Episode 333: The Ansoff Matrix
In this episode, Fiona introduces the Ansoff Matrix framework. She also talks about how this framework can guide both product-based and service-based businesses. Tune in!
Topics discussed in this episode:
Introduction
Considerations for business growth and Expansion using the Ansoff Matrix
Importance of strong market penetration before venturing into new markets
Encouragement to explore and utilize the Ansoff Matrix
Detailed exploration of each quadrant's
Utilizing the Ansoff Matrix to guide decision-making
Conclusion
Get in touch with My Daily Business Coach
Resources and Recommendations mentioned in this episode:
Welcome to episode 333 of the My Daily Business Podcast. Today is a quick tip episode, and this is an important one, particularly if you are in a product-based business and you're considering doing something new or if you are in a service-based business and things have become a little stagnant or you're just tired and over what you're putting out there. It's a framework that is super simple and super important.
Before we get stuck into the quick tip episode where I'll go into that framework, I wanted to acknowledge the traditional owners and custodians of the beautiful land on which I record these podcasts. And that is the Wurrung and Wurundjeri people of the Kulin Nation. And I pay my respects to their elders, past, and present, and acknowledge that sovereignty has never been ceded.
The other thing I wanted to mention is that we often get DMs or emails saying, "Hey, when are you running your next round of Marketing for Your Small Business with the coaching program?" Marketing for Your Small Business is an online course. It's always available. You can go to marketingforyoursmallbusiness.com, and find out all the information. You can buy the course and go through it at your own pace twice a year. We do run a coaching program in addition to the course, so you buy the course and then you meet with me and other people every single week for nine weeks consecutively to work through and finish the course and come up with your marketing plan.
We usually run that around September, and we will be doing that again this year. If you have already bought the course, you'll get an email shortly with the small feed to upgrade if you want to do the nine-week coaching program. If you are on my Sunday email, you'll always be the first to know about this and find out anything that we are doing. You can just subscribe over at mydailybusiness.com/subscribe. But if not, just check out Marketing for Your Small Business. You can find out all the information there and sign up for the coaching program, which will kick off next month. Let's get into today's quick tip episode.
In my line of business, you come across a lot of frameworks, theories, strategies, methodologies, and a lot of all these different types of models of doing things in business. Some of these are proven and have been around for decades. Others are newer but still awesome. Sometimes you find things that are just so easy to follow and explain sometimes quite complex problems that you just use them again and again. The one that I'm going to talk about is one that I have used with many clients in various different ways over the years, and also something that I've used previously in my employed roles, and it comes from all the way back in 1957. This is not a brand new thing that we just saw on TikTok.
This has been around for a long time. Not that that's anything wrong with things that you see on TikTok. Sometimes they're fabulous. This framework is called the Ansoff Matrix, and it comes from a 1957 article that was in the Harvard Business Review by a guy called H Igor Ansoff. I don't know if you say Ansoff, I've heard both Pro Enunciations, but I just say Ansoff, like hands off, it's called the Ansoff Matrix. If you imagine a two by two matrix and you've got four squares, if you imagine a SWOT diagram like the strengths, weaknesses, opportunities and threats diagram that you see a lot in business, it's like that. You've got four squares, you've got an X axis and a Y axis, and on the Y axis, the vertical one, you've got markets and you've got new markets and existing markets.
On the X-axis, the one going horizontal, you've got products, and you've got new and existing. What you're doing is you end up with four squares. You've got one that is existing under markets. Then you've got new markets and existing products. You've got existing products with existing markets. Then you've got existing products with new markets. Then you've got new products with existing markets and new products with new markets. You have these four squares. This is important if you are going to increase your categories as a business owner. Maybe you are going to offer different services, or maybe you are offering different product lines. Maybe you originally always just did furniture and now you are going to add linen or cushions or things into that furniture. That's a different category line.
It's a new product and you may decide we are just going to offer that new product to our existing customers because it's new and it's exciting, or we are going to take that new product and also offer it to a new market. We are going to target either a different type of audience. Maybe you're going from targeting, I don't know, women to targeting men, or you are going to target. The market is a geographical change in the market. You might say, we're going to take this product and we're going to also take it to a whole new location, out of Australia, into the US or Europe. These quadrants, you've got the first, which is existing markets and existing products. And that's where you want to be thinking, have we got full market penetration?
Does everybody in our market know about our product? If it's a large product, if it's a niche product, certain groups are aware of what we do enough to know that everyone in our existing market knows about our existing products. That can be a good place to start. I was talking to clients just recently and we were talking about expansion and growth, and I brought this framework to them, and we talked about the fact that they're still in that number one market penetration phase. The market needs to be penetrated more. The market needs to know that we exist and that we do this before we expand. That's the first one. You've got market penetration, existing products and existing market. The next one is where you have a new market, but you have the same products.
Let's say you have a store, it's doing well and it's in Melbourne, and then you want to replicate that store in Sydney, you would be going into market development. That is where you have the same product, but you have to develop the market. You have to develop a whole new strategy around how are we going to market in Sydney. How are we going to get people in Sydney? How are we going to build a community in Sydney when we are known as a Melbourne brand or a Melbourne Brace brand? That can be the same for all sorts of things. Let's say you sell supplements for women going through pregnancy. You may be like, everybody knows who's pregnant, and knows about our supplements, but what we're going to do is pitch those same supplements to women in the postnatal period.
I don't know anything about supplements, and I'm sure this is incorrect completely, but maybe they also work for people in the first few months after they've given birth. We are going to tap into that market as well. It's probably a bad example, but you take the products that you already have and you're developing them for a new market. Let's say, for example, I tend to work with creative small business owners, but if I was like, I'm going to take all the same products that I do and I'm going to start working with a completely different market than I've been working with. Maybe I'm going to work with purely tech startups. I'm not going to go and do that, and I still have some clients with that, but that I hope explains.
You've got the first quadrant is your existing products with existing markets. Your second one is market development. You've got your new market, but the existing products. Then you move over to the product, new products. You've got your new product development with, so these are new products with existing markets. You have an existing market and you're going to bring out a new product. Let's say again these supplements, I'm probably totally wrong here and I'm sure some people are going to pick me up on this, but let's say you had the market of mums, they've been taking your supplements, you are going to come out with kids supplements or vitamin supplements for kids. That is a new product, but you are talking to the same market that you've already had. That is called product development. And then the fourth thing is diversification, where you take an entirely new product and a brand new market and you pull those things together and that has the greatest risk because you don't know the market, you haven't tested a whole lot of things, and also you haven't had this product around or this new service offering around for long enough to be able to test it again.
That Ansoff Matrix is a way of working through, firstly, where are we as a company. Where are we with our product selection and our service offering? Are we in a place where everyone knows about us and we've fully penetrated this market with the products we already have? Or do we have new products to bring to that same market? Or do we want to take a new product to a new audience? You've got one market penetration, which is the idea of increasing your sales of existing things that you already sell with the same market that you've been selling to. That is the first one. Then you've got market development, which is you are taking your existing products and trying to hit up a new market. As I said, that can be a geographical new market. It can be a new market segment.
You've got number three, which is product development. That's focusing on bringing new products into existing markets. That's the one before, which I know I can get confusing, was market development, which is taking existing products to new markets. This is taking new products to existing markets. The last one, which is diversification, is the idea of going into a new market with a new product. If you were doing the whole supplement, you might say, “We are actually going to create a brand new product, which is for men who are trying to become fathers.” And that's a brand new product, and we are also going to hit up a new market, which is men that are in the age range of having children or whatever it is. That is a new market and it is a new product.
This framework is called the Ansoff Matrix framework. It could be a helpful thing to walk through to consider the questions or the need for each of those quadrants to be done well before you move to the next one. And to understand as a business, particularly if you're bringing in a new category line or a new service offering, or you are trying to pitch yourself into the US market or the Asian market, how well have we created strong market penetration in where we are at right now before we go and launch into another market? What are the lessons that we can learn? What are the templates that we can pull together so that if we do launch into a new market, we have systems and processes and everything else to help support us? Like I said, I use it quite often and you can Google it, you can find a billion videos on it. It's a useful thing. If you are in that stage of your business, then definitely check out the Ansoff Matrix. We will link to it in the show notes and the show notes for this episode. You'll be able to find it over at mydailybusiness.com/podcast/333. Thank you so much for reading. I'll see you next time. Bye.
