Ansoff Strategic Matrix

The strategic planning of the company is one of the stages of successful business development. This truth began to take shape from the beginning of the 20th century. And the idea developed rapidly over 100 years. The first units involved in long-term and medium-term planning were not permanent departments or units in this type of activity. Annual financial estimates - this ended the strategic construction.

Idea founder

Igor Ansoff, a native of Russia who lived most of his life in the USA, gives one of the simplest and most understandable definitions of strategic planning. According to this expert, the analytical, logical process, which assumes with its forecasts the future position of the enterprise in the market, should take into account the external environment. The Ansoff Matrix is ​​the most famous tool of the American mathematician-economist. The elementary in understanding of the square of the forecast of the organization’s development has won by its simplicity a firm place in the strategic plans of almost every modern enterprise.

Strategy History

Only at the second stage of planning development, and this happened in the 50-60s of the 20th century, planning departments began to be formed at enterprises, which were constantly engaged in the prospect of business development.

Finally, the idea of an enterprise development strategy declares itself to be a necessity at the third stage - during an increase in the competitiveness of European and Japanese firms relative to American companies. And it is the representatives of the latter who develop vivid economic and mathematical proposals.

Simple table

The initial form of the analytical tool is a square in which two axes are considered: vertical and horizontal. But isn’t it easier to consider it in the form of a table, enclosing the 4 elements located beyond the edges in a common grid? Then the matrix takes the following form:

In this view, it is much easier to understand the ways of intersecting factors. And you can calculate business development options.

Ansoff Matrix: Growth Strategies

The idea itself implies a close relationship between future and existing markets and products of the company. Any manufacturer of services or goods can name the prospects for the development of their business. The strategy determines the path along which the company needs to move, the existing risks when choosing an option. At the same time, it is important not only to determine the direction, but also to determine as accurately as possible the existing sales markets, the segment of consumer demand, set the growth vector of the company based on the real market position, determine the competitive advantages of the currently produced products and offers in the future. Ansoff’s strategic matrix will be an effective tool only if all of the above conditions are met.

Easiest way

By the number of columns and rows in the table, it is easy to determine that the American mathematician proposed only 4 growth options. At first glance, this is not a very rich alternative. But the Ansoff matrix and many years of experience in its application prove the opposite.

1. Market penetration using existing products and markets in which the company operates confidently, takes its own segment and competitively. This development option involves an increase in sales. What can contribute to this? The following measures are possible:
   
   - the company is increasing market share;
   - the development of repeat sales, that is, the development of a network of regular customers;
   - an increase in the quantity of a product in already conquered market segments;
   - disclosure of such qualities of goods and services that require their use in new areas.
   
   Ansoff matrix is ​​suitable for any company. Product-market - the most obvious strategy. The costs of existing resources can always be calculated with the least risk.
   
   
2. In the case of choosing a strategy for developing new markets with existing products of the company, it is necessary to adapt goods and services to new segments. The tools in this case can serve:
   
   - geographical expansion of sales areas;
   - development of new distribution channels;
   - the development of new market segments.
   
   Such a path of development can be chosen by a company whose marketing policy is developed to an effective level.
   
   
3. The third option, the Ansoff matrix involves the introduction of a new product in existing markets. As a rule, enterprises engaged in the production of technical equipment successfully use this development path. It is their characteristics that should be updated to meet the higher requirements of consumers in the existing market. The selected third strategy on the Ansoff matrix involves the development of growth due to:
   
   - updating the properties of the product, improving its quality, changing status;
   - offers of completely new goods and services;
   - expansion of the product line;
   - Offering consumers the existing goods and services of a new generation.

Risks and Growth

The most risky choice of strategy is the last option of intersecting factors. A new market and product involves diversification. Entering a company in unfamiliar territories can be justified in extremely rare cases. As the Ansoff matrix shows, “product-market”, if none of them are mastered, can be considered as a scheme only if:

• the inability to use the three above methods of development and growth;
• if the development of existing activities, obviously, does not bring the desired profit;
• if there is a lack of information to predict the stability of the business with its usual development;
• little or no investment in new projects.

Ansoff matrix and its practical application in the banking sector

The economic development of the enterprise directly depends on lending activities and other financial services. Banks in this niche occupy a central position. And the strategy of their activities is as relevant as the marketing planning of any enterprise.

Ansoff Opportunity Matrix is ​​an effective tool for the implementation of the proposed financial products, both new and proven in developed markets. We are talking only about them due to the fact that most of the population uses the services of banks, and the search for unreached segments of the market is becoming less and less successful.

Improve what you already do

The obvious strategy, or as it is also called the strategy of the "small ship", "cost savings", involves the following stages for development:

• identification of weaknesses in similar services of competitors;
• development of methods of persuading potential customers, which should ultimately give preference to the product of this bank (at the same time, pressure is categorically excluded, since its result can only be a temporary effect)
• offer related services on favorable terms.

Existing financial products need to be improved, expanded and modified. This activity is based on intensive research work, the result of which is the positioning of the product, that is, the need to determine its characteristic features, features that differ from analogue services, substitute services.

Based on two stages of work , a bank assortment policy is being designed. It implies the formation of a set of services that determines successful activity in this market segment, ensures economic efficiency, and sets the development vector.

The last stage of work is an assortment strategy. For its formation, it is necessary to consider the following development paths:

• Service differentiation. It implies the allocation of a separate niche for the sale of existing products other than competitors' products.
• Narrow specialization. As a development strategy, it is chosen to provide products limited to certain characteristics of the activities of the number of customers.
• Diversification of services. Expanding the assortment and number of market sectors for the sale of goods, as a rule, is the prerogative of universal banks.
• Vertical integration. Strategy is the embodiment of synergy.

Percentage ratio

The Ansoff matrix and many years of experience in using it in practice made it possible to deduce certain patterns of the success of applying a particular strategy, as well as the likely value of costs. A clear presentation of the percentage of risks to expenses makes it possible to make marketing decisions with a clear understanding of the probability of losses.

The strategy of introducing new products in the existing market loses significantly in terms of success and the amount of costs when choosing the option “old goods in the developed segment”. Such indicators make it possible to say with confidence that for each enterprise the development alternative is limited by a number of circumstances, the external environment, economic opportunities and many other factors. The Ansoff matrix is ​​only a tool to help you choose a strategy, which does not negate more in-depth analysis of the capabilities of the enterprise.