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1 Ansoff matrix Introduction The Ansoff matrix presents the product and market choices available to an organisation. Herein markets may be defined as customers, and products as items sold to customers. The Ansoff matrix is also referred to as the market/product matrix . Some texts refer to the market options matrix , which involves examining the options available to the organisation from a broader perspective. The market options matrix is different from Ansoff matrix in the sense that it not only presents the options of launching new products and moving into new markets, but also involves exploration of possibilities of withdrawing from certain markets and moving into unrelated markets.

2 Ansoff matrix is a useful framework for looking at possible strategies to reduce the gap between where the company may be without a change in strategy and where the company aspires to be. For any decision to be taken at corporate level, you need the right strategic tools. Ansoff matrix is one of them. Ansoff matrix helps a firm decide their market growth as well as product growth strategies. The 2 questions which the Ansoff matrix can answer is How can we grow in the existing markets and What amends can be made in the product portfolio to have better growth.

3 From the above two questions, it is clear that Ansoff matrix deals with the companies external market scenario as well as the product portfolio which the firm has. The matrix is divided in two quadrants The product quadrant and the market quadrant. The Product quadrant on the X axis is further divided into Existing products and New products. The market scenario on the Y axis is divided into existing markets and new markets. Thus the Ansoff matrix divides a firm on the basis of the products it has existing products or new products, as well as the markets it is in existing markets or new markets.

4 Depending on the characteristic of each, the marketing strategy is decided. These marketing strategy are as follows. Main aspects of Ansoff Analysis The well-known tool of Ansoff matrix was published first in the Harvard Business Review. It was consequently published in Ansoff 's book on Corporate Strategy' in 1965. Organisations have to choose between the options that are available to them, and in the simplest form, organisations make the choice between for example, taking an option and not taking it.

5 Choice is at the heart of the strategy formulation process for if there were no choices, there will be little need to think aboutstrategy. According to Macmillan et al (2000), choice and strategic choice refer to the process of selecting one option for implementation. Organisations in their usual course exercise the option relating to which products or services they may offer in which markets. The Ansoff matrix provides the basis for an organisation's objective setting process and sets the foundation of directional policy for its future (Bennett, 1994).

6 The Ansoff matrix is used as a model for setting objectives along with other models like Porter matrix , BCG, DPM matrix and Gap analysis etc. The Ansoff matrix is also used in marketing audits (Li et al, 1999). The Ansoff matrix entails four possible product/market combinations: Market penetration, product development, market development and diversification ( Ansoff 1957, 1989). The four strategies entailed in the matrix are elaborated below. 1) Market Penetration In the Ansoff matrix , market penetration is adopted as a strategy when the firm has an existing product and needs a growth strategy for an existing market.

7 The best example of such a scenario is the telecom industry. Most telecom products are existing in the market and they have the same market to cater to. Thus in such cases the competition is higher and you might have to go out of the way to cater to your market or to increase your firms market share. Several things have to be considered when adopting the Market penetration strategy. By using market penetration, you are ensuring that only the existing resources of the firm are used and no extra costs need to be incurred in setting up a new unit for.

8 At the same time, your current group of employees are the best people to notice any growth opportunities in the existing market. Thus they need to be used optimally by providing them the right information at the right time. There needs to be a combination of marketing and sales promotions if you have to grow in an existing market with an existing product. On the other hand, market penetration might not be the strategy you are looking for. What if the market becomes too saturated? Fighting for a higher market share in a saturated market accounts for higher expenses and lower profitability.

9 Thus the market analysis needs to be spot on and the market penetration strategy should be adopted only if there is scope for increasing market share in an existing market. For example, Cadbury india is pushing for chocolate to be used as small gifts instead of more traditional sweets during Diwali and other festivals. HUL try to capture more market share of already existing market with already existing products such as in India. It includes aggressive advertisements, offers etc to penetrate more into existing market.

10 2) Market Development Market development is the second market growth strategy which can be adopted as per the Ansoff matrix . The market development strategy is used when the firm targets a new market with existing products. There are several examples of the market development strategy including leading footwear firms like Adidas, Nike and Reebok which have started entering international markets for market expansion. Every other day we hear of one or the other companies thinking of lunching their products in a new country.