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Ansoff's Product/Market Matrix for Competitive Strategies

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  • 0:00 Growing Your Business
  • 0:30 What Is Ansoff's Matrix?
  • 1:22 Market Penetration &…
  • 2:15 Product Development
  • 2:41 Diversification
  • 3:28 Lesson Summary
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Lesson Transcript
Instructor: Beth Hendricks

Beth holds a master's degree in integrated marketing communications, and has worked in journalism and marketing throughout her career.

Growing a business takes planning and purpose. In this lesson, you'll learn about Ansoff's Matrix and what it means for new and existing products in new and existing markets.

Growing Your Business

Business has been somewhat slow during the second half of the year. Your chain of health and beauty stores are seeing an average amount of foot traffic, and you've gained some additional online support through email newsletters and social media, but you're looking for ways to grow your business into something bigger and better for the coming year. Should you create new products? Expand into a new market? Let's take a look at a model that can give you some direction in your pursuit of growth.

What Is Ansoff's Matrix?

Ansoff's Matrix, also sometimes referred to as the Ansoff product and market growth matrix, or simply, the product market matrix, is a strategic planning and marketing tool invented by mathematician H. Igor Ansoff and was first published in the Harvard Business Review.

The matrix, typically displayed as a two-square by two-square table, can assist a business in determining its product and market growth by focusing on new and existing products and new and existing markets.

The purpose of using the matrix is to help join a business's marketing strategy with its general strategic direction, by presenting four different opportunities for growth. Those include developing new products or pushing existing products to current markets or by pushing existing products or developing new products for a new market. Let's take a look at each of the four points of the matrix more closely.

Market Penetration & Development

Market penetration deals with how to sell more of your existing products to your current customer base. Here, you are increasing your share of the market without creating new products or tapping into new audiences. It is the least risky of all these potential strategies because you are using existing products and resources, but it can reach a threshold where the market is saturated and there's no more room for development. You can achieve market penetration by expanding store hours, reducing prices, or changing up the packaging.

If you want to reach new audiences with your existing products and services, market development is where your strategy resides. Taking a product to a different market is a frequently used tactic, though slightly riskier than market penetration. Market development might involve expanding into a new geographic area by opening a new location or by undertaking an e-commerce site to expand your reach in that way.

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