The present answer is about Ansoff Matrix and its application in the hospitality industry. Ansoff Matrix is an essential tool that is used by many businesses to define and implement strategies. However, the complex structure of the tourism and hospitality market and its fast development could make it difficult for managers to choose the correct approach. Assessing the suitability of the model for analysing hospitality and tourism organisations is important because it can help managers to decide if the use of Ansoff Matrix will be beneficial. To explore the application of the matrix to the hospitality industry, the essay will use it to analyse strategy directions for Marriott International.
According to the Ansoff Matrix, the first strategy direction for Marriott International is market penetration. This strategy involves selling existing products in current markets to grow the market share. For Marriott, this strategy would attract more customers to its current hotels through increased marketing, promotional offers, and other similar practices. Evans argues that market penetration is the lowest risk strategy because “this option represents known markets and known products.” Indeed, Marriott International already has a large number of successful properties all over the world. Pursuing this strategy would help to capitalise on the existing assets of the company without risking financial performance.
Another strategy that Marriott International could pursue is product development, which involves offering new products to existing markets. This option is particularly beneficial in the changing market environment. Masset and Weisskopf mention that trends such as the experience economy, sustainability, digitalisation, and competition require hospitality organisations “to evolve in order to better adapt to the current environment.” For example, Airbnb and similar services pose a threat to Marriott International because they offer guests a cheaper stay with more flexibility. Using product development, Marriott International could respond to this threat by opening new facilities with affordable rooms or apartments. Thus, product development would be a useful strategy for the organisation in today’s hospitality context.
Market development and diversification, however, would not be as useful for Marriott as the other options. Firstly, finding new, profitable markets for premium and luxury hotels would be impossible due to the high market saturation. Secondly, creating new products for unexplored markets could result in financial losses and affect the reputation of Marriott. Evans states that diversification “represents the highest risk category”, meaning that it should only be used if other strategies are not helpful. Hence, it is unlikely that Marriott would benefit from market development or diversification, and the company should opt for one of the other strategies instead.
Based on the example above, the application of the Ansoff Matrix to hospitality and tourism companies can be useful for evaluating opportunities. However, the matrix is not specific to the hospitality industry, and thus managers should also assess the business environment and key trends. Therefore, it is recommended that hospitality managers use the Ansoff Matrix in combination with other strategic management techniques, such as environmental scanning.
All in all, Ansoff Matrix provides a useful framework for analysing strategic options in tourism and hospitality. When applied to Marriott International, the model shows that market penetration and product development would help the company to increase market share and profits. Market development and diversification, however, would not be as helpful because there are few profitable opportunities in new markets and the risks outweigh potential benefits. While Ansoff Matrix can help to identify strategic directions, managers should apply it with caution as part of a comprehensive approach to strategic planning.