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Also known as the Product/Market Expansion Grid, the Ansoff Matrix is a tool that firms use for planning and analyzing their policies for growth. This matrix displays 4 strategies that aid a firm in growing, and it also analyzes the dangers related to every strategy.

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What is Meant by Ansoff Matrix?

The Ansoff Matrix tool proposes a framework to aid senior managers, executives, and marketers to devise policies for future development. It has got its name after Igor Ansoff, a business manager and an applied mathematician, as he formed this concept. 

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The Strategies of Ansoff Matrix

Market Penetration – In this strategy, firms use their products in an existing market. To put in other words, firms that aim to augment their market share find the market penetration strategy useful in various ways. You can execute the market penetration strategy in multiple ways like:

  • Lessening costs for alluring novice customers.
  • Getting competitors in the same marketplace.
  • Augmenting distribution efforts and promotion.

A telecommunication company employs market penetration strategies by proposing introductory prices and augmenting its distribution and promotion efforts.

Product Development – In this strategy, firms develop novice products for catering to the present market. Commonly, this move includes extensive research, development, and expansion of the companies’ product range. You can implement this strategy in various ways:

  • Developing strategic partnerships with various other firms for gaining access to every brand or distribution channel of each partner.
  • Acquiring the product of your competitor as well as merging resources for forming novice products that would better meet the requirements of the present market.
  • Investing in R and D to develop novice products for catering to the present market.

An automotive company creates electric cars for meeting the altering requirements of the present market.

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Market Development – Firms enter a novice market with their present product in this strategy. In this matter, expanding into novice markets might mean growing into fresh customer segments, geographic regions, etc. The strategy of market development might involve one of the approaches mentioned below:

  • Getting into a novice domestic market.
  • Getting into a foreign market.

For instance, some sporting goods companies, like Adidas and Nike, only recently got into the market of China for expansion.

Diversification – In this strategy, firms enter a novice market with novice products. Though this strategy happens to be the riskiest because both product development and market are needed, this risk can be lessened through related diversification.

The leather shoe producers that begin manufacturing phones pursue an unlinked diversification strategy.

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