When was ansoff matrix created

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Analytics analytics. The Ansoff matrix was invented by Igor Ansoff in and is used to develop strategic options for businesses. It is one of the most commonly used tools for this type of analysis due to its simplicity and ease of use. As the diagram demonstrates, the matrix will give managers four possible scenarios, or strategies for future product and market activities. This strategy focuses on reaching new markets with new products.

Diversification can be either related or unrelated. Related Diversification: The organisation stays within a market they have familiarity with. Unrelated Diversification: The organisation moves into a market or industry they have no experience with. This is considered a high risk strategy.

So as always we recommend we use this tool as part of a larger marketing tool kit. Professional Academy's Strategic Marketing Theories Explained is a video series that explains marketing models in more detail.

If you're a more visual learner, check out this 3-minute animated video outlining how to use the Ansoff Matrix. When using an Ansoff Matrix, you and your team will consider questions, risks, and opportunities that follow under four categories.

These include:. As you can see in the example, these categories make up the four quadrants in the matrix. Market penetration is the option with the least risks, while diversification holds the highest risks. This option is the most simple and, as mentioned above, least risky. Rather than trying to develop a new idea, you would find new ways to make your existing product more appealing and successful within the market you already use.

You might accomplish this by running promotions, lowering your prices, or changing your distribution strategy. For example, a local bakery could expand by offering a loyalty program that rewards returning customers with free baked goods. They could also send a voucher for a free meal to anyone who signs up for their newsletter.

Even though the business and product remain the same, these new strategies bring in fresh business. This can include opening stores in new locations, targeting a new audience, or moving your products into international markets. These moves give your successful products new exposure. A silly sock company that caters only to adults can also begin offering a line for kids. Though the focus is different, the basic concept and materials are exactly the same.

By targeting this new customer segment, they can sell more pairs than ever before. Conversely, product development involves creating new products for an existing customer base. These new offerings generate renewed interest in the company, retaining customers that might otherwise choose competitors with more products. Expanding your product line is risky and expensive, so this avenue requires in-depth research and development. You should only use this option if you have a strong grasp of your audience and a firm place within your existing market.

One of the most prevalent examples of product development today can be found within streaming services. Though these companies, such as Disney and NBC, may have already reached every available viewer in their main market creating entertainment , developing a streaming platform keeps these customers invested in the company.

Along with a new stream of revenue, it also provides the opportunity to offer exclusive items only to subscribers and further solidify their market share. This quadrant is the most risky option for a reason. Diversifying involves creating a new product for a new market. Rather than relying on an existing customer base or product, this strategy starts from scratch. That said, businesses can use related diversification to make things somewhat easier.

Rather than creating a line of products that has nothing to do with your existing offerings unrelated diversification , you can develop items that are similar. When Apple began selling smartphones alongside their computers, tablets along with their smartphones, and watches with their tablets, for instance, these were examples of related diversification.

The introduction of the Apple credit card and AppleTV, however, are reflections of unrelated diversification strategies. The matrix should also show the overlap of new markets, existing markets, new products, and existing products for the quadrants. You can create either virtual or physical versions with any medium you prefer, such as on paper, whiteboards, slideshows, and more.