The Ansoff matrix makes it possible for marketers to determine growth on the basis of four quadrants. These quadrants are also called product / market combinations.
Do I need the Ansoff matrix?
You need the Ansoff matrix in the following scenarios:
- Market penetration: You have an existing product or service in an existing market
- Product development: You have a new product or service in an existing market
- Market development: You have an existing product or service that you want to tap into a new market
- Diversification: You have a new product or service that you want to tap into a new market
Which variables do I need?
The ansoff matrix uses four variables that you can apply for your organization. You can use them individually or combine them.
With market penetration you want to penetrate into an existing market with your existing product or service. You want to increase your current market share. There are several ways to do this. In Kotler ‘s competitive approach , some ways have been explained on how to apply it to your organization.ap
In this growth strategy of Ansoff matrix, the goal is to adapt your existing product to fit the modern era of the market. You can think of an adjustment of an iPhone screen. Apple has increased its screens from 4 inches to 4.7 inches. The existing iPhone product has been adapted for a more user-friendly way to visit the internet.
When you have an existing product for a new market, you want to sell your product or service through new channels. Your existing product or service has been proven for your existing market, but you also want to enter a new market with the same product or service. A new target group can be segmented using the STP process . After all, you want to tap into a new target group / market.
The diversification square of the Ansoff matrix is not often used, because you want to enter a new market with a new product or service. There are many risks when launching a product in a new market.
How can I apply the Ansoff matrix?
Just like the BCG Matrix , your product or service goes through several phases. This is a strategy to identify the attractiveness of each quadrant. You take an extra step towards a quadrant every time. This way you reduce the risk for your product or service.
The 4 quadrants that go through your product or service
- Market penetration – bottom left
- Product development – bottom right
- Market development – top left
- Diversification – top right
In this example I use an Apple program iTunes . iTunes has gone through the quadrants of the Ansoff matrix and has become successful in the market.
Apple initially used a market penetration growth strategy for its product iTunes . Here is the least risk. There was a demand for a program to make burning CDs easier. This way you could listen to all your music on your computer. This solved the user’s frustration.
This program became successful and Apple decided to make it more accessible on other devices except on an Apple computer (Mac).
Apple went from a market penetration strategy to a product development in the quadrant of the Ansoff matrix. They came up with the iPod to listen to music ‘on the go’ with 1 GB of space. This solved another frustration with the user, as there was a restriction on the number of songs you could take with other devices.
The iPod became a success for Apple users. Apple wanted to make the iPod available to everyone. With this in mind, she wanted to enter a new market with market development in the quadrant of the Ansoff matrix . Now the service was available not only to Apple users, but also to Microsoft users. As a result, they had approached a new market.
Apple wanted to go one step further, but this quadrant of the Ansoff matrix carries the most risk. Apple wanted to enter a new market with a completely different product than the iPod. They came up with the iPhone for this purpose through diversification. The iPhone solved a lot of frustrations with the users. One of the frustrations was not discovering new songs ‘on the go’.