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.
[Diagram: ansoff-matrix]
📉 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.
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