The product market expansion grid was specified by the Ansoff’s matrix. The product market expansion grid is used for planning by a company when the company is looking to increase the sale of its products either by expanding product range or entering new markets. Thus, there are various strategies that the company can develop when it compares the product with the current market.
The product market expansion grid considers two main factors. The product and the market. The product can either be a current product or a new product. And the market can either be a current market or a new market. Thus, a grid is made, keeping in mind the two forms of products and the two forms of markets. This grid is the product market expansion grid. With the help of the grid, the proper market expansion strategy is decided. There are 4 main strategies of the product market expansion grid. These are mentioned below.
Market penetration strategy
Market penetration strategy is decided when the product is a current product in an existing market. It falls in quadrant 1. Thus, in such a case, the customers are aware about the product and due to one reason or another are not using the product. There are three main tactics which a company can implement to increase market penetration.
Market development strategy
The market development strategy is used when the product is an existing product but the market is new. This strategy falls in quadrant 2 of the grid. A company might decide to increase its territorial reach and therefore enter a new market. The new market may have tough competitors, or it may happen that the new company may be received very positively. In either of the cases, there are three main tactics which the company can use for market development.
Product development strategy
Product development is used when there is a new product which has to be introduced in an existing market. It falls in quadrant 3 of the matrix. This may be done because the companies products are not selling anymore or that the company has identified new segments which it had missed before and wants to introduce new product to increase product sales. There are majorly three tactics which the company can use for Product development.
Diversification strategy is used when a company enters new markets with new products. In such a scenario, the demands of the new market might be different from the current markets where the company exists. Thus, the company has to bring new products in new markets and hence the complication rises. In such a case, there are 3 different tactics which a company has to use to establish a diversification strategy.
Thus, there are many tactics and 4 different strategies for market expansion. In today’s world, the most commonly used strategy is Market penetration, because the market is slowly becoming a crowded place with products being introduced daily in existing segments. However, for market leadership, companies like apple and Samsung have demonstrated that either market development or product development is needed if you want to permanently get ahead of your competition.