In this article I would like to introduce to you a methodology for analyzing and planning a portfolio. Portfolio refers to both products and services.
The methodology that I would like to introduce to you was developed by the American mathematician and economist Harry Igor Ansoff and is generally known by the name Ansoff Matrix, also known as Product Market Matrix.
The concept of the Ansoff Matrix is based on the idea to categorize product portfolios into meaningful categories. Based on these categories strategies for the further development of the portfolios can be identified, in particular the (further) development of growth strategies.
In addition, the Ansoff Matrix can be used to analyze retrospectively which growth strategies have been used implicitly or explicitly in the past. In this way, the strategies of different companies can be compared with regard to the expected and actual results in the implementation of the chosen strategies.
For the categories, the Ansoff Matrix distinguishes between existing and new products as well as between existing and new markets. Based on these criteria, the following four categories can be derived:
The four categories can be visualized using the Ansoff Matrix and attributed with strategies.
The Ansoff Matrix
I would like to discuss the four categories in more detail below.
I would like to start with the category, which typically is identified and implemented first and which can usually be implemented with the least amount of effort.
Strategies for existing products in existing markets
Growth with existing products in existing markets can be generated in different ways. Typical approaches are
The second growth area is the generation of growth through new products in existing markets.
Strategies for new products in existing markets
Typical strategies are:
New markets can be in new geographies, but also be different from existing markets in cultural or socio-economic characteristics. Typically, companies apply this strategy most often when a product was successfully introduced as a new product into their existing home market, and then gradually new markets are opened up.
Strategies for existing products in new markets
A tried and tested example of this strategy with beverage manufacturers is to make a beverage, which was previously marketed as a stimulant and soft drink, attractive to new customer groups. For example, by addressing the market of sports-loving customers through its isotonic ingredients.
The most risky of the growth areas is the generation of growth through new products in new markets.
Strategies for new products in new markets
Typical strategies are:
Finally, I would like to introduce you to three features of the Ansoff Matrix, which have some relevance in the practical work with the model.
In summary, it can be noted that the Ansoff matrix is an useful instrument in business development management, in particular:
I hope this article has helped you with ideas for identifying growth strategies in your own business and wish you every success in the application.