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The Ansoff Model PDF

The Ansoff Matrix is a strategic planning model used to identify growth opportunities for businesses. It evaluates alternative combinations of new markets and new products or services. The four growth strategies it identifies are market penetration, market development, product development, and diversification. Companies can use the Ansoff Matrix annually to evaluate potential opportunities for increasing sales through one of these four strategies. It provides a framework to help businesses determine how to sell more to existing customers, enter new markets, develop new products, or diversify into new markets with new offerings.

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274 views4 pages

The Ansoff Model PDF

The Ansoff Matrix is a strategic planning model used to identify growth opportunities for businesses. It evaluates alternative combinations of new markets and new products or services. The four growth strategies it identifies are market penetration, market development, product development, and diversification. Companies can use the Ansoff Matrix annually to evaluate potential opportunities for increasing sales through one of these four strategies. It provides a framework to help businesses determine how to sell more to existing customers, enter new markets, develop new products, or diversify into new markets with new offerings.

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Carbon Nano Tube
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© © All Rights Reserved
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The Ansoff Model

Using The Ansoff Matrix to identify growth opportunities

What is the Ansoff Matrix?

This model is essential for strategic marketing planning where it can be


applied to look at opportunities to grow revenue for a business through
developing new products and services or "tapping into" new markets. So
it's sometimes known as the ‘Product-Market Matrix’ instead of the ‘Ansoff
Matrix’. This focus on growth means that it's one of the most widely used
marketing models. It is used to evaluate opportunities for companies to
increase their sales through showing alternative combinations for new
markets (i.e. customer segments and geographical locations) against
products and services offering four strategies as shown.
How to use the Ansoff Matrix

Strategic questions that can be answered using the matrix include:

 Market Penetration: How to sell more of your existing products or


services to your existing customer base?
 Market Development: How to enter new markets?
 Product and Development: How to develop existing products or
services.
 Diversification: How to move into new markets with new
products or services, increase your sales with your existing
customer base as well as acquisition.
You may be executing more than one of these strategies depending on the
stage in your business,

“My best practice tip is to use Ansoff at least once a year in strategic
planning for your business to identify potential new markets, new
products as well as product development opportunities.”
To evaluate the suitability of these strategies, issues to consider for each of
these:

1. Market Penetration: change your opening hours of your store,


reduce order processing times, showcase entire product portfolio etc.

2. Market Development: Does your research on your market share in


your existing sectors back up potential demand for you to ? Can
your company support this with existing resources?

3. Product and Development: cheaper manufacturers, improve


quality, review packaging, ask customers and influencers for
feedback etc.

4. Diversification: Assess expertise, technical know-how. Can you


move into a new market with a new product offer using the skills in
your business? Do you have a strong management team to support
it.
Examples of how the Ansoff Matrix can be applied to digital
marketing strategy

The Ansoff matrix is useful for developing online strategies too, for
example...

 For Market Development strategy. RS Components a


supplier of a range of MRO (maintenance, repair and operations)
items, found a new online market when they launched their site, with
10% of their web-based sales to individual consumers rather than
traditional business customers. It also uses the website to offer
additional facilities for customers placing large orders online.The UK
retailer Argos found the opposite was true with 10% of website sales
being from businesses when their traditional market was consumer-
based. EasyJet also has a section of its website to serve business
customers.
 Product development: – e.g. online trade
magazine Construction Weekly diversified to a B2B portal
Construction Plus which had new revenue streams. Similarly, music
and book publishing companies have found new ways to deliver
products through a new development and usage model such as
subscription and pay-per-use. Retailers can extend their product
range and provide new bundling options online also.
 Diversification: Ryanair offers it customers discounts if they
book car hire with Hertz car rentals.
To find out more how to review these strategies, read our free Models
Guide which explains how to use the strategies for some of the following
objectives.

 1. Market Penetration: market share growth, customer loyalty


improvement and customer value improvement.
 2. Market Development: use of online channels to sell into
new markets at low cost. Sell existing products to new market
segments and different types of customers.
 3. Product development: Use the web to add value to or
extend existing products or services.
 4. Diversification: into related business, unrelated business,
upstream integration with suppliers, downstream integration with
intermediaries.
What to watch for?

Fairly new business then perhaps it's wise to focus on no more than two
strategies, which could be Market Penetration and over time move to
Market Development.

The Original Reference Source

 Ansoff, H. I. (1957). Strategies for Diversification. Harvard Business


Review. (Vol. 35 Issue 5, Sep/Oct). p113-124.

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