the ansoff matrix, also called the product/market expansion grid, is a tool used by firms to analyze and plan their strategies for growthsustainable growth ratethe sustainable growth rate is the rate of growth that a company can expect to see in the long term. the matrix shows four strategies that can be used to help a firm grow and also analyzes the risk associated with each strategy. in a market penetration strategy, the firm uses its products in the existing market. in a product development strategy, the firm develops a new product to cater to the existing market.
in a market development strategy, the firm enters a new market with its existing product(s). the market development strategy is most successful if (1) the firm owns proprietary technology that it can leverage into new markets, (2) potential consumers in the new market are profitable (i.e., they possess disposable income), and (3) consumer behavior in the new markets does not deviate too far from that of consumers in the existing markets. in a diversification strategy, the firm enters a new market with a new product. 1. related diversification: there are potential synergies to be realized between the existing business and the new product/market. 2. unrelated diversification: there are no potential synergies to be realized between the existing business and the new product/market.
this is where you can use an approach like the ansoff matrix to think about the potential risks of each option, and to help you devise the most suitable plan for your situation. it has given generations of marketers and business leaders a quick and simple way to think about the risks of growth. it can help you weigh up the risks of your career decisions, and choose the best option as a result. product development, in the lower right quadrant, is slightly more risky, because you’re introducing a new product into your existing market. you can do this by finding a new use for the product, or by adding new features or benefits to it.
you’re trying to sell more of the same things to different people. conduct a risk analysis to gain a better understanding of the dangers associated with each option. you can make sure it really is the best one with one last step: use decision matrix analysis to weigh up the different factors in each option, and make the best choice. this is useful as it shows the difference between product extension and true product development, and also between market expansion and venturing into genuinely new markets (see figure 2, below). next, look at the risks associated with each one, and develop a contingency plan to address the most likely risks. subscribe to our free newsletter, or join the mind tools club and really supercharge your career!
market penetration: this focuses on increasing sales of existing products to an existing market. product development: key points market penetration. product development. market development. diversification. product development is the name given to a growth strategy where a business aims to introduce new products into, ansoff matrix examples, ansoff matrix examples, ansoff matrix market development, ansoff matrix theory, ansoff model. the ansoff matrix is a strategic planning tool that provides a framework to help executives, senior managers, and marketers devise strategies for future growth. it is named after russian american igor ansoff, an applied mathematician and business manager, who created the concept.
in product development strategy, a company tries to create new products and product and development: how to develop existing products or services. diversification: how to move product development is one of the four alternative growth strategies in the ansoff matrix. this growth strategy requires,
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