Product/Market expansion grid ( The Ansoff Matrix)

Kayumboyev Dilmurod

Kayumboyev Dilmurod

Digital Marketer, Twitter @Davidtokyoo

Many successful companies understand that their organization needs growth if they want to compete more effectively and achieve sustainability in the market.

To manage profitable growth in the market, there are some available options such as developing a new product or entering new or existing markets.

In this case, The product/Market expansion grid might be a helpful device for identifying growth opportunities


What is the Product/Market expansion grid?

The product/market expansion grid, also called Ansoff Matrix is a matrix used by the management team for planning and discovering growth initiatives.

This tool was developed by H. Igor Ansoff and first published in the Harvard Business Review in 1957, in the article # Strategies for Diversification”.

Along with evaluating growth opportunities, the organization can analyze the level of risk associated with different growth strategies.

Ansoff Matrix

 Market penetration: it is the concept of achieving growth by increasing sales of current products to the existing market without changing the product.

The organization manages it through marketing mix improvements such as changing their product design or opening hours of the store, reducing order processing times so on.

This is considered the safest of the four options. The customers are aware of the product and the company knows the product works.

Market development: It is the strategy to seek for new territorial reach with an existing product.

The company might try to identify new growth opportunities by offering its current products to new segments in the new market.

This concept is the next least risky because the organization does not have to invest much in R&D or product development but the competition might be tough in the new market.

Product development: the concept of offering new products to an existing market.

This strategy is a little bit risky because the company has to invest in R&D and introduce a new product into a current market segment. The organization might decide to focus on this concept when company products are not selling anymore or want to expand its product lines.

Diversification: the riskiest of the four options is the diversification strategy that focuses on introducing new offers into an entirely new market that the company may not fully aware of.

It is required both market development and product development. If the organization was able to manage it successfully, it can bring huge rewards for the company.   


In conclusion

As abovementioned, the company can apply one of these strategies for business growth. This model helps to play the company’s growth strategy by understanding the risk associated with each of them.

However, the companies like Apple and Samsung focus on market development or product development to have competitive advantage.


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