How to use the Ansoff Matrix for market expansion?

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In business, it’s important to keep an eye on the horizon and potential new opportunities, even when things are going well. The Ansoff Matrix is a product market expansion grid that you can use to help you identify these new opportunities to grow your business. It is designed to help product teams weigh up the risk vs reward of four different types of growth strategies:  Market penetration, Market development, product development and diversification.

Upon completion of an Ansoff growth matrix, teams should have a series of possible growth strategies that set the direction for the business strategy. 

What is the Ansoff matrix?

Russian mathematician Igor Ansoff designed the growth grid way back in 1957, although it is still relevant for all product managers today. It is used to help product management decide on the best approach to expansion by considering the risk of each. Ansoff came up with four possible outcomes: 

1. Market Penetration: Focuses on pushing existing products further into an existing market.
2. Product Development: Focuses on introducing new products to an existing market.
3. Market Development: Focuses on taking existing products to a new market.
4. Diversification: Focuses on introducing new products to a new market.

The four strategies correspond with risk level, with option 1: Market Penetration deemed to be the least risky, while Option 4: Diversification carries a much greater risk.

So let’s take a deeper look at how to use the matrix template to help form your product development strategy.

The Ansoff matrix template explained

It’s important to conduct this matrix as a collaborative exercise with your team. Begin by inviting your team to collaborate on Conceptboards ready-made template by sending them a link to the board.

Use template

We’ve listed some of the questions you can ask to help the brainstorming begin. Ask everyone to contribute their ideas onto Sticky Notes on the board in each of the four quadrants, beginning with the least risky through to the higher risk strategies. 

Market Penetration 

• Can we launch a new marketing campaign?
• Can we offer a special price promotion?
• Can we offer a loyalty scheme?
• Can we start a partnership?
• Can we take over a competitor?

Product Development

• Can we offer a new flavour/style/size/version?
• Could we offer bundles or packages?
• Can we expand our service offering?
• Can we improve our customer service?

Market Development

• Can we launch into a new geographic market?
• Can we launch a new sales channel (i.e. an e-store, or a pop-up store?)
• Can we target a different demographic: i.e.: gender, age, hobbies?

Diversification

• What new products could we launch using existing knowledge?
• What new geographic areas do we want to access?
• How will we approach both things at once, and why?

Once you’ve completed each section, go through each idea and discuss as a group. Firstly, look at the risks associated and how these could be overcome.  Secondly, consider what competencies you already have as a team that you could leverage to help make it a successful launch. 

Ansoff matrix example

We’ve included two real-world examples of how to use the Ansoff matrix for giants Apple and Starbucks. Check out these completed product market expansion grids below to get a greater understanding of what yours might look like.

For both of these examples, we’ve used our own template. 

Apple example

Now let’s understand Apple’s scope and possible future expansion strategy into new markets and products.

Use template

Starbucks example

A company that’s known for its rapid retail growth and expansion, Starbucks is no laggard when it comes to product innovation, either. Here we’ve analysed Starbucks’ marketing penetration strategy.

Use template

Additional frameworks

The Ansoff Matrix is strategic framework applicable for product marketing planning. By using this matrix, you should be able to identify which expansion plans suit your organization based on your existing skills, competencies and products. Now you have developed a strategy, it’s important to dial down on the details, using the Product Market Fit canvas, or the Product Vision Board template.

Additionally, you could also use the Porter’s 5 forces framework to understand the competitive intensity of a new market or industry. It’s also a good idea to first look inward by analysing your company’s relative strengths and weaknesses with a SWOT analysis or assess your existing product portfolio with a BCG matrix.  

Don’t forget to let us know what you think in the comments below! For more great collaborative templates, check out the full template library on our blog.