The Ansoff matrix developed by Igor Ansoff is a very essential tool for strategic planning. It helps the firm to identify the firms’ growth using the intensification and diversification strategy, which aims at achieving growth through certain modifications in the firm’s existing business. According to Ansoff model four different strategies are possible. They are –
• Market penetration strategy
• Market development strategy
• Product development strategy
Market Penetration Strategy
This strategy involves achieving growth through existing products in existing market. Amul’s market penetration strategy involves its expanding its customer base in the existing market. Currently Amul is trying to expand its customer base through the following measures –
• Amul is set to build up 10,000 `Amul Parlours' across the country during the year. These stores will sell the entire product range of Amul products, in addition to the existing retail network for ice cream, milk and other products.
• It is trying to get more and more customers through a more intensive distribution. It is opening more stores at Highways, Railway stations, Airports, Bus stations, Schools, Colleges, and Industrial Canteens etc.
• It is trying to find place in various retail outlets, the latest story being Amul trying to acquire a shelf in the yet to come Wal-Mart.
• Opening small Amul-exclusive stores in each and every neighborhood to reach to the very near of the consumer.
Market Development Strategy
This strategy is concerned with creating business through developing new markets with existing products in hand. Amul is using this strategy to capture new and unexplored sectors without creating new products. What Amul is doing in this sense is as follows –
• Amul is now shifting its focus from urban to rural markets and smaller towns. In 2005 Amul added 900 new stores all across small towns to increase its reach.
• Amul is capturing the market of diabetic and health conscious people through sugar free ice-cream, which is a variation of an existing product.
• Amul will expand its fresh milk markets to Kanpur and Lucknow and other smaller towns this year, thereby increasing its market base for the existing products.
• Amul is also increasing its market base for milk through a new version – the Amul Tazaa. Tazaa is the long-life version of milk which has a longer shelf life as compared to normal fresh milk. This product is highly picking up in the domestic and export market.
Product Development Strategy
Product development deals with producing new products for the existing customer base. Amul has vastly capitalized on this strategy by constantly coming up with newer products. Let’s have a look at some of them –
• Amul-Cool (milk based cool drink) and Amul-Kool café – these are the products aimed at the youth of the country with synonymous marketing campaigns.
• It is coming up with a chain of pizza corners. This chain would consist of around 2000 stores all over India.
• Stamina – the instant energy whey based sport drink has been launched to provide its customers with a totally new product.
• Amul has recently launched a new variation of ice-cream, the sundae swirl to its existing base of ice-cream customers.
• Amul-Masti, the packaged buttermilk is aimed to be another non-carbonated cool drink in the Amul Cool range which is not only aimed at the youth but also at the more mature chunk of the society.
Diversification is a very important part for any business organization. For the further growth opportunities of a company diversification is required. When a new product is launched into the new market diversification holds good and provides more growth opportunities in the future. Diversification is a high-risk strategy as it involves taking a step into a territory where the parameters are unknown to the company. Amul has identified the need to increase its presence in newer markets and thus have come up with many new such strategies for increasing its presence in the entire market.
There are different types of diversification process that any company can adopt they are as follows:
• Concentric Diversification Strategy
• Conglomerate Diversification Strategy
• Horizontal Diversification Strategy
Concentric Diversification Strategy: It is the development of new products by using the older technology directed for the benefits of newer segments. In this type of diversification Amul has identified a segment for the health conscious people and is introducing two pro-biotic ice cream ranges, Amul Sugarfree and Amul Profile and both of these products will be available in five different flavors this is apart from the various regular ice cream products that it offers. They have identified the working class women as a new segment and has introduced frozen easy to cook stuffed parathas, matar paneer and paneer pakoras which makes them easy to cook quality tasty food in less time.
Conglomerate Diversification Strategy: It is developing new products for the newer markets. Amul in this concern has come up with an idea of introducing an altogether new spots drink named "Stamina" which will be the first sports drink by an Indian company and it will be priced at only Rs 12 for 200ml which will be lower than its competitors whose price ranges around 60 to 75 Rs. In this they have also introduced the Amul Pizza in order to enter the pizza market. They have also come up with flavored milk and also flavored lassis to enter newer markets.
Horizontal Diversification Strategy: It is developing newer products with newer technologies for the old customers. In this concern Amul to provide something new to its older and loyal customers have come up with a facility whereby they could order the food through the internet and this was at a time when internet was heard by very few in India during 1996.
Thus we can say that Amul has come across a long way in diversification to provide something new to its customers and in this concern what Amul has to say is that the diversification has nothing to do with the increasing competition.