What is Product Market Matrix
The product market matrix is a strategic planning tool for determining where the company can be grown in the future. The product-market growth matrix (Ansoff matrix) provides four strategies based on the market and product, each of these categories represents the intersection of a strategy between products and other related markets.
The product-market matrix’s strategy includes market penetration, product development, market development, and diversification.
- Market penetration (existing products, existing markets) involves selling more existing products to existing markets.
- Product development (existing markets, new products) involves selling new products to existing markets.
- Market development (new markets, existing products) involves selling existing products to new markets.
- Diversification (new products, new markets) involves selling new products to new markets.
To implement the Ansoff matrix or the product market matrix effectively, the company that looks for growth opportunities needs to determine where is the greatest opportunity can be achieved at the lowest risk. To do that, the company needs to do research and analyze a lot of information about the market and the product.
Product market matrix is also known as the Ansoff matrix since the product-market matrix is developed in 1957 by Igor Ansoff.
- Product market matrix is a strategic planning tool for determining where the company can be grown in the future. They are includes market penetration, product development, market development, and diversification.
- The product market matrix also known as the Ansoff matrix and product market grid.
- Market penetration strategy focused on selling more existing products to existing markets.
- Product development strategy focused on selling new products to existing markets.
- Market development strategy focused on selling existing products to new markets.
- Diversification strategy focused on selling new products to new markets.
Selling more existing products to existing markets.
Market penetration strategies focus on selling more existing products to existing customers or finding new customers within the existing markets. This type of growth strategy often involves encouraging current customers to buy more each time they go to the store or buy more frequently.
For example, Pizza Hut tries to get existing customers to buy one more pizza with a sales promotion each month.
The market penetration strategy is the easiest strategy of the Ansoff product-market matrix for most company that looks for growth opportunity since the selling of the existing products to existing customers is much easier and lower risk than developing a new market.
Selling new products to existing markets.
Product development strategies involve creating a new product for existing markets. The company may try to find and satisfy the unmet needs of the existing customers to fulfill. For example, Pepsi and Coca-Cola launched a new flavor of cola.
The advantage of a new product development strategy is the trust and relationship between the existing customers and the brand. In most cases, this makes the customer easily go through the product adoption process and adopt the product than creating a new product in a new market.
Selling existing products to new markets.
Market development strategies focus on selling existing products to new customers. Market development is about finding new customers in new geographies and finding new customers in existing geographies. The targeted new customers could be of a different gender, age, region, or country.
However, acquiring new customers is not that easy because it is almost the same thing as creating a new product. New customers need to be taken through 5 stages of the product adoption process before they decide to purchase and adopt the product.
Selling new products to new markets.
Diversification strategies involve attracting new customers in the new market by offering new products that are unrelated to the existing products of the company. To put it simply, it is about selling new products to new markets. Additionally, diversification strategy also includes the acquisition of companies in a different market.
Diversification is the hardest strategy in the product market matrix (Ansoff matrix) to implement, this strategy is (almost) equal to start to a new business since the company needs to develop a new product and research for a new market.