The Ansoff Matrix or product-market matrix is often used as a business strategy tool and marketing. It determines the strategic direction of growth of a company, relating the products with the markets in which it can act.
In this way, the matrix is divided into 4 quadrants according to the criteria of two types of products and two types of markets, current and new for both. The result that it will give us will be that of a specific business strategy together with advice on the best option that we should follow.
The 4 quadrants of the Ansoff Matrix
The growth strategies according to the Ansoff Matrix are the following:
1. Market penetration strategy
It is the first option and occupies the first quadrant. The objective of this strategy is to achieve a greater market share with current products and in the current market in which we operate.
It is about carrying out actions that favor customers, attract new customers andSteal customers to competition to win market share (improve business image, propose new uses of our products, etc). It does not usually cost the company a lot (since we know the market well) nor do we put the company's products at risk because we already know them.
2. New product development strategy
It is located in the quadrant of new products-current markets. The company aims to offer new products in the markets it currently has, although there is also the possibility of making modifications or updating products to satisfy the needs that are generated by the changes that occur in the markets.
3. New market development strategy
Raises the option of developing in new markets with current products. The company decides to develop its products in new markets, so it decides to identify new geographic markets, market segments that interest it, and find new distribution channels.
4. Diversification strategy
The last option tries to see if there is a possibility of finding new products in new markets. It would be the last option to be chosen by the company, since it is the one that offers the greatest risk (as it does not know the market or the products very well).