is based in America, its operations are distributed in more than 200 countries around the world (The Coca-Cola Company, n.d.). The company embraces diversity and as a result, it has over 700,000 employees that help it achieve its goals. Given its size, it is deducible that the company grew significantly to become what it is today. Nevertheless, through Ansoff Matrix strategies, the company can grow further its sales revenue.
Ansoff Matrix Strategies
The Ansoff Matrix was developed by Harry Igor Ansoff in his 1957 article published in Harvard Business Review (Proctor, 2008). The matrix is based on two strategic components: markets and products. The sections below examine how the tool can help the Coca-Cola Company improve its sales revenue.
Market Penetration
This strategy seeks to improve the sales of a firm’s current products in its existing markets (Proctor, 2008). In this case, the nominal outlays of marketing expenditure can be used by an organization to convince more first-time users of the brand to make purchases. An organization can also seek to increase the usage of its existing products. The intent, in this sense, would be for customers to buy more volume of the company’s existing products. According to Proctor (2008), market penetration can also be achieved through the promotion of new applications for the company’s current brand consumers. It is important to note that seeking to improve the market share of a company through market penetration exerts huge pressure on marketing resources and can thus have an unwelcome impact on profitability. However, if the market penetration strategy results in economies of scale, the marketing expenditure can easily be offset.
One of the ways through which the Coca-Cola Company can grow its sales revenue through market penetration strategy is through promotion and advertising to entice customers in its existing markets to purchase the products more. The customers, in this case, can either be new customers or the existing customers. While the company currently engages in advertisements and promotional activities, other players in the beverage industry such as PepsiCo still control a considerable share of the market. Therefore, it can be seen that despite the Coca-Cola Company having operations 200 plus countries around the world, there are still opportunities in the markets that can be explored for the growth of sales. The advertising and promotional activities should focus on its Zero Sugar and Diet Coke products. According to Forbes (2018), the launch of Coca-Cola Zero Sugar in 20 markets contributed significantly to the positive results of the company. Furthermore, its revamp of Diet Coke helped the organization keep up with the ever-changing preferences of consumers. A key challenge that the company has been facing the firm is the sugar in its products that are considered by many people to have an undesired effect on health. However, with Diet Coke and Coca-Cola Zero Sugar, the company addressed the concerns.
According to Proctor (2008), reminder communications can help a company increase the frequency of use of products. Therefore, if the promotional and advertising activities are done regularly, the existing customers of the company are likely to use the products more. In this sense, an acceleration of promotional and advertising activities focused on the two products can be instrumental in helping the company increase the usage of its brand in the existing markets. Given that the two products address an underlying issue, it is deducible that it has the potential to help the brand attract new customers. The advertising and promotional activities also have the potential to increase the usage of the product among existing customers. Therefore, a key recommendation for the company is to engage in the marketing and promotional activities of Diet Coke and Coca-Cola Zero Sugar in order to boost its sales revenue in its existing markets.
Price reduction strategy can also be instrumental in helping the company penetrate more into existing markets and grow sales revenue in the long-run. As aforementioned, other brands such as PepsiCo have a considerable share of the market that Coca-Cola has operations on. In this sense, a price reduction strategy can help the company reach customers who are price-sensitive and thus make use of competitors’ products. As pointed out by Proctor (2008), the reduction of prices is one of the strategies for market penetration. With the price reduction, there exists a potential for the company to make a significant rise in its sales that would consequently result in a rise in sales revenue.
Product Development
Product development is also an important strategy of Ansoff Matrix that can help an organization grow its sales revenue. While profitability may not rise initially due to research, development, and launching costs, the introduction of a new product positively impacts the growth of sales (Proctor, 2008). Innovation is integral to helping an organization develop and launch new products that have the potential to succeed in the market. It is through innovation that a company can attain a competitive advantage and consequently success. The international market environment in which Coca-Cola operates is extremely competitive and as such a firm cannot be successful in it without innovation. Through a new product, an organization seeks to offer a new or revised set of expected benefits (Proctor, 2008). Apart from increasing sales revenue, new product development helps an organization compete effectively and also address the changing needs of customers. As technology advances, consumers and competitors change their behaviors and if a company does not adjust accordingly, it risks failing. The product development strategy can help Coca-Cola supplement or replace its offerings in existing markets and serve new markets. Key recommendations, therefore, for the company include investment in innovative talents, monitoring of competition, gathering feedback from customers, and carrying out market research.
Investment in innovative talents is integral in helping the company improve its new product development capabilities. According to Kanagal (2015), the people that participate in the innovation process in an organization must be talented. In this sense, therefore, a key practice that can help the company improve its product development is scouting and hiring qualified people with the right knowledge that complements its new product development process. The company can attract qualified candidates by providing better employment than competitors. Given the importance of innovation, the company can also engage in talent development itself. The talent development or recruitment should take into consideration the different markets in which it operates. For example, in the Japanese market, the company should hire individuals that understand the needs of the market and customer preferences trends in the country. Talent development and hiring of the right people can help Coca-Cola develop innovative products that are bound to be successful in today’s competitive global market.
Monitoring the activities of competition can also help the company in its new product development process. Key activities that Coca-Cola can monitor among competitors include product launches, product prices, and product development. The major competitors of the company include other beverage firms such as Red Bull, PepsiCo, and Bri...