To answer this question, we first need to establish what an Ansoff Matrix is. In the most basic terms possible, an Ansoff Matrix is a grid that helps businesses to develop ideas that will increase their profits and gain them greater market share.
A basic Ansoff Matrix is divided into four quadrants: market development, diversification, market penetration and product development.
Marketers have identified several notable advantages to the Ansoff Matrix. Firstly, it is very simple to understand and use. This makes it easy for a representative of a marketing agency to explain their thinking to a client, who may understand little about marketing.
Being a visual aid, the Ansoff Matrix makes it simple to weigh up various options that may be possible. This matrix also provides an immediate indication of the risks associated with any strategy.
The flaws associated with the Ansoff Matrix relate to the information that the Matrix cannot provide, rather than flaws of the matrix itself. The first criticism is that the Ansoff Matrix ignores the activities of competitors, thereby creating unrealistic scenarios and putting a business at risk of operating in a "bubble" rather than considering external factors. In addition, the Ansoff Matrix is unable to factor in fluctuations in consumer opinions and needs. Lastly, the matrix does not provide a cost-benefit analysis of any option presented.
More than twenty years after the development of the Ansoff Matrix, Michael Porter developed "Porter's Five Forces", which I would argue is a fantastic tool, especially when used hand-in-hand with the Ansoff Matrix. The five forces which Porter states must be examined are: competitor rivalry, supplier power, buyer power, threat of substitution, and threat of new entry.
The simple SWOT analysis, examining strengths, weaknesses, opportunities and threats was developed by Albert Humphrey in the 1960s. While more simplistic than the other models discussed here, it provides a great start to any market research endeavor.