How to define your Product/Market Growth Strategy with the Ansoff Growth Matrix (includes a free template in Powerpoint)
Ansoff Growth Matrix Purpose
The Ansoff Growth Matrix, also called Product/Market Growth Matrix, will help you outline the different strategies a company can use to increase market share or introduce a new product.
The Ansoff Matrix was developed by H. Igor Ansoff and first published in the Harvard Business Review in 1957, in an article titled "Strategies for Diversification." It has given generations of marketers and business leaders a quick and simple way to think about the risks of growth. Sometimes called the Product/Market Expansion Grid, the Matrix assists top executives to consider 4 key strategic growth options and their respective risk.
The idea is that each time you move into a new quadrant (horizontally or vertically), risk increases.
Market Penetration is the safest of the four options. Here, you focus on expanding sales of your existing product in your existing market: you know the product works, and the market holds few surprises for you.
With Market Development, you're putting an existing product into an entirely new market. You can do this by finding a new use for the product, or by adding new features or benefits to it.
Product Development is slightly riskier than Market Penetration, because you're introducing a new product into your existing market.
Diversification is the riskiest of the four options, because you're introducing a new, unproven product into an entirely new market that you may not fully understand.
A popular example of market penetration is Coca-Cola. The company has been able to increase its sales by introducing new packaging sizes, expanding its distribution channels, and increasing its marketing efforts.
A good example of market development is Apple. The company has been able to expand its market by introducing its products to new countries and regions.
An example of diversification is Amazon. The company started as an online bookstore but has since diversified into other areas such as cloud computing, streaming services, and smart home devices.
A well-known example of product development is Tesla. The company has been able to introduce new products such as the Model S, Model X, and Model 3.
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