The product market expansion grid

1. The product market expansion grid
Prepared by:
Azizul Haque Bhuiyan
Roll number: 07
Batch: 58thB
Department of Business Studies
Dhaka International University

2. The Product Market Expansion Grid
The product market expansion grid, also called the ansoff matrix, is a
tool used to develop business growth strategies by examining the
relationship between new and existing products, new and existing
markets, and the risk associated with each possible relationship. The
matrix aids growth plans through the introduction of existing or new
products, in existing or new markets.

3. The product market expansion grid strategies
The Product Market Expansion Grid offers four main suggested strategies
Existing product New product
Market penetration Strategy Product development
Strategy
Market development
Strategy
Diversification strategy
Existing market
New market

4. Market Penetration Strategy:
Existing Products + Existing Markets = Low Risk
 The Market Penetration Strategy creates growth by focusing on introducing current
products to existing markets. In such instances, customers may be aware of a product
but for some reason are not purchasing it. This strategy is typically used to achieve one
or more of the following objectives.
 Increasing or growing the market share of current products with pricing strategies,
promotions, advertising and an increase in sales efforts
 Securing dominance of growth markets by identifying which markets offer the best
prospects for existing products
 Driving competitors out of a mature market with aggressive pricing and promotional
campaigns
 Increasing usage of a product by existing customers through special offers and loyalty
schemes

5. Market Development Strategy:
Existing products + new markets = some risk
 The market development strategy creates growth through the introduction of
current products to new markets. This strategy is used when a company has
identified markets that were previously unidentified or when it wants to expand its
market reach. Here too, there are a number of tactics to enter and develop a new
market for existing products.
 Focus can be turned to new and untapped geographical areas
 New pricing procedures can be used to attract new target audiences
 New distribution channels can be created to offer products in new ways and to new
customers

6. Product Development Strategy:
New Products + Existing Markets = Some Risk
This strategy is likely to be more expensive than the market focused
tactics and requires more time. Emphasis needs to be placed on a
detailed analysis of customer needs, research and development, and
early introduction to ensure products are first to market. The
company can use the following methods to stimulate growth.
 Adding new features to existing products.
 Innovative and new technologies can be added to products or
used to improve products.

7. Diversification Strategy:
New products + new markets = high risk
 The diversification strategy is used when new products are introduced
to new markets. Diversification is the most risky of all the approaches.
This strategy requires the highest amount of investment of both time
and resources.
 While this approach is likely to be the most costly, diversification
offers a company security and an advantage should it suffer in one
sector of the business because it can then rely on another. Ansoff
reinforces that this strategy will require the company to acquire new
skills, techniques and possibly facilities. Good feasibility studies and
research are key to ensure a winning approach.

8. Thank You