Key Idea: The Ansoff Matrix helps businesses choose growth strategies based on whether they are using existing or new products and markets. In IB exams, it is used to assess risk and justify strategic decisions.
Risk generally rises as a business moves from existing products and markets towards new ones.
🔒 Interactive diagram
Explore the labelled diagram, charts and maps for this topic in study mode.
📉 Lower risk strategies: **Market penetration —** existing products in existing markets. **Focus —** increase market share. **Methods —** promotion, pricing, loyalty. **Lowest risk —** known market and product.
📈 Higher risk strategies: **Product development —** new products in existing markets. **Market development —** existing products in new markets. **Diversification —** new products in new markets. **Highest risk —** both unknown.
Core structure (memorise)
- Market penetration — grow using existing products and markets
- Product development — new product for existing customers
- Market development — enter new markets with current product
- Diversification — new product in new market (most risky)
Risk logic
- More change = more risk
- Known market reduces risk
- Known product reduces risk
- Diversification is highest risk due to double uncertainty
Always LINK the strategy to the case. Do not just name the strategy — explain WHY it fits the business.
Compare strategies using risk: penetration = safer, diversification = riskier but higher potential reward.
Important: Students often confuse product vs market development. Ask: is the PRODUCT new or the MARKET new?
- Identify the strategy from the case
- Explain how it works
- Apply it to the business
- Evaluate risk and reward
- Compare alternatives if needed