The Product Market Grid was developed by Igor Ansoff in 1957 and first published by Harvard Business Review. I also published a post on what the Market Product Grid is and how Marketing plays a role in every stage of the four development strategies.
In short, the Product Market Expansion Grid/Ansoff Matrix suggests four strategies in relation to current and new markets, as well as existing and new products:
Product Market Grid Marketing Example
I’ve developed a hypothetical use case for Marketing teams they can find themselves in based on the Marketing Software solution.
Let’s assume the current software offering is a content management platform. It has a basic calendar and collaboration tools. As we all know this is a very crowded space and how do those software companies grow in the red sea of competition?
Strategy one could be Market Penetration. In this strategy, the company focuses on penetrating the existing market with existing products. The goal is to increase market share.
Marketing Plan for Market Penetration
The content management software (CMS Inc) wants to increase the market share. What does the marketing plan look like to achieve this goal with the market penetration strategy?
In the first step, CMS Inc really defines its current market aka buying persona. Based on the buying persona the marketing team can
- generate new leads,
- help to close existing opportunities,
- up-sell existing customers, or
- win back lost clients or opportunities
All of those tactics shouldn’t be rocket science for the marketing team. It may have to increase advertising budgets, focus on specific marketing channels (existing or new), and enhance collateral. It can also deploy email marketing campaigns to the existing database.
Marketing Plan for Market Development
The market development strategy is more interesting for the marketing department. The goal is to sell the existing products to new markets/audiences. This could be geographically or demographically.
For example, CMS Inc is mainly catering to the US market. It could expand to other markets like the UK or Australia. PR campaigns to enter the markets, advertising campaigns, and even SEO campaigns to change wording or spelling (personalize vs personalise). This also requires new keyword analysis and answer targeting.
Targeting new demographics can be interesting, too. Instead of targeting content planners and creators, CMS Inc could expand to Social Media marketers, copywriters, or freelancers.
Potentially new pricing structures to offer start-ups an incentive.
Marketing Plan for Product Development
Product marketing is its own beast: Creating sales material, website copy, email marketing, advertising, press releases, and more. Potentially, an entire re-branding. For example, if people associate CMS Inc with content calendars only, they will need a rebranding to be trusted with new products.
The product development strategy aims to market new products to existing markets.
The main goal of the marketing plan is to create an up-/cross-sell to existing audiences. For software companies that can be by offering different bundles of solutions.
Marketing Plan for Diversification
The diversification strategy is by far the most complex for the business, product, and marketing teams. It develops new products for new markets that are related (concentric diversification) or unrelated (conglomerate diversification) to the existing business model. In the concentric diversification, synergies can be leveraged to market the new products.
Sometimes related growth strategies are also called vertical, and unrelated/conglomerate strategies are referred to as horizontal diversification.
When entering new markets with new products, the marketing team needs to create awareness through PR, advertising, partnerships, or sponsorships. Often, existing databases can’t be used due to the low relation to the new products.
In our example, CMS Inc. offers a tablet computer that has no relation to the content management system its audience is used to. It wouldn’t be wise to heavily market to the existing contact database.
Marketing needs to research the buying persona, what they are interested in, what makes them purchase a product, and where they are. Knowing these details allows CMS’ marketing department to tailor their messages and introduce new products on the channels where their new buyers are.
While all discussed business growth strategies hold massive opportunities, they also come with risks. Every business strategy needs to consider the marketing efforts that come along with a fundamental business decision.
Sascha is a Lifecycle Marketing Consultant with over 8 years of digital marketing experiences in Silicon Valley, the UK, and Germany.
After leading the demand generation for a 100+ million company, he decided to venture out on himself. He’s now helping clients to attract and convert more leads and customers.
His main focus are SEO, paid media & marketing automation – all with the focus to tie marketing campaigns to revenue.
Sascha has been featured in industry publications.