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How to Grow Your Small Business with Ansoff Matrix
How to Grow Your Small Business with Ansoff Matrix
Feeling stuck? Here are 4 simple, proven strategies from the Ansoff Matrix to kickstart your business expansion.
Market Penetration
Sell More of What You Have, to Who You Already Know
This is often the safest growth strategy because you’re focusing on familiar territory: your existing products and your current market. The goal is to increase your market share and get current customers to buy more, more often.
Simple Examples:
- Launch a loyalty program to reward repeat customers.
- Run sales promotions or bundle deals to increase transaction value.
- Increase your marketing and advertising efforts aimed at your current customer profile.
Is this for you?
Your market is not yet saturated.
There is potential to increase usage from existing customers.
Your competitors’ market share is decreasing.
Product Development
New Stuff for Your Current Fans
Here, you capitalize on the strong relationship you have with your current market by introducing new products or services. Since you already know your customers’ needs, you can develop offerings that genuinely appeal to them.
Simple Examples:
- A local coffee shop starts selling its own branded mugs and coffee beans.
- A software company adds new, premium features to its existing application.
- A hairdresser begins offering new beauty treatments like manicures or facials.
Is this for you?
You have a strong understanding of your customer base.
Your industry is characterized by rapid technological changes.
You have strong R&D capabilities.
Market Development
Your Old Stuff, New Places
This strategy involves taking your existing products and finding new markets for them. This could mean targeting a new demographic, expanding to a new geographical area, or finding new channels to sell through.
Simple Examples:
- A brick-and-mortar boutique launches an e-commerce website to sell nationwide.
- A children’s toy company adapts its marketing to appeal to schools and daycares.
- A local brewery starts distributing its beer to neighboring cities or states.
Is this for you?
Untapped or new markets are available.
You have the production capacity to expand.
Your core business is profitable and can fund expansion.
Diversification
Brand New Stuff, Brand New People
This is the riskiest of the four strategies because it involves entering a new market with a new product. It requires significant investment and research, but it can also be the most rewarding, opening up entirely new revenue streams.
Simple Examples:
- A successful clothing brand opens a chain of trendy cafés.
- A technology company known for software starts manufacturing smart home devices.
- An automotive company ventures into producing electric bicycles.
Is this for you?
Your current market is in decline.
You have the capital to invest in a new venture.
There are clear synergies between your existing business and the new opportunity.
Which Strategy is Right for You?
Choosing the right path depends on your appetite for risk and your business’s current position. Start with lower-risk options and build from there.
Lower Risk, Steady Growth
Market Penetration and Product Development are your safest bets. You’re working with what you know—your existing customers and market—which reduces uncertainty.
Higher Risk, Higher Reward
Market Development and especially Diversification involve stepping into the unknown. These require more research and investment but can lead to exponential growth.
The key is to build a balanced portfolio. Use our Ansoff Matrix Strategy Builder to map out your ideas, assess risks, and create a clear, actionable plan.