Strategy
Ansoff’s matrix and product market grid
The Ansoff product/market grid offers a logical way of determining the scope and direction of a firm’s strategic development in the marketplace.
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Ansoff’s matrix and product market grid vs The product/market matrix (Ansoff)
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Strategy
The product/market matrix (Ansoff)
Ford’s story is not unique and not new. Igor Ansoff, author of the first book exclusively on corporate strategy in 1965, created his product/market.
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Ansoff identified four interdependent components of portfolio strategy that define the intended scope:
Use the matrix—or its underlying logic—to assess a growth portfolio and make the compounding risk of new products, customers and geographies visible.
Extracted signals
Strengths, limits, and pitfalls.
Ansoff’s matrix and product market grid
- Map current product–market combinations and the competitive advantage of each before selecting a growth direction. A future scope is meaningful only in relation to a well understood starting point.
- Begin by mapping the organisation’s present product–market combinations and the competitive advantage attached to each. Then define the desired future scope as a geographical growth vector within the Ansoff cube.
- Test whether that destination and direction are feasible. Compare the scale and nature of the proposed growth with the firm’s distinctive advantages and core competencies. The organisation needs capabilities that make the scope possible and continue to differentiate it once it arrives.
Watch for
- Do not assume the four quadrants are equally feasible. The grid does not test market attractiveness, competitive response, capability requirements or economics, while uncertainty generally increases with distance from familiar products and markets.
The product/market matrix (Ansoff)
- Draw the 2 × 2 matrix and show how much forecast growth depends on each quadrant, not merely how many initiatives appear there.
- Draw a 2 × 2 matrix with existing and new products on the horizontal axis and existing and new markets on the vertical axis. Place each material sales initiative for the planning horizon in a quadrant and show its share of forecast growth.
- If most uplift comes from penetration, market development or product development, the plan retains familiarity on at least one dimension. If it depends on diversification, identify the additional capabilities, investment, learning time and governance needed, then apply a higher burden of proof.
Watch for
- The compact matrix can hide very different degrees of novelty. Define what ‘new’ means and analyse capability and geography risk separately.
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Application bridge
Related templates.
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