ANSOFF MATRIX

Definition

The Ansoff Growth matrix is a tool that helps businesses decide their product and market growth strategy.

Looking at my business – “Victorio Cakes” it is difficult to say what sector it should go to. From one point of view, it cannot go into the market penetration sector, because those businesses that go into this sector sell existing products into existing markets, where there are barriers to entry due to high initial investments needed for promotion, and where there are many big firms trying to compete on quality, brand loyalty and anything they can, as well as carrying out aggressive promotional campaigns. This could be suitable for such large firms, but not “Victorio Cakes”.

Neither “Victorio Cakes” can go into the market development sector, because my business is not seeking to create a new segment on the custom-made cake market, sell existing products into existing markets and use various pricing strategies to encourage more customers.

“Victorio Cakes” could have been fitted in the product development sector, because it is trying to introduce slightly different products into existing markets, but my business has not entered the development stage yet, because I has not even been started yet, which makes it impossible to put it in this section too. However, this is the closest example that nearly fits my business- “Victorio Cakes”.

There’s also the forth sector called diversification, which involves those businesses inventing new products and trying introducing them in completely new markets, which although it is risky, can actually be very effective. However, this doesn’t fit “Victorio Cakes”, because it doesn’t involve inventing a completely new product, neither it involves entering a completely new market.

It is very difficult to judge what category “Victorio Cakes” suits best, because ideally it doesn’t fit any category at all, because I haven’t started up this business yet, and it’s too yearly at this stage to decide what particular sector it should go into, because it is also unclear how much of the investments might be needed to finance my project.