Ansoff Matrix (Product-Market Growth Matrix)

What is an Ansoff Matrix?


Ansoff matrix, or Product-Market Growth Matrix, is also an important tool for the marketers to formulate the strategies to grow in a market. It depends on whether the product is new or an existing one and the market for the product is new or an existing one.

Existing product means the company is already functional in one region, and now it is trying to introduce the same product in another region, e.g. introduction of iPhones in India.

New product means that that the company has not produced or sold that product anywhere before, e.g. launch of Patanjali products

Existing market means the market for those products is already there and other similar products are already being sold, e.g. entry of Motorola mobile phones in India, when all brands were already existing.

New Market means that those kinds of products have never been used by the common people in that region before, e.g. introduction of mobile phones just after Pagers in India.

Now, following are the four cases which can take place with the combination of existing - new products and existing - new markets:

Market Penetration: When both the product as well as the market are existing, a firm must use market penetration strategy to compete with other similar products. It is generally the least risky strategy as it gets an advantage of the company’s already existing resources, skills and capabilities. In this, a manager must focus on the aggressive marketing of the product and be devising a price strategy.

Market Development: If the product is already existing but the market is new in which it is being introduced by the firm, the firm must use a Market Development strategy. It is riskier than the penetration strategy as there is no prior market here. So, before advertising of the product, managers must create a need or want of that product for common people.

Product Development: If the product is new but the market is already existing in which it is being introduced by the firm, the firm must use Product Development strategy. In this, the firm has to generate enough competencies in order to compete with the already existing players. If the firm already has loyal customers and it is entering into a new domain, then it should first target its existing customers to start selling the new product.

Diversification: When both the product as well as the market are new to the common people, a firm must use Diversification strategy. It is generally the riskiest one among the four. Some marketers call this quadrant the “suicide cell”. The only advantage is that if the product has potential, it might provide a huge return to the firm.

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