Ansoff Matrix
Compare growth through existing or new products and markets. Use the Ansoff Matrix to organise options, test assumptions and weigh execution risk.
Use the idea inside a branch. Never say the name.
- Penetration: same products, same markets
- Product development: new products, same markets
- Market development: same products, new markets
- Diversification: new products, new markets
Watch out: Risk rises down the list; diversification needs the strongest reason.
On a case
A Chennai filter-coffee chain wants to grow.
- Penetration: more outlets in Chennai
- Product: packaged decoction
- Market: open in Mumbai
- Diversification: a breakfast restaurant
Illustrative case. Figures and conditions below are assumptions for practice, not market data.
For the Chennai coffee chain, first define the product as prepared filter coffee and the market as its current Chennai customers. More visits from those customers is penetration. Selling the same coffee to customers in Mumbai is market development.
Packaged decoction for existing customers is product development. A breakfast restaurant serving a different segment combines a new offer with a new market. A new outlet is not automatically penetration: its customer base determines the classification.
Compare expected incremental contribution, capital required and what must be learned for each option. Test one adjacent option before committing to diversification. The matrix ensures coverage; it does not prove demand or make a risky option attractive.
Sources and further reading
- OpenStax: strategic planning and growth options
Background on product-market growth choices and business portfolios; the practice example is NorthStar Club's own.