Ansoff’s Matrix

Igor Ansoff identified 4 possible strategies for companies:-

  • Market Penetration
  • Product Development
  • Market Development
  • Diversification

Ansoff's Matrix

Market Penetration

Here the company would focus on growing its share of existing markets – “Doing what you do now – but better”

There are a variety of possible strategies for penetration – prices quality strategies, customer service, Branding

Product Development

Companies can grow profits by developing their product range – “Offering new products to existing customers” Here a company would extend its range with alternative and/or complementary products. The product range has been credited to Albert Sloan of General Motors – he masterminded the companies strategy to compete against Ford in the early part of the 20th century.

Market Development

This approach suggests that a company can identify new markets or new segments to offer their product to. The obvious market development strategy is to export.

Diversification

Diversification is the strategy with the highest risk – here a company seeks a new product to offer to a new market. At its extreme the business will not be able to build on any of its experiences of exisiting products or markets. Often when experincing difficulties diversification is the first strategy mentioned – however greater success might be achieved by exploring other alternatives.

Reference

Ansoff, I (1989) Corporate Strategy, rev edn Penguin.

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