AI advisor. Alikhan
You can grow by selling more to the same customers, entering new markets or creating new products. The Ansoff matrix helps you pick a path and assess the risk.
Level: for beginners
Language: Russian
Duration: 1:50
This choice was first described by Igor Ansoff in a 1957 article for Harvard Business Review. He proposed a simple matrix of four growth options: selling more of the same product to the same customers (market penetration), selling an existing product in a new market (market development), creating a new product for existing customers (product development) and creating something new for a new market (diversification). The main idea of the matrix: the more you change at once, the higher the risk. That is why a new product for existing customers and an existing product for a new market are both considered moderately risky, while a new product for a new market is the riskiest.
The takeaway for you is simple: change one thing, not everything at once. Now, how to choose between the two options.
The first question: what is hitting a ceiling for you right now? If customers are satisfied but have other problems you could solve, grow through new products. If the product works well but the current market is nearly exhausted, grow through new markets.
The second question: what are you better at? Market development requires distribution and adaptation to local conditions. Product development requires R&D and engineering capacity. And diversification requires both, plus the organization's ability to change.
The third question: what risk are you prepared to take? With a new product for existing customers, the risk lies in execution: you know the customer but may get the product wrong. When entering a new market, it is the other way around: the product is familiar, but the customer still has to be studied.
And remember that the matrix shows the situation at a given moment. In fast-changing industries, today's bet on a new market may become ordinary growth in the current one tomorrow.
A good example is Netflix, which used both paths, but one after the other. In 2013, the company launched its first original series, “House of Cards,” which was a new product for existing subscribers. Reed Hastings later said that the decision to make the series was harder than the decision to expand globally. And in January 2016, Netflix expanded into another 130 countries in a single day to offset slowing growth in the US. Original shows became the foundation for the new market: according to Hastings, viewers in Spain and Italy watched them very eagerly, and this gave the company the confidence to launch with original content as the core of its offering. In other words, first a new product, and then new markets built on it.
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