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Ansoff Matrix Ads and Disads

The document discusses Igor Ansoff's marketing matrix, which outlines four corporate growth strategies based on existing and new products and markets: 1) Market Penetration focuses on increasing market share of existing products in current markets, 2) Market Development introduces existing products to new markets, 3) Product Development creates new products for existing markets, and 4) Diversification develops new products for new markets. The strategies differ in their risk levels, with Market Penetration posing the least risk and Diversification the most.

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348 views3 pages

Ansoff Matrix Ads and Disads

The document discusses Igor Ansoff's marketing matrix, which outlines four corporate growth strategies based on existing and new products and markets: 1) Market Penetration focuses on increasing market share of existing products in current markets, 2) Market Development introduces existing products to new markets, 3) Product Development creates new products for existing markets, and 4) Diversification develops new products for new markets. The strategies differ in their risk levels, with Market Penetration posing the least risk and Diversification the most.

Uploaded by

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© © All Rights Reserved
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IB Marketing

Ansoff Matrix

To show the different 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
Market Penetration     Product Development    
Markets

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.
IB Marketing

Teacher’s notes

What are the advantages and disadvantages of using


different strategies?

The market penetration strategy is the least risky since it uses 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 finding additional market segments or


geographical regions to target. 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.
IB Marketing

Other advantages of diversification include the potential to gain entry to an


attractive industry and the reduction of overall business portfolio risk.

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