Glossary
Ansoff Matrix
The Ansoff Matrix - also called Product Market Matrix - is a tool for strategic management. It analyzes and differentiates between various growth potentials based on the product portfolio of a company and the external market. This results in four alternative growth strategies whose risk rises with each new element (new product, new market).
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Market penetration: Old product - Old market
The increase of the own market share for an existing product on an already developed market is considered. This strategy carries the lowest risk because the company already knows both the product and the market. -
Market development: Old product - new market
Here the company opens up a new market with its existing product. The aim here is to identify an additional benefit for a new customer group for the existing product. -
Product development: New product - old market
Here the company develops new products for a market it already serves. The knowledge of the market that has already been acquired plays a fundamental role in the success of the new product. The old activities have already made it clear how the customer segments can best be addressed and which needs need to be satisfied first and foremost. -
Diversification: New Product - New Market
Diversification, i.e. the development of new products for a completely new market, carries the highest risk of the four strategies. It suits companies with experience in product development and market analysis, as diversification of the company offers an elementary safety net through risk diversification, but also represents a high degree of uncertainty. Acting in insecure regions only makes sense if the necessary expertise is already available.
The four fields describe alternatives that a company chooses between or combines. The further a strategy moves away from existing products and markets, the less experience the company can draw on and the higher the risk. With every strategy, the products should fit the company's own strategy so that its positioning stays clear.
