Ansoff matrix

Successful leaders understand very well that if the organization wants to grow in the long term , it cannot continue with the stagnation mentality , even if things are going well in the company. To the contrary, they should seek and find new ways to increase the benefits and reach reaching new customers . There are many options available to achieve this but it is also important to know how this will work best for businesses. This is where the Ansoff matrix comes into play as it allows us to think about potential risksof each option and helps to design the most appropriate plan depending on each situation.

Definition

The Ansoff matrix or matrix of products or markets , is a very important tool within the field of business strategy and marketing because it works perfectly to determine what the direction should be in terms of strategy to make a company grow and reach your growth goals . Through it, it is possible to establish a relationship between the products that are on the market based on current criteria.

Through it obtained four different quadrants which have information regarding what can be the best option to continue : the strategy of penetration of markets, strategies to develop the new products , the development of new markets or diversification strategies . The matrix then shows the strategies that companies can use to grow. It is also a method by which the risks associated with each of them can be analyzed.

Characteristics of the Ansoff matrix

Among its main characteristics we find the following:

• It is a method of a strategic analytical type .
• It is in charge of making an assessment regarding the businesses within the markets based on four quadrants
• It is also known as a growth vector .
• Your first step should always include establishing a relationship between products and markets depending on whether they are new or already exist.
• Products are placed on the horizontal axis of the matrix .
• Markets should be placed on its vertical axis .
• Its variables , which are products and markets , are subdivided into two different categories, new and current .
• This model is essential for the strategic planning of the marketing .
• You may execute more than one of your strategies depending on its stage.

Source

The Ansoff matrix was developed by the mathematician and business manager H. Igor Ansoff . It was published in the Harvard Business Review in 1957 .

What is the Ansoff matrix for

The Ansoff matrix is ​​a tool that helps companies identify new opportunities within the markets while giving the company a good guide so that it can direct its positioning efforts correctly in the market. thus establishing the best routes for the goals that have been proposed to be achieved .

It is also used in order to be able to evaluate the opportunities that companies have to increase their sales by publicizing different types of alternative combinations for new markets, in other words, between customer segments and geographical locations with respect to products and services offered by all four strategies. It can be said that this type of matrix serves to identify the best way to introduce the products into the markets .

How to do it

Actually, this type of tool is an evaluation of the portfolio of products taking into account two different axes, markets and products taking into account that in the graph , the columns are separated by ” new ” or “existing” . Depending on the crossings, the strategy to be followed by the products that are located in the quadrants will be established.

In order to do it correctly, it is also important to understand what each of the quadrants mean:

• Penetration of the market : the combination of markets with current products and strategy whose main objective to increase the sales using the same products . This can be done by raising advertising , promotions, capturing customer preferences and increasing the consumption of current customers through promotions and discounts.
• Development of new markets : it is a combination of current products with new markets and its objective is to be able to identify which are those new markets where the products can be valued . Strategies such as new channels of diffusion, international advertising, fairs and product presentations can be used.
• Product development : its main objective is to create and develop products that are innovative in design, quality or new functions, products that can be sold in the current market.
• Diversification : it is based on being able to open new markets through the sale of products that are also new . It is very profitable if done correctly and will require product development and market development .

Importance

As it is one of the best strategic tools, it is important because it helps companies establish a guiding framework to be able to direct efforts towards better growth in order to establish a correct route to achieve the objectives that have been set by a company. It is an ideal medium that can help companies to decide which are the best measures to be taken depending on the scenario presented by the market and the scenarios of the products that are already in existence.

Ansoff matrix examples

Coca Cola Ansoff Matrix

• Market penetration : use aggressive advertising, run special promotions and offer, for example, souvenirs or collectibles for a specified amount of soft drink caps.
• New market development strategy : it has managed to penetrate markets around the world.
• New product development strategy : it is a leader in offering new products that ensure the satisfaction of customer expectations.
• Diversification strategy : the company has taken the risk of being able to create new products for other types of markets, for example, Fanta.

Apple Ansoff Matrix

• Market penetration : the company introduces a product that already exists but they do so by working correctly in attracting customers.
• Product development : the products created by this company are gradually changing in terms of their functionalities and their presentation.
• Development of new markets : Apple products have managed to open a good path worldwide and have done so through various channels.
• Diversification strategy : Apple is a company that has focused on research and development as its main themes because they are always creating new products that produce great expectations in customers.