Ansoff Matrix (SL IB Business Management)

• Ansoff’s Matrix is a tool for businesses who want to grow quickly and have a growth objective
• It is used to identify an appropriate corporate strategy and identify the level of risk associated with the chosen strategy
• The model considers four elements, which are broken down into two categories
  • The market - existing and new markets
  • The product - existing and new products
     

Ansoff’s Strategic Matrix

• The least risky strategy to achieve growth is to pursue a strategy of market penetration 
  • This involves selling more products to existing customers by encouraging
    • More regular use of the product
    • Increased usage of the product
    • Brand loyalty of customers
      
      
• Market development involves finding and exploiting new market opportunities for existing products by
  • Entering new markets abroad
  • Repositioning the product by selling to different customer profiles (selling to other businesses as well as direct to consumers)
  • Seeking complementary locations
    • E.g. M&S Food has achieved significant growth since teaming up with fuel retailers such as BP and Applegreen and providing express retail outlets
       
• Product Development involves selling new or improved products to existing customers by
  • Developing new versions or upgrades of existing successful products
  • Redesigning packaging and aesthetic features
  • Relaunching heritage products at commercially convenient intervals
    • E.g. Lindt relaunches Christmas-themed products each year, often with a subtle design change, to recapture the interest of customers
       
• Diversification is the most risky growth strategy as it involves targeting new customers with entirely new or redeveloped products
  • Examples of diversification include
    • UK supermarket Tesco launching a range of financial products including current accounts and credit cards
    • Café chain Greggs launching a range of themed clothing products