What is Ansoff Matrix?

April 27, 2018

Igor Ansoff, developed the Ansoff matrix, to portray different growth strategies (other than increasing market share) to corporates. This strategy focuses on a business' present and potential products, and markets(customers). By considering growth opportunities, through existing products and new products, in existing markets and new markets, there emerge four product-market combinations.

Ansoff Matrix

Market Penetration

This is a strategy which arises when a business tries to grow in existing markets, using existing products. This happens when the business tries to increase its market share and dominance in the markets that it operates in. This can happen in various ways which includes promoting existing customers to use more of the product, driving out the competition through aggressive promotional strategies. Penetration strategy is "business as usual" where the business is dealing with products and markets it know well, thereby reducing the need for market research.

Market Development

This strategy is used when a business tries to grow by selling its existing products to new markets. This may be new geographical markets, using new channels of distribution, or even different pricing, and product attributes(like packaging) to create new market segments.

Product Development

Product development refers to a strategy when a business seeks to grow by introducing new products to existing markets. This may require the development of new competencies to complement the development of new products. Ideally a business which is strong with existing customers, than products, can implement this strategy by developing new products which cater to the requirement of such customers.


When a business seeks to sell new products to new markets, it is said to be employing a diversification strategy. This is the most risky among the four strategies listed above, as the business moves into new markets and products, of which it has relatively less knowledge. A diversification strategy calls for extensive market research and marketing research. Though the risk of the strategy may be high, it is often offset by the high returns, or it enables the business to gain a strong foothold in a growing/attractive industry thereby reducing overall business portfolio risk.

This question was asked by one of our readers, Kamalakar Reddy [Image Credit: Pixabay]

Our Newsletter

Subscribe to stay updated

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form
News From Our Blog

Related Posts


What It Takes to Quit Your Job and Start Travelling the World

Do you want to travel the world, but don't know how to make it happen? Read this article to learn how you can start earning money online, quit your job, and travel.


The Definitive Guide To Becoming An Entrepreneur

If you are sitting on the fence about becoming an entrepreneur, then this guide will teach you everything you need to know about entrepreneurship, from what it is to how to get started.

Web Development

The Ultimate Guide To Launching an Online Store

An online store is always improving and always evolving. A well-maintained and relevant store is key to success in the ever-changing world of online retail.

View all the latest blog posts