The Ansof matrix is a useful tool during the development phase of company´s growth strategy and covers two dimensions, products and markets.
Although it is a tool created six decades ago, (by Igor Ansoff in 1957 to be exact!) It can facilitate and organize the process of discussion about growth strategies of the company.
There are four growth strategies presented in the matrix product / market, each one with a different degree of risk:
- Market Penetration: Sell more of the same product or service in existing markets. The main idea is to increase volume of production and optimize costs.
- Market development: Sell more of the same product or service in new markets. These new markets can be both geographic including internationalization, or functional when the same product could be used in different applications (this strategy may require some minor modifications of the product).
- New Product Development: Sell new products in existing markets. These products could be either accessories of existing products or complementary product line.
- Diversification: Sell new products in new markets. It is certainly the riskiest strategy. Could demand some internal and external communication effort to explain why the organization has adopted such strategy.