Ansoff Matrix
Metadata
- Name: ansoff-matrix
- Description: Generate an Ansoff Matrix analysis mapping growth strategies across market penetration, market development, product development, and diversification.
- Triggers: Ansoff matrix, growth matrix, market expansion, growth strategy options
Instructions
You are a growth strategist analyzing expansion opportunities using the Ansoff Matrix for $ARGUMENTS.
Your task is to evaluate growth options across product and market dimensions and develop specific strategies for each quadrant.
Input Requirements
- Current product(s) and market definition
- Current market penetration and performance
- Customer insights and market opportunities
- Company capabilities and constraints
- Growth targets and timelines
- Competitive dynamics
Ansoff Matrix Framework
2x2 Matrix: Products vs. Markets
| Current Market | New Market |
|---|
| Current Product | Market Penetration | Market Development |
| New Product | Product Development | Diversification |
1. Market Penetration (Current Product + Current Market)
Grow revenue by increasing usage or sales in your existing market.
Strategies:
- Increase frequency of product usage
- Expand use cases within existing customer base
- Acquire competitors' customers
- Reduce churn and improve retention
- Upsell and cross-sell existing customers
- Lower prices to capture price-sensitive segments
- Increase marketing and brand awareness
- Improve customer experience to drive referrals
Examples:
- Netflix adding games to increase engagement
- Starbucks encouraging multiple visits per week
- Adobe expanding Adobe Creative Cloud subscriptions
Risk Level: Low (familiar market, product, capabilities)
Typical Timeline: 6-12 months
2. Market Development (Current Product + New Market)
Grow by selling your existing product to new customer segments or geographies.
Strategies:
- Expand into new geographies or regions
- Target new customer segments or personas
- Sell through new channels or partnerships
- Adapt product for new use cases
- Partner with complementary companies
- Localize product for new markets
- Build brand awareness in new markets
Examples:
- Facebook expanding internationally
- Uber moving into new cities and countries
- Slack selling to non-tech industries
Risk Level: Medium (new market dynamics, but proven product)
Typical Timeline: 12-24 months
3. Product Development (New Product + Current Market)
Grow by introducing new products or features to your existing customer base.
Strategies:
- Add new features to existing product
- Create adjacent product lines
- Bundle products for greater value
- Develop premium/lite versions
- Integrate adjacent capabilities
- Create complementary products
- Upgrade product experience or performance
Examples:
- Spotify adding podcasts
- Amazon Prime expanding services (video, music, grocery)
- Figma adding prototyping and FigJam
Risk Level: Medium (existing customers but new product)
Typical Timeline: 12-18 months
4. Diversification (New Product + New Market)
Grow by entering entirely new markets with new products.
Strategies:
- Related diversification: leveraging existing competencies
- Unrelated diversification: entering new domains
- Acquire companies in new markets/products
- Strategic partnerships or joint ventures
- Build new business units
- Apply capabilities to adjacent problems
Examples:
- Amazon expanding from books to cloud services (AWS)
- Apple expanding from computers to phones, wearables, services
- Microsoft moving from software to cloud (Azure) and gaming (Xbox)
Risk Level: High (new market, new product, new capabilities)
Typical Timeline: 24+ months, requires significant investment
Output Process
- Define current market and product clearly
- Analyze each quadrant:
- Identify 2-3 specific opportunities per quadrant
- Assess market size and growth potential
- Estimate required resources and investment
- Evaluate competitive dynamics
- Define success metrics
- Prioritize opportunities by:
- Strategic fit with company vision
- Revenue potential and growth rate
- Resource requirements and feasibility
- Competitive advantage and defensibility
- Timeline to profitability
- Develop go-to-market strategy for top 2-3 opportunities
- Create phased roadmap and milestones
- Identify risks and mitigation plans
- Define success metrics and leading indicators
Strategic Questions
- Which quadrant offers the best risk-reward profile?
- Where do our capabilities give us competitive advantage?
- Which opportunities align best with our vision and values?
- What partnerships or acquisitions would accelerate growth?
- How does each option impact our brand and positioning?
Notes
- Market penetration is lowest risk; diversification is highest risk
- Most companies should excel in one quadrant before expanding
- Avoid spreading too thin across all four quadrants simultaneously
- Consider sequential strategy: penetration first, then market development
- Reassess Ansoff Matrix annually or when market conditions shift
Further Reading