Ansoff Matrix
Term of the Day - 12 February 2024
Today’s Term is “Ansoff Matrix”.
Ansoff's Matrix, also known as the Ansoff Growth Matrix, is a strategic planning tool that helps businesses explore growth strategies by considering the relationship between their products and markets. Developed by Igor Ansoff in 1957, the matrix provides four growth strategies:
Market Penetration: This strategy involves increasing market share by selling existing products in existing markets. Companies focus on attracting more customers or encouraging existing ones to buy more.
Market Development: Companies pursue market development by introducing existing products to new markets. This might involve geographical expansion or targeting different customer segments.
Product Development: In this strategy, businesses create new products or modify existing ones to meet the needs of current markets. The aim is to attract existing customers with innovative offerings.
Diversification: Diversification is the riskiest strategy, involving the introduction of new products to new markets. It can be either related (related diversification involves products or markets with some commonalities) or unrelated (unrelated diversification involves entering entirely new and unrelated markets).
Ansoff's Matrix is a valuable tool for managers to systematically evaluate and choose growth strategies based on their risk appetite, market understanding, and resource capabilities. It provides a framework for strategic decision-making in the dynamic business environment.
