Ansoff Matrix

PRIYANSHU PRIYADARSHANI – 19F

Harry Igor Ansoff (1918 – 2002)

• Father of modern strategic thinking.

• Came from a great line of strategic
thinkers including the likes of Sun Tzu
and Machiavelli.
• Born in Vladivostok to a Russian
mother and an American diplomat
father.
• Studied Mechanical Engineering and
Physics.
Harry Igor Ansoff (1918 – 2002)

• Started working for Rand Corporation

developing strategic problem solving for
NATO.
• Moved to work at Lockheed and eventually
became an academician.
• Authored many books.
• Influenced thinkers like Michael Porter,
Gary Hamel and C.K. Prahalad.
What is ANSOFF Matrix

• It is a strategic planning tool that provides a framework to

help executives, senior managers, and marketers devise
strategies for future growth.
• It helps to plot generic strategies for growing a business via
existing or new products, in existing or new markets.
• It helps managers to assess different risks associated with
moving their organization forward.
 Introduction

• Need to move away from “Business as usual” mind-set.

• Find new ways to increase profits and reach new customers.

• Numerous options available.

• Important to find out which option is most viable?

 The Beginning

• Developed by H. Igor Ansoff.

• Published in Harvard Business Review in 1957, in an article titled “Strategies for

Diversification”.

• Also called the Product/Market expansion grid.

 The Matrix
• Illustrates the four strategies
that can be used to grow

• Helps analyse risk that is

associated with each one

• The four quadrants includes

four different strategies with
different levels of risks
 RISK WITH EACH LEVEL
●
MARKET PENETRATION ●
MARKET EXTENSION

MODERATE
LOW RISK
RISK

HIGH RISK MEDIUM RISK

●
DIVERSIFICATION ●
PRODUCT DEVELOPMENT
The MATRIX
EXAMPLES OF ANSOFF MATRIX
Coca-Cola
McDonald
 Market Penetration

• Object – Sell more to same market;

• Develop new marketing strategy to encourage people to choose our product or
use more of it;
• Loyalty scheme;
• Launch price or other special offer promotions;
• Buy competitive company.
 Product Development
• Object – Sell different product to same market
• New products come in the form of:
– New products to replace current products
– New innovative products
– Product improvements
– Product line extensions
– New products to complement existing products
– Products at a different quality level to existing products
• Product development is used when:
– The Firm has strong R&D capabilities
– The market is growing
– There is rapid change
– The firm can build on existing brands
– Competitors have better products
• But new product development is costly and there are
moderate risks associated with this strategy
 Market Development
• Object – Targeting new markets or new segments of existing markets;
• Selling more of same things to new people;
• Target new markets using PEST Analysis;
• Use different sales channels;
• Use Market Segmentation to target new customers with different age, gender and demographic
profiles;
• Use Marketing Mix to understand how to reposition your product.
 Diversification
• Object – Set up new business with new product in a new market;
• Extremely risky because it involves two unknowns.
• Therefore new products and new markets should be selected which offer the
prospect for growth which the existing product market mix does not.
• Little scope of using existing knowledge and expertise;
• Advantage is expanding business;
• Adversity on one business does not affect other.
 Can it be applied in BANK ?
• Aim of any bank is to achieve growth and make profits just like any
other organization.
• Market penetration should be the main focus , that is making sure
that the current resources are being most effectively employed and
ensuring that the bank is doing the best it possibly can with its
current products and customers.
• After this, the Product development and Market development follows.
• Diversification should be attempted at last as it is most risky,
requiring new capabilities
• Market Penetration : A common Strategy in banking is to
increase market share whereby existing products in the bank’s
portfolio are offered to the prospects and existing customers
with the aim of Cross-selling . It is a low risk strategy as the
demographic and psychographic characteristics of existing
customers are already well known to the bank.
• Product Development: It aims to provide new products to
existing market segments. It is appropriate where customers
remain with the bank for a lifetime, with different needs arising
at different stages of the life cycle. It is low to medium risk since
the focus is on existing markets and the bank may also create
new features in existing products to meet the customer needs.
• Market Development : This is relatively riskier . Introducing
existing products to new market segments is riskier than
creating new products for existing market segments.

• Diversification : Riskiest of all as it offers new products for new

markets. It is consistent with the bank that has a high tolerance
for risk .
Thank You