Understanding the Market Development Matrix for Business

Every marketer will face a different challange in executing their business strategy. There are many strategies changes today, from campaign strategy, launching challange, and product distribution.

If your busienss face a difficult obstacle, at least there is a strategy that needs to be improved. Marketing challange may come from how to create, distribute, and sell product within a platform.

Today, marketing is so dynamic, thus it's hard to identify which area to improve. But, the aim of strategy improvement is crucial to facilitate growth.

What is Ansoff Matrix?

Ansoff Matrix is a basic framework teached in business schools across the world. It can be a simple and intuitive way to visualize decision by management when considering growth opportunities.

This focus can be used as a common model. It aims to evaluate opportunity and improve revenue by showing alternative combination for new market (customer segmentation and geographic location) according to your product and services. It offers 4 strategies: market penetration, market improvement, product development, diversification.

Development Strategy in Ansoff Matrix

The implementation of Ansoff Matrix strategy or model has becoming a benchmark to determine market growth

1. Market Penetration

When using market penetration strategy, management is trying to sell more product to existing market. The common execution strategies are:

• Marketing improvement or efficiency on distribution process
• Price reduction to attract new customer segment
• Competitor acquisition in the same market

In other word, this concept is used to improve existing product to customers. It is usually done by attracting competitor's customer.

2. Market Improvement

In practice, market improvement strategy is usually less risky because it doesn't require significant investment in product research and development. This strategy allows management to utilize existing product to a different market with various approach:

• Aiming differenc customer segment or demographic target
• Regional expansion
• International expansion

An example for this is Lululemon who decide to aggresively expand to Asia-Pacific to sell their popular sporting products. Developing advertising and logistic infrastructure in international market is inherently risky, but the risk can be minimized through a proper road map.

3. Product Development

A strong business always listen and understand a specific customer target who has potential to expand their market. For instance, build brand loyalty.

For example, a brand produce popular hair products for 28-35 years old female. To create brand loyalty and popularity in this demographic, they massively invest in a new product line so this market will adopt it.

4. Diversivication

Relatively, diversivication strategy has the highest risk. In this case, you need product development and research. This is a high-risk high-return strategy.

Your business can obtain a whole new revenue opportunity or reduce company dependability to 1 product. It can be done by moving to a new market with a new product or services, increasing sales with existing customer, or acquisition.