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Ansoff Matrix

The Ansoff Matrix provides a framework for corporate growth strategies based on existing and new products and markets. It outlines four strategies: market penetration using existing products in current markets; market development by targeting new markets with existing products; product development of new products for existing markets; and diversification into new products and markets, which carries the most risk. The document then discusses each strategy, noting market penetration carries the least risk while diversification carries the most but could provide high returns if successful.

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303 views2 pages

Ansoff Matrix

The Ansoff Matrix provides a framework for corporate growth strategies based on existing and new products and markets. It outlines four strategies: market penetration using existing products in current markets; market development by targeting new markets with existing products; product development of new products for existing markets; and diversification into new products and markets, which carries the most risk. The document then discusses each strategy, noting market penetration carries the least risk while diversification carries the most but could provide high returns if successful.

Uploaded by

Yusra-angelz Fayzu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOC, PDF, TXT or read online on Scribd
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Ansoff Matrix

To portray alternative corporate growth strategies, Igor Ansoff presented a matrix that
focused on the firm's present and potential products and markets (customers). By
considering ways to grow via existing products and new products, and in existing
markets and new markets, there are four possible product-market combinations.
Ansoff's matrix is shown below:
Ansoff Matrix
Existing Products

New Products

Existing
Markets

Market Penetration

Product Development

New
Markets

Market Development

Diversification

Ansoff's matrix provides four different growth strategies:


Market Penetration - the firm seeks to achieve growth with existing products in their
current market segments, aiming to increase its market share.
Market Development - the firm seeks growth by targeting its existing products to new
market segments.
Product Development - the firms develops new products targeted to its existing market
segments.
Diversification - the firm grows by diversifying into new businesses by developing new
products for new markets.

Selecting a Product-Market Growth Strategy


The market penetration strategy is the least risky since it leverages many of
the firm's existing resources and capabilities. In a growing market, simply
maintaining market share will result in growth, and there may exist opportunities
to increase market share if competitors reach capacity limits. However, market
penetration has limits, and once the market approaches saturation another
strategy must be pursued if the firm is to continue to grow.
Market development options include the pursuit of additional market segments
or geographical regions. The development of new markets for the product may
be a good strategy if the firm's core competencies are related more to the
specific product than to its experience with a specific market segment. Because
the firm is expanding into a new market, a market development strategy
typically has more risk than a market penetration strategy.
A product development strategy may be appropriate if the firm's strengths are
related to its specific customers rather than to the specific product itself. In this
situation, it can leverage its strengths by developing a new product targeted to
its existing customers. Similar to the case of new market development, new
product development carries more risk than simply attempting to increase
market share.
Diversification is the most risky of the four growth strategies since it requires
both product and market development and may be outside the core
competencies of the firm. In fact, this quadrant of the matrix has been referred
to by some as the suicide cell". However, diversification may be a reasonable
choice if the high risk is compensated by the chance of a high rate of return.
Other advantages of diversification include the potential to gain a foothold in an
attractive industry and the reduction of overall business portfolio risk.

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