The Ansoff Matrix: A framework for business growth

Use The Ansoff Growth Matrix To Scale!

If the process of scaling up your business has been a struggle, the key to your breakthrough might lie with the Ansoff growth matrix. No, it’s not a Russian action movie starring a Keanu Reeves look-alike. 

It is a framework devised by the Russian American applied mathematician and business manager Igor Ansoff.  In 1957 he gave business owners a lens through which they could plan the organic growth of their companies based on their specific product-market relationship

Everybody is looking for sustained, accelerated growth. Taking into account current assets ( i.e. products & markets ) and future aspirations, you can receive a solid base from which to structure your own customized ladder to the top. 

Learn how to take haphazard and chaotic efforts and turn them into a more efficient scaling operation. If you want a strategic plan for scaling up, the Ansoff growth matrix has four paths you can go down, all outlined below.   

Source: https://en.wikipedia.org/wiki/Ansoff_matrix

 

 

 

 

 

 

 

 

 

 

 

 

 

Of course, this range of options begs the following question:

Which Business Scaling Strategy In The Ansoff Matrix Is Right For You?

As we can see in the image above, the Ansoff growth matrix presents combinations of two factors – existing/new markets and productsAlso note that the strategies are color-coded, corresponding to a risk grading.

Market penetration is the least risky, diversification the most, with market/product development sitting right in the middle.  

We will go into more detail on each of these four strategies, discussing their possible risks, payoffs, and whether they might be a good fit for your scaling plan. 

We will also give examples for each using a fictional company selling foam rollers. This will be done to:

  1. Give inspiration for future actions you might also undertake in the same scenario. 
  2. Illustrate how the Ansoff growth matrix strategies needn’t be used in isolation, but can succeed one another to form a natural upwards trajectory. 

Market Penetration

In this approach you take an existing product in a market you are currently established in, to increase your share of it.  It is also referred to as the “protect and build” strategy, hinting at its relatively safe, minimal risk nature. 

This is when you want a robust, efficient sales funnel up and running and marketing campaigns to draw in more leads.  We won’t do a full deep-dive here, but take a look at our past blog posts, as sales funnels & marketing campaigns are two of our main topics of discussion. 

Here are a few quick suggestions to boost your market share: 

  • Facebook Lookalike Audiences. Simply take your existing buyer persona and tell Facebook to find similar people for your Ad campaigns. This is a reliable way to boost your visibility while ensuring a high conversion rate, since the new leads are already in your sphere of influence. 
  • Lead magnets. Offering value upfront makes the entire sales process more effective, and a great lead magnet can considerably boost word of mouth. 
  • Partnerships. Social Media influencers / Youtube channels / blogs / other companies. Tapping into existing and related audiences can push your outreach even further. 
  • Discounts. Take some time to design a theme for your sale, or make it coincide with a holiday, to make it more memorable and appealing. 

Let’s take our example company. It’s just starting out, it has one product (a foam roller) and one distribution channel (an online store page). 

Its market penetration strategy involves signing an endorsement deal with a top online fitness instructor to promote its product. To coincide with this, it temporarily reduces the price for a week. As a result of this visibility boost and discount preparation, sales are going up

ansoff matrix - tips for product and market development

Market Development

The next two strategies are very similar since they both:

1) Are a great way to reignite interest in your company when momentum is stagnating. 

2) Carry a similar amount of risk when compared to market penetration and diversification. 

Market development involves taking an existing product and entering a new market. 

To be truly successful, the new market should be a segment of your existing one.

We recommend the following: 

  • Establish new sales channels. Open an online shop or a brick & mortar location. While there is some overlap between online and real-world shoppers, having a place to cater to each of them maximizes your potential. 
  • Focus your online outreach (SEO & Ads) on other cities/parts of the country and new demographics.  

NOTE: You may need to adjust your product as well to make the move into a new market as successful as possible. This is particularly important for international expansion, where you have to consider local laws, design preferences, market expectations, etc. 

Using the boost in sales, our fictional foam roller seller takes the opportunity to negotiate a deal and get their product into major fitness retail stores across the country. This way it reaches new potential customers and isn’t confined to the online space. 

Through segmentation and market research, it discovers that a significant percentage of its client base is made up of physical therapists who are giving foam rollers to their patients. This could lead to two things: 

1) A marketing campaign targeted at this segment of the market, with specialized jargon and emphasis on the medical benefits of the product. 

2) Changes to the packaging to make it more instructional for the patients. 

Product Development

When you have a well-developed market presence, it’s time to capitalize on it by creating a new offering. It can be a product or service if you are a SaaS business. Keep feedback channels open and browse forums / social media groups to monitor discussions and identify complaints/wishes. Look for ways in which your product can serve an existing need. 

Going back to our example, foam rolling the lower back is generally discouraged so the company makes self-massage devices in different shapes and sizes to target different muscle groups in the body. Foam rolling is also usually done on a mat, which is another product that perfectly complements the current product range. 

Look to become the one-stop shop for your customers. The fewer trips they have to make to other places, the less friction there will be in their decision-making process.  

The Diversification Strategy

By far the riskiest strategy in the Ansoff growth matrix, this is when you go into a new market with a new product. Only attempt this if you already have a healthy business and are looking to take it to the next level.  To get a better idea of the benefits, let’s conclude our series of examples. Now that our fictional company has gone from selling foam rollers to catering to multiple segments of the market with a wide range of products, it wants to diversify and opens up a gym. 

If the revenue from either business ever dries up or is affected by market-wide activity, the company as a whole will still remain afloat.  It’s also a spot for cross-promotion as it can equip the gym with its branded products, encouraging people to use and remember them. 

It also indirectly boosts its existing business. A successful gym will create more gym-goers, increasing the demand for quality foam rollers and mats. 

Using all of the four strategies in the Ansoff growth matrix, we have taken a theoretical company selling foam rollers from just another fish in the pond to a stable enterprise able to sustain market fluctuations.

Risks Of The Ansoff Growth Matrix 

Although the four strategies are graded for risk, the Ansoff growth matrix itself has a potential risk factor built into its design. The main criticism of the Ansoff growth matrix has been its apparent simplicity. It does not factor in the possible operations and counter-measures of the competition which could hinder your ability to move into new markets. 

We still believe the Ansoff matrix provides a really solid base from which to structure your growth plan. If you wish to get as complete a strategy as possible, don’t hesitate to contact us right here. We will schedule a call right away and discuss how we can implement the Ansoff growth matrix in our strategy to help your business scale! 

Share This Story...

Facebook
Twitter
LinkedIn
Pinterest

Related Posts

Use Advanced Targeting With OptinMonster
26 Digital Marketing Tools To Scale Your Business in 2022
Must-Have Elements For A Converting Lead Magnet

Leave a Reply

Your email address will not be published.

Let's Talk Today!

  • This field is for validation purposes and should be left unchanged.

Vlad Popirda

MARKETING SPECIALIST

If you’ve been swayed, convinced, or otherwise persuaded by the writing on our page or in some of our emails, chances are Vlad was the man behind it.

Be it Social Media Management, Marketing Strategy, PPC Ads, or Copywriting, you can rely on him to get the job done.

With a Bachelor’s in Marketing and a Master’s in Advertising, his life’s work is to leave this world better than he found it, and he aims to achieve that by putting his talents in the service of the right people and helping businesses make a difference in the world.

Outside of working hours, you may find him singing Britney Spears songs at karaoke nights, or exercising his creativity in varied ways, such as playing chess, designing board games, playing guitar, or playing Dungeons & Dragons with his mates.

Alisa Villanueva

ACCOUNT MANAGER

Alisa is the glue that brings all the parts of our operation together. The one always keeping an eye on the bigger picture. The person that makes sure that it all works smoothly and on schedule, giving everything an artistic spin and flourish with her keen eye for design.

With her background in sales, customer service and art, it’s no wonder her strength is in communicating with people, be they our customers or us, her team.

While juggling her different tasks (Project Management, Web Design, Quality Control, Customer Service), one thing never changes: she will use her artistic sense to make a project unique and she will hear out the person she is working with, understanding their needs and wishes while integrating and tying them all together to create an outstanding final product.

When she’s not tuned in to her work, you’ll find Alisa taking ordinary things and making them beautiful. In her artistic endeavors she explores many different mediums of expression, like painting, ceramics, dance, and cooking. Among these, her dancing stands out, as she is part of a salsa dance performance team, doing gigs both locally and nationally.

Her dream is to travel and explore different cultures, which she is always doing from home by cooking and trying out various cuisines from around the world.
Short Excerpt:
Alisa is the one that makes things work smoothly and on schedule, giving everything she does an artistic spin and flourish with her keen eye for design.

With her background in sales, customer service and art, it’s no wonder her strength is in communicating with people, be they our customers or us, her team.

Zach Warshawsky

CHIEF OPERATING OFFICER

Zach manages the operational side of our business and coordinates all the work done by our team. He designs technical architecture and always keeps an eye towards the future, making sure his solutions are scalable. He applies his skills in all sorts of fields, such as Project and Team Management, Sales Funnels, Web Technology, Split Testing, Automation and CRM.

If there’s one trait he shares with Henry, it’s passionate problem-solving. Although he has been working for over 25 years in Sales, Marketing, Management, Team Building and Customer Service, perhaps his relevant business credentials start even earlier. At 15, he started a business selling and installing car stereo systems before he even had a driver’s license. Armed with a reseller’s permit and a passion for business, he started down the path of entrepreneurship and hasn’t looked back since.

With four amazing children and a wonderful wife in his life, his goal is set: provide the best possible life for them that he can. To that end, he works hard on helping clients scale their businesses through the use of cutting edge digital marketing tools.

His weapon of choice on this quest is not a coincidence, for his knowledge of technology is certainly top-notch. This can sometimes be a blessing and a curse however, when the Apple Genius Bar can’t solve a friend’s problem, it’s Zach’s phone that gets lit up.

To unwind, he spends time with his children, goes on weekly dates with his wife and is passionate about crafting culinary art… he unwinds and loves creating amazing home-cooked meals for his friends and family!

Henry Hamamjy

CHIEF EXECUTIVE OFFICER

One of the two men that started it all, Henry has a knack for judging character and managing the internal structure of our team. The go-to guy for when business owners hit a roadblock, he is well known for offering unique, scalable solutions to any issue that presents itself. 

With a background in Sales, Marketing, Management, People Development and Leadership, he puts it all to good use in the service of his clients and fellow team members, helping them better themselves. 

He’s a born problem-solver, breaking any seemingly impossible task into achievable actionable items.  He has successfully helped dozens of businesses expand to the 7-8 figure level, by designing and implementing extensible, supportive and responsive infrastructure that his clients could then leverage to their fullest advantage. 

At work, he loves helping our customers make their dreams a reality, taking businesses to the next step of success, guiding them all the while. Outside of work, he enjoys a good meal with friends and a nice Napa Valley Cabernet Sauvignon. He also likes travelling with his family and exploring different cultures and finding out more about our world. Having dreamt of becoming a soccer player when he grew up, he has since traded that sport for another, namely golf, which he partakes in whenever he gets the chance.

Little known fact, he won the Atomic Spicy Food Competition when most of the people quit after just a couple of bites. Scientists have yet to come up with an explanation.