ANSOFF Framework

Strategy Tools Explained - Part 5

The Ansoff Framework is a framework/matrix invented in the 1950s by Igor Ansoff, an American professor of strategic management. The framework helps to evaluate growth strategies.

🧩 Purpose of the Ansoff Matrix:

Ansoff devised the matrix to evaluate growth options by evaluating:

Existing Products vs. New Products

Existing Markets vs. New Markets

The value of the Ansoff Matrix

• It is a simple and visual tool.
• It can be applied both to startups and mature businesses.
• Ties in to other tools like Porter's Five Forces and SWOT analysis.

Ansoff Framework - Explained

1.Ansoff Framework - Definitions

📊 Strategy	📖 Definition
📈 Market Penetration	Increasing sales of existing products in existing markets. Lowest risk. Includes promotions, price reductions, and loyalty programs.
🌍 Market Development	Selling existing products in new markets. New markets = new geographic areas, new customer segments or new distribution channels. Moderate risk.
🧪 Product Development	Creating new products for existing customers/markets. This uses brand recognition and customer loyalty to launch new products. Higher risk.
🧭 Diversification	Creating new products in new markets. Highest risk.

2. Ansoff Framework - Examples

📊 Strategy	🧭 Definition	🏢 Examples
📈 Market Penetration (Existing Products, Existing Markets)	Increase market share using current products in current markets	🥤 Coca-Cola: Boosts sales through promotions & advertising 📺 Netflix: Enhances features to grow user engagement
🌍 Market Development (Existing Products, New Markets)	Enter new geographic or demographic markets with existing products	🚗 Tesla: Expands sales to China, Europe 🎧 Spotify: Launches in India and SE Asia with local features
🧪 Product Development (New Products, Existing Markets)	Develop new products for existing customer base	🍏 Apple: Introduces AirPods, Apple Watch 📱 Samsung: Launches foldable phones for loyal users
🧭 Diversification (New Products, New Markets)	Enter entirely new markets with new products	🛒 Amazon: Created AWS to enter cloud computing 🚀 Virgin Group: Expanded into space travel, airlines, hotels