Dec 202011

Use the Ansoff Matrix to help grow your business

Very often when thinking about how to grow and improve a business our minds get confused by the options available to us and, as a result, we either don’t do anything or we end up making a mess of it.  But in very fundamental terms there are only really 4 things we can do and they are:

  • Develop a new product or service;
  • Expand our market area;
  • Diversify our offering, and
  • Increasing penetration into our existing market.

These basic ideas were developed by Igor Ansoff and are a really good guide to helping to  sort out all our ideas.  Ansoff explained them by use of a matrix as shown below.


Let’s put this into a practical example and say that our business is selling motor spares for European cars.  We have a single outlet on an industrial site on the outskirts of town.

Market penetration

This is taking the same products and selling to the same market so all we can really do here is increase our market size.  We do this by things like improving our advertising, sponsorship of related events or putting on a big sale to attract more custom.

Product development

Here we go out to our present customers with new (but related) products.  So we might start selling European car cleaning polishes or something similar that will appeal to our present customers.  Would they be interested in specialist European car magazines that they can’t get at the local magazine shop?

Market development

Here we’re looking at taking our existing products into new markets.  At the moment we only sell locally so the obvious choice is to start selling via the Internet.  Opening another store in a nearby town is also an option, provided we know there is sufficient business.


This is the biggest jump you can make and can sometimes feel like you’re starting a whole new business.  An example for us here might be to start selling European bicycles; there’s still the European link but it’s a whole new market.


You’ve probably realized by this stage that not all changes are of equal risk.  There is also the issue of cost to consider and, generally speaking cost and risk increase together.  I’m not saying that you should avoid risk but do be sure that you have done your homework properly before going down the more risky routes.

Running a business successfully means expanding it and growing it in a logical fashion.  Using the Ansoff matrix is a great way to help you bring your thoughts together in a way that helps you make informed decisions on how you[re going to advance.