What is the Ansoff Matrix?
Ansoff’s Matrix is a model for a company’s market growth. It helps you determine new strategy if you’re considering launching new products or exploring a move into a new market.
What do companies use the Ansoff Matrix for?
Ansoff’s Matrix is most commonly used to answer two major questions:
- Business growth – how can entering a new market or developing a new product create new wealth for my business?
- Strategic development – do we need to develop, create, and release new products to enter a new market, or will we be able to succeed with our existing products?
How can my business use Ansoff’s Matrix?
You can use Ansoff’s Matrix to determine the best possible strategy for your business.
You can explore both:
Market strategy – this helps you examine your growing market share with your current products in marketplaces where you already have a presence. Tactics could include acquiring a competitor in a mature market, increasing your ad spend, or developing a customer rewards program to encourage repeat business.
Product development – you can either create new products for your current markets or change them in order to encourage further growth in those markets. You can find new purposes for your current products or expand upon a current product range, for example.
Diversification – this consists of creating new products for new markets, either developed in-house or acquired. This can be somewhat risky, but it also likely won’t affect other existing products or markets where you are currently experiencing success.
Market development – this strategy helps to find new markets for your existing products, possibly by finding a new angle or approach to help sell them. You can reach out to new segments, use different sales channels, or connect to a new demographic.
Be sure to consider the size of any market you are considering entering, as well as connections between products and markets you are already familiar with.
Entering a new market or developing a new product is risky – market penetration is seen as much safer. Diversifying by releasing less-tested product into new markets is considered to be the most significant risk, especially when face stiff competition or internal issues within your organisation.