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The Ansoff Matrix

The Ansoff Matrix

Note: This article is part of an ongoing series about understanding competitive intelligence.

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Most people think competitive intelligence is about competitors, spotting the best products/services in your market and trying to copy them.

There’s more to it. CI actually starts by understanding your company and your positioning into the market.

A great and valid tool for this is the Ansoff Matrix, which was first introduced by H. Igor Ansoff in 1957.

The matrix (aka Product/Market Expansion Grid), shows four strategies for strategic thinking that you can use to grow. It also helps you analyse the risks associated with each one.

On one axis you have “Product” and on the other you have “Market”.
By diving each of the axis in “New” and “Existing” you get 4 quadrants.

The Matrix outlines four possible avenues for growth, which vary in risk:

  • Existing products in an existing market: Market penetration
  • New products in an existing market: Product development
  • Existing products in a new market: Market development
  • Total new products in total new market: Diversification

This is not an either/or model: you can purse different avenues at the same time, but be aware of the risks involved. As you expand into new products or new market, risks will be higher.

Also note that if you pursue different strategies in the quadrant with equal forces, you will probably not going to make a lot of progress.