Strategies for Growth using Ansoff's Matrix (or Ansoff Matrix)
Igor Ansoff proposed four strategies for growth which can be neatly summarised in the matrix below:
|
Existing products |
New products |
|
|
Existing markets |
1. Market Penetration |
2. Product Development |
|
New markets |
3. Market Development |
4. Diversification |
1. Market Penetration means selling more of existing products to existing markets, ie increasing
market share.
2. Product Development means growing through existing customer segments by offering new products to them.
3. Market Development refers to selling existing products to new customer segments.
4. Diversification means doing two things at once: developing new products for new markets.
Ansoff's matrix provides a very simple but very effective focus for considering different options for growth, and provokes
debate about whether to find new customers for existing products [3], offer more products to the existing customer base [2], or
stay with existing products and gain a greater share of the current market [1].
Diversification [4], which is often the instinct
of ambitious organisations, is the most risky growth strategy, because as the matrix shows so clearly, it means leaving the safety
zone of both existing customers and existing products into a region of two unknowns.
Note: This web page is not intended to provide comprehensive coverage of the subject, merely a brief introduction to provoke thought and to lead to a more in depth understanding and application of the topic, either through further reading - or from me as your management consultant, executive trainer or personal coach in a consultancy project, training course, workshop or seminar.
References and Further Reading
H Igor Ansoff, Corporate Strategy. McGraw-Hill. 1965