Ansoff Matrix

Topics: Strategic management, Marketing, Product-Market Growth Matrix Pages: 5 (1562 words) Published: April 27, 2015
Module:

Betriebswirtschaftliche und volkswirtschaftliche Grundlagen

Subject:

Einführung in die Betriebswirtschaftslehre

Semester:

1 semester, SS 2015

Module Leader:

Prof.Dr.Dirk Gunther Trost

Assignment title:

ANSOFF MATRIX

08/04/2015

Tanju Colak
AccountID:

70446465

1

Tanju Colak (70446465) – Betriebswirtschaftliche und volkswirtschaftliche Grundlagen

1. Introduction
In 2003, the author Lynch suggested that the Ansoff Matrix describes the market and product choices available to a company. In this context products may be determined as items sold to customers and markets as customers. In some cases, the Ansoff Matrix is also defined as the market and product matrix. With the help of this instrument, companies can also decrease the gap between where they may be without a change in strategy and where they aspire to be (Proctor, 1997).

The purpose of this paper is to analyse the important aspects of the Ansoff Matrix. In particular, the four most important strategic options included in the Ansoff Matrix will be discussed in association with the risks. The last chapter of this essay will present all gathered findings from previous chapters and finally this paper will be completed.

2. Main aspects of Ansoff analysis
Companies have to make corporate strategic decisions regarding the choices that are available to them. While making these decisions, they should mainly consider choices that could leverage their competitive advantage, such as ensuring growth (Lynch, 2009). In other words, companies require product and marketing innovation in order to expand and grow. For this, the main objective is to determine different organisational strategies, based on the markets they target and products they offer to their customers (Ansoff, 1984).

In 1957, the author Igor Ansoff advised the Ansoff Matrix, which provides the basis for an organisation’s goal-setting process. The matrix enables companies to adapt their new or existing products into a new or existing marketplace. Thus, it is also called as the product and market growth matrix. This instrument allows stipulating corporate strategic decisions or objectives. Whereas it is also used as a model for determining the advantages and risks along with each strategic decision (Johnson et al, 2008). As illustrated in Figure 1 below, the Ansoff Matrix involves four major product/ market options: 1.

2.
3.
4.

Market Penetration
Product Development
Market Development
Diversification

Products

Figure 1: Ansoff Matrix (Lynch, 2009)
2

Tanju Colak (70446465) – Betriebswirtschaftliche und volkswirtschaftliche Grundlagen

3. Quadrants
3.1. Market penetration
As mentioned earlier, there are four major product/ market options in the Ansoff Matrix. One of them is market penetration. Market penetration is an organisational and strategic option for companies pursuing to increase their market share within an existing marketplace with a current product. This exactly means that a company penetrates a market with their existing products. It is worth mentioning that this strategy begins with the existing customers of the company. Market penetration is used by companies with the aim of increasing sales without deviating from the original product/ market strategy (Ansoff, 1957). According to the author Mercer (1996) the market penetration option can also be seen as the growth strategy for companies seeking to retain or raise the share of their existing products within the market. Despite this fact, market leadership or a change of competitive processes within a matured market could be gained. Many companies often penetrate marketplaces by poaching customers from their competitors, improving the service or their product quality and persuading consumers to use more of their products. In this context, they often utilize marketing communications tools, such as advertising (Ansoff, 1989, Lynch, 2003).

Nevertheless, it is important to emphasize...

References: Ansoff, I. H. (1957). Strategies for diversification. Harvard Business Review, Vol. 35, No.
Ansoff, I. (1984). Implanting Strategic Management. London: Prentice Hall International.
Ansoff, I. (1989). Corporate Strategy. rev. Edition, Penguin, Harmondsworth.
Christensen, C. & Cook, S. & Hall, T. (2005). Marketing malpractice: The cause and
the cure
Lynch, R. (2003). Corporate Strategy. 3rd Edition, Prentice Hall Financial Times.
Lynch, R. (2009). Strategic Management, 5th Edition, FT/Prentice Hall.
Macmillan, H. & Tampoe, M. (2000). Strategic Management, Oxford University Press.
Mercer, D. (1996). Marketing. 2nd Edition, Oxford: Blackwell Publishers Ltd.
Pearson, G. (1999). Strategy in Action, Prentice Hall Financial Times.
Proctor, T. (1997). Establishing a strategic direction: a review, Management Decision.
Proctor, T. (2000), Strategic Marketing. London & New York: Routledge.
Watts, G. & Cope, J. & Hulme, M. (1998). Ansoff 's Matrix, pain and gain: Growth strategies and adaptive learning among small food producers. International Journal of Entrepreneurial Behaviour & Research, Vol. 4, No. 2.
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