Start Management Concepts What is and How to Make the ANSOFF Matrix

What is and How to Make the ANSOFF Matrix

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What is it: The Ansoff Matrix is ​​a method created by Igor Ansoff, dating from the 50 decade, which aims to, as well as other strategic methods (SWOT, PEST, BCG), assess the market situation of the business. In this specific matrix, the studied variables refer to the portfolio of products and services of a business taking into account whether the market being serviced is new or existing, just as the evaluated product / service is something new or existing.

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When To Use: This matrix is ​​one of the tools that should be used mainly in strategic planning, because it will generate inputs for you to create concise strategies for each type of product.

How-to: The Ansoff matrix is ​​nothing more than evaluating its product portfolio in two axes: Products vs. Markets. The columns being separated by New or Already Existing. These crossings will point to the following strategy followed by the products that are in each quadrants.

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The results can be as follows:

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1) Market penetration: This is the case of products that already exist in markets already known. With these types of products, you are in a competitive market and the main objective will be to gain marketshare. In this sense, your concerns will be more focused on selling, loyalty and everything else that helps to stand out, usually without much differentiation in fact in the offer. A typical example of penetration strategy are new versions of the same product!

penetration-of-market-ansoff2) Product Development: At this intersection, you are in a known market, but you have launched something entirely new. Products that are positioned in this way need a lot of dedication in actually being able to generate value and, in general, are a bet of business innovation, with the risk of never being successful. It is important that all companies have some products with this profile, but at an acceptable level of risk. A typical example of product development strategy is the launch of Airbnb's experience services. In other words, they are selling something different from lodging, but still for travelers!

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experiences-air-bnb-ansoff3) Diversification: This is the quadrant in which both the market and the product are entirely new. In this case, the risks are the greatest, as are the returns. New companies typically have more products in this quadrant, as they need to innovate or die. However, we also see old and traditional companies needing this type of movement to survive in the market and have not been outdated. A good example of diversification is Microsoft that in recent years has entered the market for computers, mobile phones and video games.

microsoft-new-portables4) Market Development: This last crossing happens just when you want to take your product that already works in a particular market to others. The great goal in this type of strategy is to build relationships and also deeply understand the needs of this type of customer. A simple example would be companies seeking new markets geographically like opening other branches or going to another country. An acquaintance of ours who has this strategy is Uber.

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Making the ANSOFF Matrix in Excel

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Since here in LUZ we are experts in spreadsheets in excel, we could not stop creating our own matrix to make life easier for all who want to apply it in the management of your company. If you want to try it for free, visit the product at this link!

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4 COMMENTS

  1. Hey thanks for such a clear explanation and above all very specific with the examples.

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