Ansoff
Matrix
Everyone always talks about business expansion, business growth and if you are a business owner, it probably is often on your mind. But how do you actually decide how to do it and what is the best expansion option for you?
We just want to remind you about a very useful business tool called the Ansoff Matrix. Most people will use this on an intuitive level without even realizing they are using it, however, it can be very helpful to get a CLEAR idea and to be able to set achievable goals. It can be used by organizations of any size and it is designed to evaluate the risks involved with every possible growth strategy.
So there are 4 main strategies for business growth. We will quickly describe them and if you need a more detailed and PERSONALISED explanation feel free to message us. Sometimes businesses need to implement a mix of these strategies simultaneously. Sometimes, other factors need to be taken into consideration, like competitors’ counter moves, economic instability, etc.
Market penetration is the least risk you can take and it basically means to increase your share in the existing market that you are currently targeting. This can be achieved in many different ways, but the most basic ones are increasing your advertising budget, lowering the price, or making minor improvements to your product/service.
Market development is when you expand into a new market with your existing product/service. For example, you can target a different geographical area or start selling your product commercially.
Product development is a lot riskier as there are more processes involved. As you can probably guess this just means that you are creating a new product/service and sell it into the market you already conquered. For example, if you have a hairdressers salon, you can start offering manicure services as well and offer them to your existing clients.
Lastly, there is diversification, which is the riskiest move, as it means that you are creating a new product/service and introducing it into a new market.
Business tools are only there for guidance and setting clear goals. As we all know it is a lot harder to achieve a goal when it is
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