Download this tool (PDF)
The big idea
Ansoff’s Matrix is a well-established marketing tool that was first published in 1957. It is sometimes known as the Product/Market Expansion Grid and is used as a tool to consider areas of business growth. It assesses four strategies for growth: market penetration, market development, diversification and product development.
Purpose
The purpose of the tool is to help you identify the full range of options available for developing your business activities with a focus on customers and markets.
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New markets |
Market development (Expanding through existing products and/or services into new markets) |
Diversification (Expanding through new products into new markets) |
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Existing markets |
Market penetration (Expanding through existing products and/or services into existing markets) |
Product development (Expanding through new products and/or services into existing markets) |
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Existing products and/or services |
New products and/or services |
The matrix helps you assess each option in terms of its opportunities, benefits, costs and risks.
- Penetration is the lowest risk option because you are selling more of what you know in a market you know
- Market development is more risky because you are moving into new market areas
- Product/service development adds more risk still because you are trying to offer something different to your existing markets
- Diversification is the riskiest strategy of all because you are moving into something new on two fronts
The Tool
The tool takes you through the process of using Ansoff’s Matrix to think about growth options for your business. You can do it on your own or with a group and may need to dedicate time to additional research once you have done your first brainstorm of the options.
