Ansoff’s matrix
- The options that exist to
a business to compete
with their rivals
- Can be done with
products and markets
(new or existing)
- As a business competes
based on newer
products or markets, the
risk increases
Market penetration
- Existing products and
existing markets
- Least risky
- Aims to drive up market share by selling more
- Could be done through sales promotions, advertising or even extension strategies
- Can be difficult if the market is saturated
- Retrenchment can be a form of market penetration
- Will only work if the demand for the product is there
Product development
- New products in existing markets; selling new products to existing customers
- Medium risk as it requires research and development
- Makes sense if business has strong brand image or is a market leader
- Helpful if business has high cash flow
- May require some market research to ensure the products meet consumer needs
Market development
- Existing products in new markets; may be new market segment or geographical
market
- Medium risk as it needs market research for new market
- May need to consider cultural issues if moving abroad
- Business can highlight core competencies
- Advertising and distribution channels can help to increase sales
- Can be done to overcome domestic economic issues such as a recession
Diversification
- New products in new markets
- Most risky strategy
- Requires market research and research and development; high costs
- May be useful if market is saturated and product is in decline phase of PLC (dogs)
- Amazon use diversification to grow their business and continue meeting consumer
needs
- The options that exist to
a business to compete
with their rivals
- Can be done with
products and markets
(new or existing)
- As a business competes
based on newer
products or markets, the
risk increases
Market penetration
- Existing products and
existing markets
- Least risky
- Aims to drive up market share by selling more
- Could be done through sales promotions, advertising or even extension strategies
- Can be difficult if the market is saturated
- Retrenchment can be a form of market penetration
- Will only work if the demand for the product is there
Product development
- New products in existing markets; selling new products to existing customers
- Medium risk as it requires research and development
- Makes sense if business has strong brand image or is a market leader
- Helpful if business has high cash flow
- May require some market research to ensure the products meet consumer needs
Market development
- Existing products in new markets; may be new market segment or geographical
market
- Medium risk as it needs market research for new market
- May need to consider cultural issues if moving abroad
- Business can highlight core competencies
- Advertising and distribution channels can help to increase sales
- Can be done to overcome domestic economic issues such as a recession
Diversification
- New products in new markets
- Most risky strategy
- Requires market research and research and development; high costs
- May be useful if market is saturated and product is in decline phase of PLC (dogs)
- Amazon use diversification to grow their business and continue meeting consumer
needs
