Ansoff Matrix

Ansoff Matrix, also known as product/market expansion grid is a marketing planning model that can help firms to formulate product and marketing strategy. H. Igor Ansoff developed this framework and first published in the Harvard Business Review in 1957, in an article titled “Strategies for Diversification.”[1]

Within the scope of Ansoff Matrix, there are four growth strategies:

1. Market penetration. Market penetration refers to selling existing products to existing markets. This is the safest businesses growth strategy. Therefore, businesses of all sizes engage in market penetration at all times. Focusing on firm’s core value offering is very important to achieve successful market penetration. Furthermore, firms can achieve greater market penetration by improving marketing strategy, offering sales promotions, engaging in mergers and acquisitions in the same markets and through other means.

2. Product development. This involves developing new products to sell to existing markets. Firms can develop new products through effective investments in research and development, acquiring rights to produce products developed by others or acquiring companies producing different products. Ideas for new products can come from employees or customers. All major international companies engage in product development with varying levels of intensity.

3. Market development. Market development strategy is associated with finding new markets for existing products. Market development strategy includes offering same products to different customer segments and starting selling in new geographical areas, countries and regions.

4. Diversification. Diversification involves developing new products to sell to new markets and this is considered to be the riskiest strategy. Firms may decide to diversify into related or unrelated sectors. Successfully engaged, diversification allows businesses to reduce its dependence on a single market and industry.

In this portal you can find application of Ansoff Matrix framework on major international companies.

[1] Ansoff, H. (1957.) ‘Strategies for Diversification,’ Harvard Business Review, Volume 35, Issue 5, October 1957.