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• Developing product ranges and Ansoff's matrix

The Coca-Cola Company is the world’s leading seller of soft drinks. In Great Britain, the company offers over 20 brands (nearly 80 products), including Oasis, Sprite and, of course, its best seller, Coca-Cola. It sells a range of products to meet a broad range of consumer needs. But how does it decide what new products to sell and who to sell them to?

Market research
First it looks at its market. It divides this into slices or segments to identify different groups of consumer needs. Market research then finds out what each segment wants.

Market research may be:
• primary - using new data or
• secondary - using sources that have already been published.

Research by Coca-Cola Great Britain is carried out in five stages:
1. Desk research to see where there might be a gap in the market.
2. Detailed research using small groups of ‘typical’ consumers. This is to see exactly what might be wanted. For instance, it might look at a new product or pack size. This is an example of qualitative research.
3. Large scale surveys to collect information to see which type and design of product is likely to have the most appeal. This is an example of quantitative research.
4. Trials in a test market to see if the consumer likes the product.
5. Tracking the success of the product once it is launched.

Once the company identifies there is a need, Coca-Cola has to decide how it is going to meet this demand. For instance, should it make a brand new product or extend one it already has, perhaps by making a new flavour?

Should it develop the product itself (internal growth) or buy a competitor’s product (external growth)?

New products
Ansoff’s matrix is a way of identifying opportunities to expand a product range. The matrix is a grid which sets out the choices available to businesses. These are:
• Selling more of an existing product to an existing market. This is going deeper into a market so it is called market penetration.
• Selling an existing product in a new market, for instance bringing out different bottle sizes to attract different buyers. This is called market development.
• Selling a new product to an existing market. This is called product development as it means making changes to a product, for instance a new flavour like Coca-Cola Vanilla.
• Selling a new product to a new market. This is called diversification. Coca-Cola identified the need for a new sports drink and launched Powerade.

Ansoff's matrix looks like this:

| |Existing product |New product |
|Existing market |Market penetration |Product development |
|New market |Market development |Diversification |

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