Ansoff Matrix Pros and Cons List

The Ansoff Matrix has been used by businesses for more than fifty years now. First proposed by Igor Ansoff and a case made in Harvard Business Review in 1957 as a method for small business owners and marketers, the approach was geared towards helping companies achieve growth and expansion. The Ansoff Matrix is also known as Product/Market Expansion Grid. It considers four facets of a business and tries to fuel growth or expansion, both of which are correlated.

Ansoff Matrix: Explained!

The Ansoff Matrix can be split into quadrants. There are four facets that need to be strategized for growth, business expansion or increased revenues and profit. These aspects are market penetration, market development, product development and diversification.

Market penetration is strategizing ways to penetrate existing markets by advertising or promoting existing products and services through well planned branding campaigns. Market development is foraying into a new market, exploring new target audience or to build a new consumer base. Product development is simple to understand. It is the entire process that would facilitate the conception, prototyping and then developing of a new product. Diversification is again simple. It calls for developing different products and also foraying into diverse or different markets targeting myriad audiences.

List of Pros of Ansoff Matrix

1. Focused Approach
The Ansoff Matrix compels owners, managers and even team leaders to have a focused approach. This helps in developing strategies that would actually work. By solely focusing on four key elements that would drive sales, fuel growth and may even determine the viability of running a business, a company has far greater chance of survival and churning profits than otherwise. It must be noted that market penetration, market development, product development and diversification are not revolutionary ideas and they were well in existence five or six decades back. But Ansoff Matrix combines them and makes it imperative to strategize them.

2. Growth Potential
The Ansoff Matrix can fuel growth. With astute strategizing, companies can venture into uncharted territories and expand their business. There’s a stringent or disciplined approach with preset objectives, there are hard facts and presentable plans to use, there are prospective and retrospective analyses helping companies identifying areas of growth and opportunities lost and a company can take cautious steps to manage risk.

List of Cons of Ansoff Matrix

1. Isolationist Approach
Ansoff Matrix doesn’t factor in the numerous other things that will affect market development, product development or diversification. It considers scenarios that are almost utopian. The model works in theory but it doesn’t always in practice.

2. Simplistic & Overly Optimistic Theory
By simplifying far too many complicated things, the Ansoff Matrix becomes almost unrealistic. It is too optimistic and can compel a company to drown in analyses instead of coming up with actionable plans. The model doesn’t even account for unpredictable developments.