This article explains the Ansoff Matrix by Igor Ansoff in a practical way. This model is sometimes also referred to as the “Product-Market Matrix.” About the Ansoff Matrix template What is an Ansoff Matrix? Based on market & products scenarios, Ansoff matrix gives … The best example of such a scenario is the telecom industry. These consist of market penetration, product development, market development and … 3 Main Types of Business Strategies Planning, 2 Main Types Of Variables used in Strategies, Competitive Strategies - Definition, Limitations, and the Importance. The idea is that each time you move into a new quadrant (horizontally or vertically), risk increases. By using market penetration, you are ensuring that only the existing resources of the firm are used and no extra costs need to be incurred in setting up a new unit for . At the same time, your current group of employees are the best people to notice any growth opportunities in the existing market. Ansoff Matrix: How to Grow Your Business? Ansoff Matrix – Samsung’s Journey from a Grocery Store to Diversified Conglomerate Yes! This article discusses the Ansoff Matrix, which is often seen as a guide for firms wishing to expand and grow. To penetrate and grow the customer base in the existing market, a company may cut prices, improve its distribution network, invest more in marketing and increase existing production capacity. The Ansoff matrix is also good to use when you want to start a … It is available in almost every country and … Ansoff matrix is one of them. Similarly,Â on a micro level, expanding from a current market to another market where your product does not exist is also an example of market development. In this article, I share with you the Ansoff Matrix of Samsung to help you understand how Samsung went on to achieve this business growth. The market development strategy is used when the firm targets a new market with existing products. Along with the strategies and their positive implications, there are also few negative factors for these strategies. Required fields are marked *, Market Penetration: Existing Products in Existing Markets, Product Development: New Products in Existing Markets, Market Development: Existing Products in New Markets, iversification: New Products in New Markets, Click to share on Twitter (Opens in new window), Click to share on Facebook (Opens in new window), Click to share on LinkedIn (Opens in new window), Click to share on WhatsApp (Opens in new window), Click to share on Skype (Opens in new window). The first quadrant in the Ansoff matrix is market penetration. Ansoff Matrix Definition: Ansoff Matrix, or otherwise known as Product-Market Expansion Grid, is a strategic planning tool, developed by Igor Ansoff, to help firms chalk out strategy for product and market growth.It is a business analysis technique that is very useful in identifying growth opportunities. Coca-Cola: Ansoff Matrix. The risk factor of a market development strategy is higher. 1) Market PenetrationÂ in Ansoff’s Matrix â, 2) Market DevelopmentÂ in Ansoff’s Matrix â, 3) Product developmentÂ in Ansoff Matrix â, 4) Diversification Ansoff strategy in Ansoff Matrix, How To Calculate Marginal Cost (with Steps and Formula), How To Write A Reference Letter (with Template), How To Write An Executive Summary (Complete Guide). The Product quadrant on the X axis is further divided into Existing products and New products. We can also use tools like SWOT analysis to further scrutinize the different strategies. Diversification in turn can be classified into three types of diversification strategies. In such a situation it is usefull to work with frameworks like the GE/Mckinsey Matrix or the BCG Growth-Share Matrix. Thus plotting your firm in the right quadrant onÂ the Ansoff matrix becomes critical. McDonalds in India - Ansoff Matrix Product Development example When McDonald’s expanded its Business outside the US, they had to make some changes to their Menu to reach as many customers as possible. However, Diversification should be taken as a last option and should be adopted only when the company is very strong financially. It is used to identify which overarching strategy the business should use and then informs which tactics should be used in the marketing activity. For example if a business which usually sells food to families, decides it would like to sell cars to single men it would be diversifying. This is because product development involves investing in developing a completely new product. Thus the market analysis needs to be spot on and the market penetration strategy should be adopted only if there is scope for increasing market share in an existing market. Thus you might have to develop new strategic business units itself to have a strong market development. Fighting for a higher market share in a saturated market accounts for higher expenses and lower profitability. Microsoft Ansoff Matrix is a marketing planning model that helps the multinational technology company to select its product and market strategy. Other examples can be found in the pharmaceutical industry where companies such as Pfizer, Merck and Bayer are heavily investing in Research and Development (R&D) in order to come up with new and innovative drugs every now and then. He took advantage of the virgin brand and diversified into various fields such as entertainment, air and rail travel foods etc. We have created the Ansoff matrix for Apple based on our discussion. Export your Ansoff Matrix as a PDF or in other image formats suitable for publishing and printing. Ansoff’s product/market growth matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets. A great example of a conglomerate is Samsung, which is operating in businesses varying from computors, phones and refrigerators to chemicals, insurances and hotel chains. For market development, you have to treat your product as a new entrant in the market. I am a serial entrepreneur & I created Marketing91 because i wanted my readers to stay ahead in this hectic business world. This strategy is about reaching new customer segments or expanding internationally by targeting new geographic areas. 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Once you know your position, the Ansoff’s matrix also outlines the right kind of strategy to adopt. The Ansoff Matrix is a great framework to structure the options a company has in order to grow. Market Development is about selling more of the company’s existing products to new markets. Product development mainly happens when you have a good customer base and you know that the market for your existing product has reached saturation. THE place that brings real life business, management and strategy to you. I love writing about the latest in marketing & advertising. The Ansoff Matrix (also known as the Product/Market Expansion Grid) allows managers to quickly summarize these potential growth strategies and compare them to the risk associated with each one. Ansoff Matrix Analysis of Adidas. For example, automotive companies are creating electric cars to meet the changing needs of their existing market. Igor Ansoff identified four strategies for growth and summarized them in the so called Ansoff Matrix.