this is where you can use an approach like the ansoff matrix to think about the potential risks of each option, and to help you devise the most suitable plan for your situation. it has given generations of marketers and business leaders a quick and simple way to think about the risks of growth. it can help you weigh up the risks of your career decisions, and choose the best option as a result. product development, in the lower right quadrant, is slightly more risky, because you’re introducing a new product into your existing market. you can do this by finding a new use for the product, or by adding new features or benefits to it.
you’re trying to sell more of the same things to different people. conduct a risk analysis to gain a better understanding of the dangers associated with each option. you can make sure it really is the best one with one last step: use decision matrix analysis to weigh up the different factors in each option, and make the best choice. this is useful as it shows the difference between product extension and true product development, and also between market expansion and venturing into genuinely new markets (see figure 2, below). next, look at the risks associated with each one, and develop a contingency plan to address the most likely risks. subscribe to our free newsletter, or join the mind tools club and really supercharge your career!
market development and market penetration were two of four distinct company growth strategies identified by igor ansoff in a 1957 “harvard business review” article. market development is the use of an existing product or service offering to attract new customer market, whereas market penetration is an effort to dig deeper within an existing marketplace. increased market share is a common marketing objective of companies using this strategy. adding more convenient business locations or remote locations may also help you access more customers in the existing market. at some point, the additional customers you gain through more investment in marketing don’t provide enough return on investment to justify continuing with this strategy.
aggressive market penetration through competitive advertising methods may help attract some customers, but it can also lead to responsive attacks from competitors and, potentially, legal issues if you make untrue claims in the ads. as long as you have other potential markets, you can grow through market development. this is especially true when competitors haven’t already targeted the new potential market. the major risk of market development is that it typically requires capital investment in expansion, either to build new locations or to expand marketing efforts to new territories. if the new opportunity doesn’t pay off, the company wastes capital and resources it could have invested in other strategies. a local lawn service provider, for instance, may struggle to satisfy existing clients if he expands the business too far and has difficulty getting all of the work completed in a timely manner.
key points market penetration. product development. market development. diversification. product development and product diversification were the other two. market development is the use of an existing product or the ansoff matrix is a strategic planning tool that provides a framework in market penetration strategy, the organization tries, . the four strategies of the ansoff matrix are: market penetration: this focuses on increasing sales of existing products to an existing market. product development: focuses on introducing new products to an existing market. market development: this strategy focuses on entering a new market using existing products. the ansoff matrix is a strategic planning tool that provides a framework to help executives, senior managers, and marketers devise strategies for future growth. it is named after russian american igor ansoff, an applied mathematician and business manager, who created the concept.
market penetration: market share growth, customer loyalty improvement and customer value improvement. 2. while market penetration is the lowest risk growth strategy, market development is a close second this growth strategy focuses on existing products for existing markets. this involves the business aiming to increase sales,
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