Strategy & Business Development

Ansoff’s Growth Matrix

Ansoff’s Growth Matrix present three different possibilities your company can pursue in order to obtain growth.

All three use the company’s current activities as the starting point. The company can pursue one of the following intensification strategies:

  • Market penetration (to sell more of current products on existing markets)

  • Market development (to sell more of current products on new markets)

  • Product development (to sell new products on existing markets)

Market penetration

The company can create growth by selling more of the current products on existing markets. The company can penetrate the market in the following ways:

  • Expansion of the market through attracting new customers.

  • Increase consumption by making existing customers buy more.

  • New application possibilities for the product.

  • Conquer competitions’ customers.

Market development

The company sells existing products on new markets. Market development can happen in one of two ways:

  • Achieve growth by finding new export markets, geographically.

  • Cultivate new customer groups in countries where the company already have activities.

Product development

The company achieves growth through developing new lines of products. Product development can happen in the following ways:

  • Expansion of assortment (line extension), where the company’s offerings are expanded with a new line of products or where new products can be marketed under the same brand (brand extension).

  • Product improvement, where current products are given new features or functionalities.

  • New product is introduced, to cover a new demand.

Diversification

Diversification means growth through selling new products on new markets. Diversification can be seen as an independent strategy of growth, because it creates a new area of business that can lead to the establishment of a new company.

There are two types of diversification:

  • Concentric diversification
    The company promotes new products on new markets, where there is a certain connection to the existing product portfolio, for instance through technology or marketing. This way a synergy effect is achieved.

  • Conglomerate diversification
    The company obtains whole new areas of business that are unrelated to the existing product portfolio.