What is the Ansoff Matrix? How do you use it to increase your revenue?
The Ansoff Matrix is one of the tools that can help you uncover the opportunities that encourage your business growth, especially if you work in a market full of challenges.
Ansoff Matrix’s model is very useful in marketing planning, where it can be applied to discover opportunities to increase your business revenues. The increased revenue is the result of developing new products/services, or the opening of new markets.
What is the Ansoff matrix?
It is a model used for strategic planning in marketing. The mission of Ansoff Matrix is to link the company’s marketing strategy with its overall strategic direction to achieve future growth.
Therefore, Ansoff Matrix focuses entirely on growth by discovering the opportunities in the market to accelerate the growth of the company’s business and eventually increase its sales and revenues.
The Ansoff Matrix was developed by Igor Ansoff and published at Harvard in 1957, and it was named after him.
Other names for the Ansoff Matrix are the Growth Matrix and the Product/Market Expansion Grid.
The existence of this matrix assisted many marketers in understanding the risks associated with expanding their businesses and growing before actually doing it. As a result, they successfully avoided many damages and financial losses.
The Ansoff matrix offers four alternative growth strategies:
1- Market penetration:
It is the first strategy in the Ansoff Matrix. This strategy means gaining a larger market share and increasing sales of your existing products/services to your current customer base.
In other words, it means “penetrating” an existing market with your current products/services. Therefore, this is considered the safest strategy
2- Market Development
The second strategy in means that your company attempts to enter new markets with the existing products that you offer.
This strategy can be applied in several ways; For example:
- Promoting your products to a new target customer segment.
- Offering your products to a new target market located in another city -locally-
- Offering your products to a new target market located abroad -internationally –
– Current products
– New markets
3- Product Development
The third strategy in the Ansoff Matrix is about developing your current products, in addition to the introduction of new products. Subsequently, the introduction of these would be into existing current markets.
As a consequence, your business will maintain the same market share or even increase its rate.
– New products
– Current market
The last strategy in the Ansoff Matrix is the Diversification strategy, which varies slightly in comparison to the remaining strategies.
This strategy mainly focuses on entering new markets and targeting a new customer base. In addition to that, you enter these new markets by developing and offering a new product range.
– New products
– New market
Therefore, this is considered the riskiest strategy in the Ansoff Matrix!
To achieve growth, in addition to your other goals -including the marketing goals-, you can rely on more than one strategy at the same time. But that depends on the stage your business is currently at, furthermore, putting it on the market right now.
Therefore, before making any decisions, you need to analyze your business, your products/services, type of customers you will be targeting thoroughly to choose the best course of action.
Tell us what growth strategy are you pursuing at the moment to increase your revenues?
Don’t hesitate and contact us.