Definition: A strategic planningProcess to define strategy and decision-making. tool that helps organizations determine their product and market growth strategyPlan of action to increase a company's size and market share. This matrix presents four different growth strategies—Market Penetration, Product DevelopmentStrategy to introduce new products to an existing market., Market DevelopmentStrategy to promote existing products in new markets., and Diversification—based on existing or new markets and products.
Process:
- Market PenetrationStrategy to increase market share within existing customer b: Focuses on increasing sales of existing products to existing markets through increased marketing efforts, price adjustments, and improved distribution.
- Market DevelopmentStrategy to promote existing products in new markets.: Involves expanding into new markets using existing products, which could include entering different geographical areas or new customer segments.
- Product DevelopmentStrategy to introduce new products to an existing market.: Entails developing new products to serve existing markets, driven by innovation, technology changes, or changing customer preferences.
- DiversificationStrategy to enter new markets or industries.: Focuses on entering new markets with new products, which is the most risky strategy but can also provide significant growth opportunities.
Types:
- Related DiversificationStrategy to enter new markets or industries.: Entering a new market with a product related to existing offerings.
- Unrelated DiversificationStrategy to enter new markets or industries.: Entering a market with a new product that has no relation to any of the current products.
Application Example: A consumer electronics company using the Ansoff Matrix might decide to pursue a market developmentStrategy to promote existing products in new markets. strategy by expanding the sales of its current products to a new country to increase market share.
Further Reading:
- Harvard Business Review: https://hbr.org/ – Search for articles on strategic tools and case studies on how businesses implement strategies based on the Ansoff Matrix.
- Strategic Management Insight: https://www.strategicmanagementinsight.com/ – Provides explanations, examples, and analyses of various strategic planningProcess to define strategy and decision-making. tools, including the Ansoff Matrix.