It is a planning tool which helps a

organisation to portray corporate growth.

Igor Ansoff came up with this idea in
1957.

Ansoff’s matrix
Analytical Tool

Vrij Raj Singhania

Ansoff’s Matrix
It is analytical tool which deals with four growth alternatives on the basic of
new or existing market or Product and services. It helps to make future
growth strategies and makes an organisation to think about different kinds
of risks involved while moving in a particular direction. It also checks of the
business indiscipline. One can
use this attract investors and
get more shareholders. It also
highlights the various
opportunity costs involves in a
particular move of an
organisation. And most
important it gives details about
the risks involved and its
magnitude as well. To make
matrix more effective one should use STEEPLE and SWOT analysis also there
should be strong environmental evidences.

1|Page
This analytical model is based upon four growth strategies:
 Market Penetration (Existing Market & Product and services)
 Product and services Development (Existing Market & New Product and
services)
 Market Development (New Market & Existing Product and services)
 Diversification (New Market & New Product and services)

Market Penetration
This strategy aims to increase market share with the help of existing
Product and services in an existing market. This can attain through
incentives, offers, advertisements, etc. This strategy is least risky as
consumers are familiar the product or services also the market is
established. Market penetration can be aimed to increase the sales or
maintain the sales. This also ensures market dominance of the
organisation.

2|Page
Product Development
Using this strategy organisation introduce new or modified products or
service in an existing market maybe for changing outlook or the quality. It
helps to remain competitive and to be different from other. This can be in
response to market R&D i.e., identifying the changing consumer needs or
adopting the improvement in technologies. It can be aimed to launch new or
unique trends. Most common example is launching of new android versions
by smartphone companies. This strategy can be quite risky as it can cause
huge loss if the new product or service is unable to satisfy consumer’s
needs.

3|Page
Market Development
This strategy is selling, launching or exporting existing products in new
market. Before launching organisation should identify the market
favourable for the product or service. This is possible by identify new
consumer base. This is also known as Market Extension. This also have
some risks as the product or service might now accepted by the new
market.
This also includes changing geographical location, product packing and
prices. The have to utilize the new distribution and retail channels. This
strategy should include CUEGIS analysis. A good example can be Starbucks

Diversification
This strategy involves selling or launching of new product in the new
market and this the riskiest strategy. An organisation only chooses this
strategy only if there is huge scope. It is done with the help of skills and
knowledge acquired by experience. Diversification can be based on current
product or new.
An example can be TATA. As they continuously launch new products in new
market.
4|Page