The Product Market Expansion Grid

Explained
The product market expansion grid is a framework for detecting intensive growth strategies for
companies looking for new opportunities to increase profits and sales. The product market
expansion grid was developed by Ian Ansoff.

This marketing strategy is structured on four steps. The first step in implementing the product
market expansion grid is to check whether a company can gain more share on the market by
using their current products on the current markets. This first step is called Market Penetration.
The second step involves company checking for new markets for their current products. This
step is called Market Development. Another step involves finding ways to expand the market
share by introducing new company products on the current market. This step is called Product
Development. If the previous strategies were not feasible the last step involves developing new
products for new market. This last step, called Diversification, requires a lot of efforts and
budget allocation.

Market Penetration Strategy:

When a company has a product is in the current market, its share on the market can still grow. To
increase current product’s market share can be used three major approaches:

1. The company can try convincing the current customers to buy more products.

2. The company can focus in attracting competitor’s customers.

3. The company can focus its efforts in convincing non-users to start using the product.

The market penetration strategy can be used by a company to find ways to better adapt to the
current market and increase its sales and profits. In the market penetration strategy the company
is increasing its marketing efforts in order to gain a bigger market share for their existing
products on the current markets. One of the best ways to increase product’s market share is to
attract customers from competitors and to find more potential customers for the existing
products.

Market Development Strategy :

A company can use three approaches to develop the market when is launching a current product
on a new market:

1. The company can try to expand its distribution channels.

2. The company can start selling the current product in new locations.
3. The company can identify the potential users of the current product on the new market.

Companies can find new markets for a current product by focusing on geographical criteria such
as city, region, state, or county. In finding new markets companies can also focus on
demographical criteria such as sex, gender, axe, social class, and others.

Product Development Strategy :

When a company launches a new product on the current market, it can use the following
intensive growth strategies:

1. The company can develop new features for the product.

2. The company can develop different product quality levels.

3. The company can improve the product’s technology.

A product developing strategy requires significant investments of time and money.

Diversification:

Diversification with new products launched on new markets can be achieved by:

1. Concentric Diversification Strategy: Developing new products for new market segments using
the earlier technology. That is called concentric diversification strategy.

2. Developing new products for new markets in a conglomerate diversification strategy.

3. Developing new products for old customers, using new technology. This is called horizontal
diversification strategy.