Analyse B & Q’s proposed move into the bike market using Ansoff’s matrix (12 marks)
The Ansoff Matrix is a marketing plan that helps a business to decide market and product growth strategy; it looks at the degree of risk and potential for reward from the different strategic options.
Using the Ansoff Matrix, the proposal to sell bikes in the existing shops is an example of Product Development, A benefit of this would be that it would help them reach there corporative objective which is Growth, in order to do this they are planning to start by converting 50 BnQs stores in the midlands, this will mean they can test out the bike with their existing market, as about 20% of bikes are brought from online and 38% are brought from their biggest competitors Halfords as shown in Appendix A, and only about 28% of that market are willing to definitely go back and buy it from the same outlet which mean there is about 72% of 16-35 year olds who are willing to shop from someone else.
Using the Ansoff Matrix, the proposal to sell bikes in a new chain of high streets is an example of Diversification, A benefit of this would be that they will be able to spread the risk so if demand falls in one market the business will not suffer too much because it can still archive profits in its other market with its other products, this will mean they can spend £60millon on this project as the other market is slowly decreasing, but the main problem in this is Halfords plc who has 33% of the share in Britain’s Bike market tried to do the same thing but failed, this means that there is a great chance of BnQ also not succeeding, this is essential as Finance department is not keen to see £60 million of cash slip from the balance