Product/Market Grid
(Ansoff)

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Market Penetration, Market Development, Product Development, Diversification. Explanation of Product/Market Grid of Igor Ansoff. ('57)

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Ansoff Matrix Product MarketWhat is the Product/Market Grid? Description

The Product/Market Grid of Ansoff is a model that has proven to be very useful in business unit strategy processes to determine business growth opportunities. The Product/Market Grid has two dimensions: products and markets.


Over these 2 dimensions, four growth strategies can be formed.


four growth strategies in the Product/Market Grid

  1. Market Penetration. Sell more of the same products or services in current markets. These strategies normally try to change incidental clients to regular clients, and regular client into heavy clients. Typical systems are volume discounts, bonus cards and Customer Relationship Management. Strategy is often to achieve economies of scale through more efficient manufacturing, more efficient distribution, more purchasing power, overhead sharing.
  2. Market Development. Sell more of the same products or services in new markets. These strategies often try to lure clients away from competitors or introduce existing products in foreign markets or introduce new brand names in a market. New markets can be geographic or functional, such as when we sell the same product for another purpose. Small modifications may be necessary. Beware of cultural differences.
  3. Product Development. Sell new products or services in current markets. These strategies often try to sell other products to (regular) clients. These can be accessories, add-ons, or completely new products. Cross-selling. Often, existing communication channels are used.
  4. Diversification. Sell new products or services in new markets. These strategies are the most risky type of strategies. Often there is a credibility focus in the communication to explain why the company enters new markets with new products. On the other hand diversification strategies also can decrease risk, because a large corporation can spread certain risks if it operates on more than one market. Diversification can be done in four ways:
    • Horizontal diversification. This occurs when the company acquires or develops new products that could appeal to its current customer groups even though those new products may be technologically unrelated to the existing product lines.
    • Vertical diversification. The company moves into the business of its suppliers or into the business of its customers.
    • Concentric diversification. This results in new product lines or services that have technological and/or marketing synergies with existing product lines, even though the products may appeal to a new customer group.
    • Conglomerate diversification. This occurs when there is neither technological nor marketing synergy and this requires reaching new customer groups. Sometimes used by large companies seeking ways to balance a cyclical portfolio with a non-cyclical one.

Although the Product/Market Grid of Ansoff is already decennia old, it remains a valuable model for communication around business unit strategy processes and business growth. The Matrix is also known as: the Ansoff Matrix, the Product Market Expansion Grid, and the Growth Vector Matrix. Derek F. Abell has suggested that a Three Dimensional Business Definition is superior to the Model of Ansoff.




Product/Market Grid Forum (8 topics) Help
  Diversification in Africa: Why African Economies must Diversify
Many African economies have not diversified. Rather they are highly dependent on the production and export of one specific type of commodity. For example, between 1992 and 1997 more than 85 percent of export earnings of Unganda came from exporting co...
     
  Strategy for Expanding a Business
A person started a business of extracting metals. Soon it became a popular business. In order to expand his business, he needs to utilize a strategy and follow it.
What kind of strategy could he use?...
     
  Summary of STRATOP Model
Who can provide a short summary of the STRATOP model? It is supposed to be a model for designing effective product and communication strategies. Thank you......
     
  Product/Market Growth Matrix, Product Market Combination (PMC), PMG
The Product/Market Grid or Ansoff Matrix is also called: Product/Market Growth Matrix.
The 4 growth strategies are also called Product/Market Combinations (PMCs), although product/market combinations are also referred...
     
  Diversification and Globalisation
How can diversification be a tool for globalization?...
     
  Ansoff Matrix for Marketing Strategy
The Ansoff matrix clearly describes the marketing strategy and how to launch our product in the market and at what time....
     
  Turbulence, Planning and Paralysis
Igor Ansoff (1918-2002) was (one of) the first to recognize that the amount of strategic 'turbulence' (~pace of change) was increasing and to devise a structured strategic planning process to cope with this. But he also coined the humor...
     
  Ansoff Matrix Applications
The Products/Markets grid helps in differentiating between game changing & orbit changing moves of an organisation from a strategy perspective....
     




Expert Tips - Product/Market Grid Premium
  Typical Risks of a Diversification Strategy - Marketing Strategy
 
  A More Advanced Version of the Ansoff Matrix - Product Development, Product Portfolio Management
 
  How to Find or Redefine Market Boundaries? - Diversification
 
  Must-haves of a Portfolio Strategy - Product Portfolio Management, Best Practices, Product Strategy
 
  Pitfalls and Obstacles in Product Development Strategy - Product Development, Product Portfolio Management
 
  Diversification Pitfalls - Things to Signal and Avoid when Diversifying
 
  Challenging the Existing Strategic Logic - Market Development, Diversification
 
  Typical Risks of a Market Development Strategy - Marketing Strategy
 
  In Which Direction Should we Grow our Portfolio? - Portfolio Strategy, Innovation Strategy
 
  Typical Risks of a Market Penetration Strategy - Marketing Strategy
 
  Determining the Optimal Breadth of your Product Portfolio - Product Portfolio Analysis
 

Resources - Product/Market Grid Premium
Ansoff Matrix - Product Portfolio
Diversification Strategy and Portfolio Management - Diversification, Corporate Strategy, Portfolio Management, Corporate Center
The Importance of Noncustomers - Market Research, Customer Strategy, Innovation Strategy, Customer Survey Pitfalls
Product/Market Grid Diagram - Product Development
 

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Compare with: Three Dimensional Business Definition  |  Blue Ocean Strategy  |  Positioning  |  Relative Value of Growth  |  Porter Competitive Advantage  |  Parenting Advantage  |  Core Competence  |  BCG Matrix  |  Growth Phases  |  Distinctive Capabilities  |  Organizational Configurations  |  3C's


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