Ansoff's product/market matrix

Ansoff's product/market matrix is an accepted way of identifying and categorising market and product developments and opportunities. Amway makes good use of the technique.

The matrix identifies various strategies open to organisations, and splits them into four categories. For example, when selling existing products to existing markets, organisations can look to improve their penetration of that market, and so gain a larger market share.

Where a company introduces new products into its existing markets, this may give it competitive advantage over its rivals through product improvement.

Market development involves taking existing products into completely new markets eg finding new markets overseas. Better customer targeting, further research and market segmentation often help firms to identify these new markets.

Diversification, on the other hand, involves moving into new products and new markets at the same time. This may involve a complete shift away from core activities into some other form of related activity. It represents a step into less familiar, perhaps even unfamiliar territory.