ANSOFF Matrix- Ansoff Product Market Growth Matrix

ANSOFF Matrix

 


Ansoff Matrix or Ansoff Product Market Growth Matrix
 is a tool that helps businesses decide their product and market growth strategy. It was developed by Igor Ansoff in 1957. It suggests that a business attempts to grow depending upon whether it makes a new or existing products in new or existing market. The output of the matrix is a series of suggested growth strategies that set the direction for the business strategy.
The four business strategies that can be adopted by a business based upon the ANSOFF matrix are –

Ansoff Matrix

 

1. Market penetration – It is a growth strategy where the business focuses on selling existing products into existing markets. It has four main objectives-

♦ Secure dominance of growing markets

♦ Restructure a mature market by driving out competitors

♦ Increasing usage by existing customers – through loyalty programs

♦ Maintain or increase the market share of current product through competitive pricing, advertising and selling promotion

 

2. Market development – It is a business strategy where the business seeks to sell its existing products into new markets. There are many ways of approaching a new market or markets –

♦ New geographic market-exporting to new countries

♦ New product dimension or packaging

♦ New distribution channel

♦ Create new market segments

♦ Different pricing policies to attract different customers
3. Product development – This is a strategy in Ansoff matrix where a business markets new products in existing markets . It requires development of new competencies and development of modified products which can appeal to existing markets. It involves introduction of a new product to the existing product range in an attempt to increase market share.
4.Diversification – Under this strategy the business markets new products in new markets. It is a risky strategy as the business is moving into markets where it has little or no expertise. For a business to adopt this strategy it must have a clear idea about what it expects to gain from the strategy and  a honest assessment of risks. Such a strategy is chosen when the risk can be compensated with a good return on investment. 

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