This Ansoff Matrix template allows you to record the high-level implications of adopting one of its four strategies. This matrix enables you to use the findings of your SWOT analysis and to assess the implications of each strategy.
The marketing direction of a company is one of the most important facets of ensuring the short and long-term success of the business. As a manager, you need to understand the marketing strategy as a whole, and how it affects your department specifically. The Ansoff matrix is a good way to think about marketing strategies as it offers four separate directions in which a marketing plan can be taken. By using this matrix to work through all of the possible marketing options and settling on one that is best for the business, you can be sure any decisions you make will have been well-considered and appropriate for the circumstances.
The four sectors of the Ansoff matrix represent the following four possible marketing strategies.
Market Penetration. This is what most people think of when they speak of marketing. The idea of market penetration is simply to push products further and deeper into markets with the use of traditional forms of marketing such as advertising. This is generally the quickest of the four sectors of the matrix to see results, because the products and channels are already in place - the efforts just need to be expanded in an effort to see increased results.
Market Development. Taking the products you already have to sell and introducing them to new markets is considered market development. This is a desirable method when possible because there are limited costs as compared to some of the other possibilities. New markets to sell products could include different countries, different retail outlets, online, etc.
Product Development. In this sector of the Ansoff matrix, the company will develop new products which it will sell within the existing markets that it already does business. These new products will likely be a slight variation on products that have already seen success in those defined markets. The challenging part of this marketing plan is that there can be high upfront costs associated with developing a new product. Since the distribution channels are already in place, those costs are mitigated, but it will still require a significant investment in resources to get a new product off the ground.
Diversification. By far, this is the most costly and time consuming of the four choices within the matrix. Diversification involves both creating new products and finding new markets in which to sell them. In many ways, this is like starting over from a business perspective because most of what you already do is irrelevant to these new efforts. Successful diversification can lead to great growth for a business - failed diversification can be a huge blow to the resources of the company.
Advantages and Disadvantages of the Ansoff Matrix
The strength of the Ansoff matrix is opening up the eyes of managers to new possibilities for marketing efforts that can increase the growth potential of the company. It is easy to get stuck in the traditional ways of thinking about marketing and forget to think about expanding the horizons of the business. Considering the Ansoff matrix sectors will encourage all managers to keep an open mind when plotting upcoming marketing efforts.
When using the Ansoff matrix within your organization, the biggest downside is the potential for investing large amounts of time and capital in efforts that may not be successful. Some of the options, especially product development and diversification, can be very costly and require a high degree of confidence to undertake. When done right, these moves can take a business to a whole new level. The possibility of failure always exists when expanding, however, and those failures can be catastrophic if not mitigated properly.
Good managers will use the Ansoff matrix as a way to think about all marketing angles going forward. There is no one right way to use the matrix - rather, it is a good way to start a marketing discussion and begin the process of developing ideas. Include this matrix in your next marketing staff meeting and look forward to finding new ways of growing the business that you may have never thought possible.