Ansoff Growth Matrix Explanation, Example, Template & How to Use

Ansoff Matrix comes in handy to find methods to reach new customers and increase profits. Ansoff’s strategic opportunity Matrix allows businesses to expand and plan their growth. Yet, there are tons of options available. So, it may be challenging to choose the best fit for your organization. Hence, we will provide a clear explanation of the Ansoff Matrix. Also, we’ve prepared an example and template for this analysis. Finally, learn how to use it and create a diagram for it.

• Part 1. What is the Ansoff Matrix
• Part 2. Ansoff Matrix Example
• Part 3. Ansoff Matrix Template
• Part 4. How to Use Ansoff Matrix
• Part 5. Best Tool for Making Ansoff Matrix Diagram
• Part 6. FAQs About Ansoff Matrix

Part 1. What is Ansoff Matrix

The Ansoff Matrix, also known as the Product-Market Expansion Grid. It is a strategic planning tool used by businesses to help them decide how to grow and expand. Igor Ansoff created the Ansoff Matrix. He is a Russian-American mathematician and business consultant. Users can use it as an assistant in making strategic decisions. It considers two key factors: products and markets. Products are what the company sells, and markets are who they sell to.

Market Penetration

A strategy that sells more of the current products to your existing customer base. You are getting your current consumers to buy more from you. So, you offer discounts or loyalty programs. With it, you can increase sales without new products or new customers.

Market Development

A strategy where a company looks for new markets or customers for its existing products. Here, you are expanding by launching new stores, and it’s called market development. This way, you can open up new revenue streams without changing your products.

Product Development

It focuses on creating new products or services for its existing customers. It is like adding a new flavor to the food you sell or upgrading your services. The benefit is that you meet the changing preferences of its existing customers.

Diversification

McDonald's explores diversification by offering new services, like home delivery or drive-thru convenience. It is also to meet the demands of a different market segment. It's about entering new markets by providing more services to attract more customers.

Ansoff Matrix offers several benefits to businesses that seek growth. First, it makes their plans clearer and more organized. So they can make better decisions about how to grow. Second, it helps them figure out which ideas are riskier and which are safer. Third, it encourages them to try new things, which can lead to fresh ideas and more profit. It also makes sure their growth plans match their goals and what they can do. Finally, it reminds companies to always think about what their customers want.

We now have the Ansoff Matrix benefits. You can proceed to its example for a clearer representation of it.

Part 2. Ansoff Matrix Example

Let’s have McDonald’s as an example to have a better understanding of the Ansoff Matrix.

Get a complete Ansoff Matrix example.

Ansoff Matrix for McDonald's

Current Products: McDonald's is popular for its burgers, fries, and various fast-food items.

Current Markets: McDonald's serves customers in its restaurants all over the world.

Market Penetration

McDonald's wants to sell more of its existing menu items to its current customers. They decide to introduce loyalty discounts and limited-time promotions. So, they’ll encourage their regular customers to visit more often and buy more food. It's like giving their current customers extra reasons to eat at McDonald's.

Product Development

McDonald's decides to create new menu items, such as healthier options. It includes plant-based burgers and special regional dishes. That way, it’ll cater to the changing preferences of its existing customers. To keep their regular customers excited, McDonald's adds new menu items.

Market Development

McDonald's expands its reach by opening new restaurants in other countries. They also adapt their menu to cater to local tastes in these new markets. This way, they're finding new markets outside of their current locations.

Diversification

McDonald's explores diversification by offering new services, like home delivery or drive-thru convenience. It is also to meet the demands of a different market segment. It's about entering new markets by providing more services to attract more customers.

Part 3. Ansoff Matrix Template

Before creating the Ansoff Matrix framework diagram, it’s vital to know what to include. As mentioned, Ansoff Matrix consists of 4 strategies, and they are:

◆ Market Penetration

◆ Market Development

◆ Product Development

◆ Diversification

Now, here’s an example of an Ansoff Matrix template for your reference.

Get a complete Ansoff Matrix template.

Part 4. How to Use Ansoff Matrix

Using the Ansoff Matrix involves a straightforward process to help businesses grow. Here's a general step-by-step guide on how to use it:

1. Understand the Parts of the Matrix

The first step in using it involves understanding the meaning of the four sections. Familiarize yourself with the advantages and potential challenges associated with each segment. That way, you’ll ensure that you make informed decisions with confidence.

2. Weigh Your Options

For each growth strategy, consider how you would put them into action. Most especially within your organization. Here are some examples of what you might decide for each:

Market Penetration

When pursuing market penetration, you could opt for initiatives. It could be creating a loyalty program or merging with a competing company. Also, you can launch special promotions for your existing customer base.

Market Development

In the case of market development, you might think of expanding into online sales. Or, you can target a new group of customers.

Product Development

In product development, you could choose to repackage your products. So, you will maintain the interest of your current customers. Or, you can create complementary offerings. Yet, ensure that your existing customers can get benefits.

Diversification

With diversification, you may consider collaborating with a business in a different market. But make sure that it can assist you in developing and distributing a new product.

3. Check Your Tolerance for Risk

Each strategy within the Ansoff Matrix carries its level of risk. Market penetration presents the least risk, and diversification bears the most. In this phase, document the potential risks associated with each strategy. Then, outline your plans for addressing any issues that may arise.

4. Select Your Growth Path

After that, you should be able to pick the most suitable strategy for your business. It's common for organizations to revisit the Ansoff Matrix at a later stage. Do it when you prepare for further expansion.

Part 5. Best Tool for Making Ansoff Matrix Diagram

Creating an Ansoff Matrix diagram should not be that challenging. Since MindOnMap is here to help you. It is a free online diagram maker that you can access on popular browsers. It includes Google Chrome, Safari, Edge, and more. Not only that, it offers various chart templates that you can choose and use. It provides a treemap, organizational chart, fishbone diagram, flowchart, and so on. Moreover, the tool enables you to add shapes, lines, color fills, etc., to your diagram. Also, you can add links and pictures to make the chart more comprehensive.

What’s more, the notable feature of MindOnMap is its auto-saving feature. It saves all the changes you made after you stopped operating on the platform. Thus, it prevents any data loss. Last but definitely not least, it provides a collaboration function. It means you can create and design your diagram within your organization in real-time. Finally, MindOnMap has a downloadable app version. It also supports Mac and Windows platforms. So, start creating your Ansoff Matrix chart with this tool.

Part 6. FAQs About Ansoff Matrix