Ansoff Matrix

What is the Ansoff Matrix?

1. A model which identifies growth strategies for
businesses based on an analysis of their
products and their markets.

2. It highlights four strategic options for

organisations which can be used when
managers have to decide what to do next.

3. It can help you generate alternative courses of

action for firms to weigh up against each other.
 Matrix
Products
Existing New
Existing

Market Penetration Product Development

Markets

Market Development Diversification

New
 Penetration
1. This strategy occurs when a firm tries to
sell more of its existing products to its
existing customers.

2. To achieve more sales the firm may adjust

elements of its marketing mix. E.g. it may
increase its spending on advertising or cut
its price.

3. This is a relatively low risk strategy which

can be implemented in the short term.
 New product
development
1. This strategy focuses on developing
new products and offering these to
existing customers.

2. This strategy is risky in the sense

that new products might fail. Only one
in ten new products launched
survives the first two years.

3. However managers should have a

good understanding of the market.
 Market development
1. This strategy occurs when a firm
first offers its existing products
to an existing market.

2. It may try to sell its product

overseas or it may try to target
new segments of its existing
market.
 Diversification
1. This strategy involves offering new product
to new markets. E.g. a chocolate company
may decide to diversify into the soft drinks
market.

2. This is a high risk strategy because the firm

may have only a limited understanding of the
production and marketing required of the
new sector.

3. If successful this will enable the firm to

spread its risk over two markets.