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Marketing Principles Ansoff Matrix

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1.Describe the concept of sustainable competitive advantage. Do you think Subway’s competitive advantage is sustainable?

2.Identify and explain the four strategic alternatives used in Ansoff’stheory (You  use diagrams to explain your answer).  Based on the information provided in this case study, which strategy do you think Subway is pursuing? Provide reasons for your answer.



1.The sustainable competitive advantage refers to the process in which a company acquires or develops a distinguished feature that provides it with a competitive advantage over its competitors. It refers to the assets, resources or attributes that are difficult to copy and makes an organization more successful in comparison to its competitors. The sustainable competitive advantage refers to the long term attributes or resources of an organization which are not easily beatable or attainable by the competing organization. It may refer to the acquisition of highly skilled workforce, product differentiation or cost leadership. These assets are helpful for an organization to achieve competitive advantage.

It can be deduced that Subway is developing the sustainable advantage of differentiating the products according to the local taste and demands. In Australia, the consumers prefer healthy and fresh products. Therefore, the company is promoting its brand as fresh and healthy line. On the other hand, in the Middle Eastern countries, Subway is promoting the brand by adapting the product line according to the customer taste. It can be deduced that the Subway has adopted the strategy of product differentiation and product adaptation according to the local taste. It is a sustainable competitive advantage for the organization as Subway can attract a large number of customers and establish customer loyalty by adapting the products according to the local taste.

It is also important that this strategy of the organization will establish a distinguished and customer-friendly image of the organization in the perception of the customers. It will create a long-term sustainable advantage for the organization.

2.Ansoff Matrix is a strategic planning framework which discusses all the important strategies for the future growth of the organization. According to the Ansoff Matrix, the growth strategy of the organization can be differentiated into market penetration, market development, product development and diversification.


The market penetration strategy refers to the process in which the business organizations try to increase their current market share in the existing market. It is the strategy in which the main focus of the organizations is to enhance their existing market share by finding and identifying the potential customers. Most of the business enterprises pursue this strategy by reducing their existing price, merging or acquiring the rival organization or making insignificant changes in the product offering.

In the market development strategy, a business organization tries to expand itself in new and unexplored markets. It examines new geographies or countries according to their market potential. In this strategy, the product offering by the company remains same. Most of the business organizations use this strategy by diversify their customer base and hence expanding the market share. For instance, in this strategy, the companies find the industrial buyers for the goods which were previously sold to the household customers. This strategy is profitable when the company has a unique product offering which will be easily accepted by the customers or it can enhance the economies of scale by increasing the production.

Figure: Ansoff Matrix

The third strategy in the Ansoff matrix is that of product development. In this strategy, a company makes effort to develop its products or establish new products or services to increase its market share. In this strategy, the companies expand their product range and offering the best value to the customers. In order to pursue this strategy, the companies invest in the research and development of the products and making strategic alliance with the product development organizations for the market growth.


In the diversification strategy, the companies use the strategy of diversifying the product and the market. In the vertical diversification, the companies jump into an entirely different field to pursue growth. Since it is mostly unfamiliar territory, it is the most risky strategy to pursue. In this strategy, the business organizations need to establish both product development and market development. The diversification strategy could be categorized into related diversification or unrelated diversification. In the related diversification strategy, the products are similar to the existing products of the organization. On the other hand, in the unrelated diversification strategy, the products and the market are entirely different from the existing product offering of the company.

It could be examined that Subway is using the strategy of product development as its growth strategy. As per this strategy, the company is adapting its products and developing them according to the taste of the local customers. In this strategy, Subway conduct market research to obtain the market intelligence and customer preference and use it to develop its products.

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