Ansoff Matrix

Ansoff Matrix

You will come across different ways an organization tracks its growth and plans the next steps. The Ansoff matrix is one such tool. You need to understand and learn the importance of this tool and why it is so important. It is essential to plan the future correctly. An organization will stop existing if it does not have any proper plans in place. There is a team of experts working with each organization who look after such strategies. The students who are pursuing marketing will need to know the Ansoff matrix well. Some of you might aspire to be a strategist in a reputed company. It will not be possible if you do not know this matrix well. The following section will help you learn about the matrix.

What is Ansoff Matrix?

An organization will not be able to continue operations without proper planning. It is essential to find the correct tools to understand and analyze the past business patterns and propose a plan. It is not easy to do so. A principal strategist looks into a lot of data and information to predict the future. The Ansoff matrix is also known as the Product/Market Expansion Grid. It is a tool used by firms and organizations to plan their growth and analyze every action and data. The matrix highlights four different ways of development along with the risk associated with each. You must understand the essence of both these elements. An organization cannot move forward without knowing the risks associated with it. The Ansoff matrix will help in doing so. It will give you the roadmap along with the hurdles that can come in the way.

To learn the matrix well, you need to dig deep into it. It is essential to understand the elements considered in the Ansoff matrix before knowing how to use them.

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Understanding the elements of Ansoff Growth Matrix

Following is the concept of each element that exists in the matrix.

• Market penetration:

Market penetration is one of the most essential parts of the matrix. But, it is also the safest of all the other elements. Some companies have a wide range of products. Some might work, some might not. The ones that work will already have a proper place in the market. The market penetration strategies focus on expanding the sales of the product and grow more in the market. It is safe because the product has already been launched, and you know that it works. 

• Product development:

To grow in a certain marketplace, you need to understand the products working well in that particular market. Some companies feel the need to introduce a similar range of products to grab the market share. The product development phase is a bit risky because you are unaware of the response of the customers. It needs a lot of analyses, and you need to understand all the risks associated with it. 

• Market development:

A business needs to expand in different markets. The market development part concentrates on this aspect. The strategies are made for an existing product entering a completely new market. You need to do this by discovering new product uses or adding some new features and benefits to it.

• Diversification:

It is the riskiest of all the four options. Diversification can be interpreted in two ways. One, if you are entering an entirely new market, and second if you are introducing a new product in an existing market. Both are very risky, and you need to consider how the market might respond to them. There are instances where companies have failed to live up to the customers' expectations and have to call back the product. Hence, it is essential to look into all aspects before diversifying. Now that you know the different elements of the Ansoff matrix, you must know how to use one. The following section will help you learn the three essential steps to use the matrix effectively.

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How to use Ansoff Matrix? 3 Important Steps 

It is essential to learn the ways of using the tool. You need to know this, along with the impact of each element in the matrix. The strategy will not be effective if you are not aware of the ways of using this tool. The following are the three steps to follow to use this tool.

1. Analyze the options

The tool has four broad elements. You need to look into each element and understand which would be the best for business. An organization’s strategy will be based upon the proper analysis of each element. The way you want to place your product has a significant role to play in the process. You need to look into the risk factors attached to it and choose the correct option. Getting confused with market penetration and market development will be harmful.

2. Manage risks

It is better to jot down all the possibilities in each segment and choose the one with a lower risk. To do so, you need to analyze each option and find out the risk associated with each. The product and the brand matter a lot. You need to know the market you are in or the one you are planning to enter. There are different players in each market, and you need to know the level of competition that might follow. Hence, it is essential to have the list ready while making the strategy. Customers play an important role in strategy making. You might risk convincing the customers about the product or having them relate to the product and the brand.

3. Choose the best option

It is not necessary to take risks all the time. Sometimes, it is better to be wise and choose the option which has a lower risk. The Ansoff matrix helps you select the right option. The last step is to select the option that is not too risky. You must understand the pros and cons of entering a new market and choose a plan that does not have much risk. Analyzing the different elements and calculating the risk factor will help you select the option correctly.

The Ansoff matrix has been of great help to many business organizations. You need to have the correct data to analyze each matrix element and get things done faster. Business organizations are always looking for options to grow their business. Hence, it is essential to learn the correct ways of doing so.

Students who are pursuing management courses will learn about the matrix. If you want to be on the strategic team of any company, you need to be very attentive and learn this topic properly. You can also seek help from MyAssignmenthelp.com in case you get stuck somewhere.