What is Ansoff Matrix?

The Matrix is developed by Igor Ansoff to portray the corporate growth strategies. The matrix focused on the firm’s present and potential products and markets (customers). The matrix considers ways to grow via existing products and new products, and in existing markets and new markets. The four possible combinations are:

  1.    Market Penetration
  2.    Market Development
  3.    Product Development
  4.    Diversification



Ansoff’s Matrix works by identifying current market issues. Once you have identified the difficulties customers are having in the marketplace, you can position your product. You can also use those concerns to develop new products, which can then be marketed to your consumer base.

While working on The Ansoff Matrix try to focus on these four key concepts:

  • Market Penetration – What products are your current consumers buying? Is there a way to sell them something else?
  • Market Development – Are there new markets adjacent to your own, where there may be less competition and more opportunity?
  • Product Development – Are there areas where you could cut costs, or different ways to develop your product to better serve your customer?
  • Diversification – Could you develop a new product and move it into a new market, taking advantage of being the first?

The Ansoff Model, sometimes known as the Ansoff matrix due to its grid format, aids marketers in identifying chances to increase income for a company by producing new products and services or “tapping into” new markets. As a result, it’s sometimes referred to as the ‘Product-Market Matrix’ instead of the ‘Ansoff Matrix.’

Because of its emphasis on expansion, the Ansoff Model is one of the most extensively utilized marketing models. It is used to examine the potential for firms to grow sales by displaying possible combinations for new markets (i.e., customer categories and geographic regions) against products and services, with four different growth strategies to choose from.

Market Penetration: A growth strategy in which a company attempts to sell an existing product into an existing market to increase overall market share.

Market Development: Market development is the second quadrant of the Ansoff Matrix. Companies use this technique when they decide to sell their existing product in new markets.

Product Development: A growth strategy in which a company introduces a new product into an existing market.

Diversification: Diversification is a business strategy in which a corporation enters a new market with a new product, as the name implies.