Ansoff’s Matrix is a marketing model that helps a business to plan and determine its product and market growth strategy. This suggests that a business’ attempts to grow on whether it markets new or existing products in new or existing markets. The yield from the Ansoff Matrix is an array of proposed growth strategies which set the route for the business strategy.
The first thing to consider is market penetration, which is where the business concentrates on selling existing products into existing markets. Typically, market penetration is designed to achieve four main objectives, these are:
or increase the market share of current products – this can be attained by a
mixture of competitive pricing strategies, advertising and sales promotion
dominance of growth markets
a mature market by getting rid of competitors; this tends to require an
aggressive promotional campaign, supported by a pricing strategy
- Increase usage by existing customers – for example by introducing loyalty schemes
In basic terms, a standard market penetration marketing
strategy is about “business as usual” approach – thus the business is focusing
on markets and products it knows well.
The second thing to consider is market development, which is a growth strategy where the business aims to sell its existing products into new markets. You need to consider things such as:
geographical markets; for example, selling products to a new country
product dimensions or packaging
distribution channels (e.g. moving from retail to selling on the internet)
- Different pricing policies to appeal to different customers or create new market segments
Market development is generally a more risky strategy than market penetration because of the targeting of new markets.
The third thing to consider is product development, this is where a business aims to introduce new products into existing markets. This strategy normally needs the development of new capabilities and requires the business to develop modified products which can appeal to existing markets.
A strategy of product development is particularly appropriate for a business where the product needs to be differentiated in order to remain competitive.
The final thing you need to consider as part of Ansoff Matrix is diversification, this is where a business markets new products in new markets. Typically, for a business to implement a diversification strategy, it must have a clear and detailed understanding about what it expects to gain from the strategy and provide an assessment of the risks it has to take in achieving them.