Ansoff matrix practical application. Ansoff strategy matrix

matrices in strategic management are perhaps the most effective tool from the standpoint of the speed of assessing the situation for management decisions. With the help of matrices, you can draw fairly quick conclusions about actions with a particular product, business line or vector of enterprise development. But there is a catch in speed, because when developing a strategy, one cannot rush.

Harry Igor Ansoff (1918-2002) Russian American. Considered the founder of the discipline of Strategic Management.

The Ansoff matrix considers the interaction of two elements: the product and the market, allowing you to understand which strategy to follow.
This tool was first published in the Harvard Business Review in 1957.

To the essence of the Ansoff matrix

Based on your choice - “which product, existing or new and in which market, existing or new”, a growth strategy is proposed (how and due to what your business can grow), you just need to meet a few conditions.

There are four growth strategies:

1. Penetration strategy

Demand for your goods or services is far from saturation point and your share can be increased at the expense of existing consumers. You can “tear off” a share from competitors (consumers are not “tied to a particular company”). You can scale and invest.

2. Market development strategy
This strategy is followed if:
Your company is doing well, you know how and to whom to sell, there is a unique product and / or service, but so far only in your region of presence. The possibility of entering new markets is being considered - to other cities or even countries (by ourselves or through distributors). Subject to low barriers (obstacles) to entry into these markets, their growth rate is high. Well, there is capital to ensure expansion.

3. Product development strategy
This strategy will work if
Existing goods and/or services are on the wane, no growth spurts, much less breakthrough sales, moreover, a slow decline in the level of income from them. There is a need to expand the range in depth or in breadth.

4. Diversification strategy
This strategy will work under the following conditions:
- that new activities are more profitable than the development of existing ones.
- if you do not need large investments for expansion.

In any case, and in practice it happens, any expansion, whether in breadth or depth, is very risky if it is not calculated and planned properly.

Pros and cons of the Ansoff matrix

The main advantage of the tool is that it works. For general idea where efforts need to be made so that the business has growth, the Ansoff matrix is effective.

The disadvantages include the fact that the Matrix, in its original form, takes into account only options for business growth and does not take into account development in any way. As we wrote in the article "" growth without development is dangerous. Again, well, the businessman found out which strategy to follow, or, as most often happens, he already used it, he just didn’t know what it was called ... So what? What's next then?

Entrepreneurs, especially among small businesses, have no time to understand the terminology and abstruse reasoning. By and large, this tool is descriptive, made for top management of medium and large corporations, as well as for business consultants. That is, for those who have special education and understands the theory. However, as it was written at the beginning of the article, thanks to the Ansoff matrix, you can quickly navigate the situation. And in the descriptions, find some clues, or confirmation of your actions, for further movement.

Literature:

Philip Kotler, Roland Berger, Niels Bickhoff “Strategic management according to Kotler. The best tricks and methods.

Ansoff, H.I. "Strategies for Diversification"; Harvard Business Review, September-October 1957

Ansoff matrix (product-market growth matrix)- an analytical tool for strategic planning that allows you to choose one of the possible typical marketing strategies. The idea behind the matrix is that there should be a relationship between a company's current and future products and the markets in which it operates. Any industry involves a very wide selection products that can be produced and markets in which to operate, so the company has big choice growth directions. The company needs to determine its current position in the industry and choose the direction of its growth that would provide the most competitive position for it in the future. Thus, the company's strategy should be determined by three main factors:

The status quo as a set of products and markets in which the company currently operates

growth vector, which sets the direction of the company's development based on its current position

Competitive advantage - key features existing and future products and markets that can provide the firm with a strong competitive position.

The marketing strategy of the company is determined through the mutual change (development) of the company's products and the markets to meet the needs of which they are created. The tool for choosing this strategy is the Ansoff matrix.

Ansoff matrix structure

The Ansoff matrix is a square formed along two axes:

horizontal axis of the matrix- products of the company, which are divided into existing and new

matrix vertical axis- the company's markets, which are also divided into existing and new

At the intersection of these two axes, four quadrants are formed:

Strategies in the Ansoff Matrix

Market penetration strategy (existing product - existing market) Increasing market penetration is the simplest and most obvious strategy for most companies. They are already on the market, their main goal is to increase sales. The main tool here is to increase the competitiveness of products, so the main attention in this strategy should be directed to improving the efficiency of business processes, due to which it is possible to increase both the consumption of products by existing consumers and the attraction of new customers. Possible sources of growth could be:

increase in market share

increasing the frequency of product use (including through loyalty programs)

increasing the amount of product use

opening new areas of product application for existing consumers

Market expansion strategy (existing product - new market) This strategy is the second possible solution in which companies are trying to adapt their existing products for new markets. To do this, it is necessary to identify new potential consumers of existing products. Companies whose marketing competencies are strong enough to be a key driver of development can successfully go this route by:

geographical expansion of the market

use of new distribution channels

search for new market segments that are not yet consumers of this product group

Product development strategy ( New Product- existing market) A third possible growth path is to offer products to the existing market that have updated features in a way that improves their market fit. This path is most preferable for those companies whose key competencies lie in the field of technology and technical development. Opportunities for growth are based on:

adding new properties of a product or a product with increased quality, incl. product repositioning

expansion of the product line (including through new options for offering existing products)

development of a new generation of products

development of fundamentally new products

Diversification strategy (new product - new market) The last of the possible strategies is the most risky for the company, because. implies entering a fundamentally new territory for it. Her choice is justified in cases where:

the company does not see opportunities to achieve its goals, remaining within the first three strategies

the new direction of activity promises to be much more profitable than the development of existing ones

when the available information is not enough to be sure of the stability of the existing business

development of a new direction does not require serious investments

Diversification can take one of the following forms.

Horizontal- the company remains within the existing external environment, its new direction of activity complements the existing lines of business, which allows using the synergy effect through the use of existing distribution channels, promotion and other marketing tools.

vertical- the company's activities enter the previous or next stage of production or sale of the company's existing products. At the same time, the company can benefit from increased economic efficiency, but increases its own risks. concentric- development of the existing product line by including products close to it, which have technological or marketing differences from existing ones, but are focused on new customers. This strategy provides economic benefits while reducing risk. conglomerate- the new direction of the company's activity is in no way connected with the existing ones.

In Western literature, approximately the following estimates of costs and the likelihood of success are given, depending on the strategy of the firm:

strategy		success rate
Penetration
Market expansion
Product development
diversification

We propose to consider an example of using Igor Anoff's matrix in practice. This article contains detailed recommendations, turnkey solutions on the compilation of the Ansoff model, and most importantly, the main directions for possible conclusions from the results of the analysis are given. The sample analysis described below is an example of finding future growth directions for a store. retail, but in fact it is suitable for any company, product or enterprise.

The example also includes a free analysis template, which you can download from this link: .

Introduction

The example is built not in the matrix format, but in the format that is most convenient for assessing the sources of growth according to Igor Ansoff's theory. According to Ansoff, the sources of growth should be assessed using tables, evaluating each Ansoff strategy in terms of a number of parameters.

Each parameter is assigned a "green", "yellow" or "red" label, which means the appropriateness of using the strategy for the analyzed product and the company's market.

The more "green" labels, the higher the potential for implementing the strategy
The more "red marks", the lower the probability of successful implementation of the strategy

It is recommended that growth strategies be evaluated in this order, which prioritizes their implementation. The logic of this priority is as follows: the company must follow the path of least cost and least resistance, and accordingly:

first look for ways to grow the business in an existing market with an existing product
then consider extending the success of an existing product into a new market
then look for niches for new products in current markets
and at the very end consider business diversification options

Theoretical reference

If you have questions about the description of individual concepts in the matrix - see the theoretical part and

The penetration strategy is to generate higher revenue at the expense of existing customers by selling them the current product. In order to answer the question “Are there opportunities and growth prospects in the company’s current market?” needs to be assessed:

market growth rate
product consumption level
frequency of product use
level of distribution (coverage) of goods
level of knowledge of the company's product
economies of scale with sales growth
the uniqueness of the company's product (in comparison)

An example of assessing the possibility of implementing a penetration strategy:

The market development strategy is to spread the success of the current product to new markets. At the same time, new markets can be both new geographical territories and new consumer groups. In order to answer the question “Will the company be able to enter new markets with the current product?” needs to be assessed:

company's success in current activities
intensity within the industry competition of the new market
the strength of entry barriers in a new market
new market growth rate
product uniqueness (in comparison with key competitors of the new market)
high investment opportunities

An example of assessing the possibility of implementing a market development strategy:

The product development strategy is to increase the share of the current market through the release of new products. At the same time, a new product can be: an improved product, a product in a new package, a product in a new volume or an absolute novelty. In order to answer the question "Will the company be able to successfully expand the range of products in the current market?" needs to be assessed:

growth rates and size of the current market
competitiveness of the current product
intra-industry competition (cf.
new player entry threats
innovativeness of the current market
the level of renewal of the assortment and the emergence of new products from key competitors in the current market

An example of assessing the possibility of implementing a product development strategy:

The diversification strategy is to ensure the growth of the company by opening new lines of business in new markets. In order to answer the question "Does the company need to diversify its portfolio?" needs to be assessed:

Growth rates of the company's current markets
competition in current markets
company's investment opportunities
company competence level
competitiveness of current goods

An example of assessing the possibility of implementing a diversification strategy:

Consolidate the results of the analysis in a summary form and develop areas of work

The last stage of the analysis is the generalization of the results. Combine all analysis results into one table. Look at the big picture. Describe the chances of the company in the implementation of each strategy, develop key areas of work.

Ready solutions

We have ready template, with which you can easily apply the theoretical knowledge of this article in practice. You can download a template for analyzing and evaluating sources of growth using the Igor Ansoff matrix in the section.

Product-Market Matrix

Concept life cycle is valid not only for the product or market, but also for the enterprise. And if you do not take any measures, then over time, the turnover of the enterprise will decrease. The "product-market" matrix makes it possible to develop a strategic set of measures (ie, the general line of behavior of the enterprise) to increase turnover. The “product-market” development model allows using several strategies at the same time. It is based on the premise that the most appropriate strategy for strong sales growth can be determined by the decision to sell existing or new products in existing or new markets. This matrix is a chart designed to help managers make strategy decisions and also serves as a diagnostic tool.

The matrix is intended to describe the possible strategies of the enterprise in a growing market. On one axis, the matrix considers the type of product - old or new, on the other axis - the type of market, also old or new. Recommendations for choosing a strategy in the product-market matrix:

1. Strategy for improving performance (market penetration). When choosing this strategy, the company is recommended to pay attention to marketing activities for existing products in existing markets: conduct a study of the target market of the enterprise, develop measures to promote products and increase the efficiency of activities in the existing market. When using this strategy, the following paths are possible (they can be combined):
- - increase in demand for the product from existing customers, which can be done, for example, by inventing new areas of application for the product, artificially accelerating the obsolescence of the product, etc.
- - attracting new customers who previously bought a similar product of competitors, for example, through price reductions, sales promotions, product improvements, etc.
- - attracting new consumers from among those who have not used this or a similar product before, for example, through the distribution of free samples, the use of new distribution channels, etc.
2. Commodity expansion (product development) - a strategy for developing new or improving existing products in order to increase sales. Alternatives: creation of a new (for this market) product, expansion of the product palette by creating additional versions, modifications of the product. A company can implement such a strategy in an already known market by finding and filling market niches. Income in this case is provided by maintaining market share in the future. Such a strategy is most preferable in terms of risk minimization, since the company operates in a familiar market.
3. Market development strategy. This strategy is aimed at finding a new market, i.e. enter a new regional, national or international market or a new market segment for already developed products, for example, through special versions of a product aimed at certain consumer groups, or a “psychological” product differentiation carried out through advertising. Income is provided through the expansion of the sales market within the geographic region, and beyond it. Such a strategy is associated with significant costs and is more risky than both previous ones, but more profitable. However, it is difficult to enter new geographic markets directly, as they are occupied by other companies.
4. The diversification strategy involves the development of new types of products at the same time as the development of new markets. At the same time, goods can be new for all companies operating in the target market or only for this business entity. Such a strategy provides profit, stability and sustainability of the company in the distant future, but it is the most risky and costly.

Diversification can be:

- horizontal - the expansion of the product palette occurs due to new products, which, however, are still in some connection with old products, for example, the same equipment and similar technologies are used for their manufacture, existing sales systems are used, similar markets are served;
- vertical - expanding the product palette by mastering the previous or subsequent stages of production or marketing (for example, a clothing company starts producing fabrics or opens a network of its own clothing stores);
- concentric (lateral) diversification - the production of products that are completely new for the company and entering with them on completely new markets for it, the company completely goes beyond its industry. This, in turn, is the most costly and risky type of diversification.

The advantages of using the product-market matrix are visibility and ease of use.

Disadvantages of the product-market matrix:

1. aspects related to competition are not taken into account;
2. strong and weak sides enterprises, as well as the risks and opportunities of the market;
3. it is not taken into account that the enterprise does not always have enough financial resources for diversification;
4. The concept is focused only on the growth of turnover, while sometimes the company needs to make a decision: to invest in this product / market or it will be more profitable to leave.

This decision is made using portfolio analysis, such as McKinsey, in which the main parameters are the attractiveness of the market and comparative competitive advantages enterprises.