Ansoff Growth Matrix

The Ansoff Growth Matrix is a tool that helps businesses decide their product and market growth strategy. It suggests that a businesses attempts to grow depend on whether it markets new or existing products in new or existing markets.

Market Penetration is what is known as the safe route to go through and the most preferred as it focuses on selling more of the existing products to its existing customers, or to customers buying similar products from competitors. The emphasis is put on through promotions and creating customer value by strengthening the offer and effective marketing. 

Product Development is when business continue to focus on the needs of the customer but they start to understand their needs which is where they see opportunities for new products. They can either replace an existing product with something better, or start to sell other products that the customer buys to provide added convenience and customer/business relationships. The downside would be that you may attract other competitors if you start to sell the products they sell, meaning you may not be as successful as you originally thought. 

Market Development is to take current products and create a new market for them, for example set up a student discount policy or for old age pensioners, or make your products available on the internet if you haven't already done so, a second place for customers to purchase your products will boost sales. Again your action to expand your market may attract the attention of competitors who currently only trade in places where you don’t.

Diversification is the most controversial as it is taking new products to new customers. There are three different levels to diversification,
-Diversification into related markets – while the customers and products are both new, customers understand the idea behind the business.
-Diversification into unrelated markets using existing resources and capabilities – while the customers and products are different, they all rely on the current strengths of the business.
-Diversification into unrelated markets which require new resources and capabilities.