Business Studies 2010

The Ansoff Matrix

Marketing strategies can be examined using the Ansoff matrix.

PRODUCT
EXISTING NEW

EXISTING

MARKET PENETRATION PRODUCT DEVELOPMENT

MARKET

MARKET DEVELOPMENT DIVERSIFICATION

NEW

The two main variables in a strategic marketing decision:

 The market in which the firm was going to operate.
 The product intended for sale.

Product development
 Sell new products in existing markets i.e. soft drinks
 Low risk
 Low cost
 Established companies can use this strategy because they already have an
existing market
 May require a complete marketing mix strategy

Market Penetration
 Sell more products (existing) in existing markets
 Could be use to move stock
 Low risk/cost
 Marketing mix strategy especially price
 Used frequently if competition exists (substitute goods)
 Attempting to sell a product for a different occasion

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Business Studies 2010

Market Development
 Achieve high sales/higher market share of existing products in new markets
 Medium risk
 Marketing strategy i.e. promotion
 New segments/maybe overseas markets
 Example = Lucozade – originally used for health/flu now a sports drink

Diversification
 Selling new products in new markets
 Highly expensive
 Time consuming
 Can help to spread risk
 Proctor/gamble
 May have little expertise
 Example = Virgin changing to an airline/train

Ansoff Matrix Key Points

1. Allows managers to analyse the degree of risk

2. Managers can then apply decision making techniques to assess
costs/potential benefits
3. Particular strategy could depend on the size of the business, the number of
products produced, rang and mix
4. A final decision should also reflect additional research both internal and
external, primary and secondary data and an assessment of the current
position