Business Studies 2010

The Ansoff Matrix

Marketing strategies can be examined using the Ansoff matrix.

PRODUCT
EXISTING NEW

EXISTING

MARKET PENETRATION PRODUCT DEVELOPMENT

MARKET

MARKET DEVELOPMENT DIVERSIFICATION

NEW

The two main variables in a strategic marketing decision:

The market in which the firm was going to operate.
The product intended for sale.

Product development
Sell new products in existing markets i.e. soft drinks
Low risk
Low cost
Established companies can use this strategy because they already have an
existing market
May require a complete marketing mix strategy

Market Penetration
Sell more products (existing) in existing markets
Could be use to move stock
Low risk/cost
Marketing mix strategy especially price
Used frequently if competition exists (substitute goods)
Attempting to sell a product for a different occasion

1
Business Studies 2010

Market Development
Achieve high sales/higher market share of existing products in new markets
Medium risk
Marketing strategy i.e. promotion
New segments/maybe overseas markets
Example = Lucozade originally used for health/flu now a sports drink

Diversification
Selling new products in new markets
Highly expensive
Time consuming
Can help to spread risk
Proctor/gamble
May have little expertise
Example = Virgin changing to an airline/train

Ansoff Matrix Key Points

1. Allows managers to analyse the degree of risk

2. Managers can then apply decision making techniques to assess
costs/potential benefits
3. Particular strategy could depend on the size of the business, the number of
products produced, rang and mix
4. A final decision should also reflect additional research both internal and
external, primary and secondary data and an assessment of the current
position