Strategic Analysis and Planning with MATRIX V5
Tutorial Step 3 - The Ansoff Matrix

The Ansoff Matrix is one of a number of 'classical marketing concepts' addressed by MATRIX V5, the software application for business strategists. This matrix, which encapsulates the future vision of the company, is one of the most celebrated of all Strategic Modelling tools. It maps the status of each Niche against status both of Product and of Market (Existing or New)*. The resulting pattern provides a basis for assessing the host company's intended method of growth.

The classical way to use the matrix is to develop objectives for a business, and then establish whether those objectives can be achieved through competitive exploitation of existing product and market opportunities (i.e. a market penetration strategy). If there is a gap between the objectives and forecast then, the objectives can be lowered reflecting more modest ambitions for the company; alternatively the objectives can remain at their previous level and an active search should begin either:

• for new products to sell to existing markets (Product Development Strategy), or
• for new markets to take up existing products (Market Development Strategy), or
• for new products to be sold to new markets (Diversification Strategy)

The aim is to progressively narrow the gap between objectives and forecast until a suitable portfolio of business opportunities can be formulated. However, each type of strategy represents a significant 'departure' for the company, and progressively increased exposure to risk. Strategies geared around Penetration are inherently less risky than those geared around Expansion. Highest risk of all are those strategies based upon Diversification since the company is committing both to new product with unknown development problems and to new markets with unknown pitfalls.

The Ansoff Matrix And MATRIX V5

Below - An example of a Ansoff Matrix used within MATRIX V5. Note that each colour coded 'Niche' defined within the Segmentation Matrix is plotted within the appropriate Ansoff Matrix quadrant by simple 'point and click' method - the more recent the Product or Market Segment, the further to the right or bottom of the window respectively.

To display the Ansoff Matrix exactly as shown below, click the 'Ansoff Matrix' button (right) which is located on the toolbar.

A 'Key' can be revealed on the left-hand side of the chart by clicking and dragging the chart edge. Hotspots, accessed by moving the cursor over hotspots on the matrix provide on-screen information about the Market, Product and Segment. The chart can also be copied and pasted into a compatible graphics or presentation package by means of the Right-Hand Mouse Click / 'Copy to Clipboard' function.

MATRIX V5 is an expert user tool which links the Ansoff Matrix with Gap Analysis to show the company's overall Forecast compared to Objectives. It also reveals the underlying trend of business anticipated from Penetration, Market Expansion. Product Expansion and Diversification strategies.

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