Product-Market Growth Matrix by Igor Ansoff
The Ansoff Product-Market Growth Matrix was created by Igor Ansoff and it is a marketing tool. It provides with different ways to the marketers to grow business through the use of existing or new products. These products may exist in the existing and/or new market- so there are four possible product/market combinations. These combinations form a matrix which helps the companies to decide their action in any particular situation or in current performance.
The four strategies of matrix are:
- When existing markets and existing products, market penetration: this happens when a company enters the existing market with an existing products. The best way to achieve this is to convince the current users to use more product or attracting non-users through advertisements or promotion programmes.
- Product development, when market exists and but a new product: for an existing firm, a new product introduction is quite crucial for their business. The firm develops many strategies to market their new product in the market. The firm may gain new customers for their new product.
- Market development (that is developing new market for existing products): here new markets are developed for the purpose of getting the popularity of the product among new person at new places.
- Diversification (new markets and new products): for example, a new company named AIRCEL Telecommunications introduces its new product in the new market which did not exist before.
According to the above matrix, the market penetration is the only element that does not involves any risk. The product development or market extension involves greater risk than market penetration. And diversification involves the greatest of all the other elements.
Diversification element requires totally new skills, techniques and facilities for their new product in new market. The others have the experience from their past business processes, they are usually followed with same technical, financial and other resources required.
Written by: Matt Mason
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Tagged as Ansoff Product-Market Growth Matrix, business growth, diversification, Igor Ansoff, market penetration, marketing, marketing tool, product development + Categorized as Economy articles, Marketing & PR