PAWAN SANTHOSH REDDY

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Ansoff Matrix
The Ansoff Matrix, also called the Product/Market Expansion Grid, is a tool
used by firms to analyze and plan their strategies for growth. The matrix shows
four strategies that can be used to help a firm grow and also analyzes the risk
associated with each strategy.
The matrix was developed by applied mathematician and business manager, H.
Igor Ansoff and was published in the Harvard Business Review in 1957. The
Ansoff Matrix has helped many marketers and executives better understand the
risks inherent in growing their business.

The four strategies of the Ansoff Matrix are:

1. Market Penetration: This focuses on increasing sales of existing

products to an existing market.
2. Product Development: Focuses on introducing new products to an
existing market.
3. Market Development: This strategy focuses on entering a new market
using existing products.
4. Diversification: Focuses on entering a new market with the introduction
of new products.

Market Penetration: In a market penetration strategy, the firm uses its

products in the existing market. In other words, a firm is aiming to increase its
market share with a market penetration strategy.
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The market penetration strategy can be executed in a number of ways:

1. Decreasing prices to attract new customers

2. Increasing promotion and distribution efforts
3. Acquiring a competitor in the same marketplace

Product Development

This strategy, too, may be implemented in a number of ways:

1. Investing in R and D to develop new products to cater to the existing

market
2. Acquiring a competitor’s product and merging resources to create a new
product that better meets the need of the existing market
3. Forming strategic partnerships with other firms to gain access to each
partner’s distribution channels or brand

Market Development

The market development strategy may involve one of the following approaches:

1. Catering to a different customer segment

2. Entering into a new domestic market (expanding regionally)
3. Entering into a foreign market (expanding internationally)

Diversification

There are two types of diversification a firm can employ:

1. Related diversification: There are potential synergies to be realized between

the existing business and the new product/market.

For example, a leather shoe producer that starts a line of leather wallets or
accessories is pursuing a related diversification strategy.

2. Unrelated diversification: There are no potential synergies to be realized

between the existing business and the new product/market.

For example, a leather shoe producer that starts manufacturing phones is

pursuing an unrelated diversification strategy.
PAWAN SANTHOSH REDDY
F20010