Original Content: Business Upside
Business entities that have flourished and succeeded in their ventures are the ones that well understand the risks of becoming stagnant. A unique aspect of all these successful businesses is that they are constantly trying to better their performance by adopting newer strategies that promise to deliver. So, where does the Ansoff Matrix fit into the puzzle? This is exactly what we will focus on in this brief write-up.
Role of Ansoff growth Matrix in your business
When you are trying to work out strategies to better your productivity and get the best returns from your marketing efforts and investments, you plan to adopt several options. These options might include stuff like creating new products and services, making inroads into newer vistas or markets, and increasing your efforts to connect better with your target audience.
The Ansoff Matrix analysis tool will help you to weigh the pros and cons of situations that might arise with every strategy you try to implement.
The Ansoff Growth Matrix is a tool that will help you to assess the amount of risk that you are susceptible to for each approach that you intend to take. So, let us understand the tool better.
What is Ansoff Matrix?
Developed by H. Igor Ansoff and came to be known for the first time in the Harvard Business Review 1957, in “Strategies for Diversification”, it can help you to ascertain the extent of risk of growths.
Also known as Product/Market Expansion Grid, according to the Matrix, there are four strategies that you can make use of for growth. And the best part is that it not only offers the ideas of the four strategies but will also let you know the risks that are associated with each strategy that you go ahead with.
The four strategies as per the Market growth Matrix include the following-
Market Penetration
Market Development
Product Development
Diversification
Let us understand each strategy in brief in the paragraphs that follow.
1. Market Penetration
This is the first strategy as per the product growth Matrix. This is a strategy in which you try to win over new markets but with the help of the products that you already have. The main aim of the strategy is to improve your stake in the market or rather increase your market share. It involves the lowest risk in the Ansoff product-market Matrix.
The formula for calculating market penetration is as follows-
Market penetration= (number of own customers/number of potential customers in the market)*100.
The degree of market penetration is inversely proportional to the remaining growth potential.
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