Business Strategy

Introduction to the Ansoff matrix
Igor Ansoff, known as the father of strategic management, was a mathematician and business manager. In the 1950s his work was developed and eventually published providing managers and the marketing world with a simple, practical tool that is in use 50 years later.
In essence the Ansoff product/ market matrix is a tool that helps businesses decide their product and market growth strategy.
Ansoff’s product/ market matrix suggests that a business’ attempts to grow depend on whether it markets new or existing products in new or existing markets.
The traditional four box grid or matrix Ansoff model
History – The Product / Market Matrix
Igor Ansoff created the Product / Market diagram in 1957 as a method to classify options for business expansion. The simplisity of this model is that the four strategic options defined can be generically applied to any industry.
This well known marketing tool was first published in the Harvard Business Review (1957) in an article called ‘Strategies for Diversification’. It was consequently published in Ansoff’s book on “Corporate Strategy” in 1965.
About the Ansoff Matrix
It is used by marketers who have objectives for growth. Igor Ansoff’s matrix offers strategic choices to achieve the objectives. There are four main categories for selection.
■Market Penetration
■Market Development
■Product Development
■Business Diversification
The four main categories
Market Penetration (existing markets, existing products):
Here we market our existing products to our existing customers. This means increasing our revenue by, for example, promoting the product, repositioning the brand, and so on. However, the product is not altered and we do not seek any new customers.
Market penetration seeks to achieve four main objectives:
■Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling
■Secure dominance of growth markets
■Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors
■Increase usage by existing customers. For example by introducing loyalty schemes.

A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research.
Market Development (new markets, existing products):
Here we market our existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region, are examples of market development.
Market development is the name given to a growth strategy where the business seeks to sell its existing products into new markets.