Product/Market Grid
(Ansoff)

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What is the Product/Market Grid?

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.

Forum Start a new topic about the Product/Market Grid Write here. Ask a question or explain something. Current forum discussions about the Product/Market Grid: Ansoff Matrix Applications The Products/Markets grid helps in differentiating between game changing & orbit changing moves of an organisation from a strategy perspective.... 36   2 comments Turbulence, Planning and Paralysis by Analysis 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 wit... 15   How to Decide in Which Sector to Diversify? When a firm decides to diversify there could be several possible factors to take into account when making the choice for the business or industry in which to diversify. According to Neffke and He... 13   Diversification Types and Examples A business and marketing strategy that has been overlooked by some small businesses is diversification. Due to the Corona virus many SMEs are closed down and the probability of opening soon seems low.... 12   3 comments International/Global Expansion International or global expansion refers to the strategic initiative undertaken by a company to enter and establish its presence in international markets beyond its domestic or current operations. Thi... 10   5 comments How to Prioritize Business Growth Opportunities (Ansoff): The ICE Prioritization Tool The Ansoff Matrix can be a useful model to generate and communicate business growth opportunities. However, organizations need to keep in mind that there are several factors that might hinder companie... 10   3 comments

Courses about the Product/Market Grid. Beginners Course Advanced Course Course for Experts

Expert Tips Advanced insights about the Product/Market Grid. Here you will find professional advices by experts. Consultancy Tips Teaching Tips Practical Implementation Tips Typical Risks of a Diversification Strategy Marketing Strategy Typical risks of a Diversification strategy in the Ansoff Grid are: 1. Requires a company to acquire new skills, new te... A More Advanced Version of the Ansoff Matrix Product Development, Product Portfolio Management While his original Product Market Matrix had only two dimensions: 1. Product, and 2. Market), in 1987 Ansoff introdu... How to Find or Redefine Market Boundaries? Diversification In their book: Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, Kim and ... Must-haves of a Portfolio Strategy Product Portfolio Management, Best Practices, Product Strategy Ansoff mentions 4 components of a portfolio strategy: 1. (Geographic) Growth Vector: a graphical representation of the ...

Information Sources Various sources of information regarding the Product/Market Grid. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops. Ansoff Matrix Product Portfolio Good article on Ansoff Matrix by NGFL Wales Business Studies.... A Service-Oriented View on Marketing Service-Dominant Logic, Perspectives on Marketing Presentation about a service-dominant logic mindset in marketing, including the following sections: 1. Getting the logi... Diversification Strategy and Portfolio Management Diversification, Corporate Strategy, Portfolio Management, Corporate Center Presentation about diversification including many graphs and figures for clarification. The presentation includes the fo...

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