In a simple and handy model of growth strategies, Igor Ansoff built a matrix that helps you focus on your company’s present and potential products and customers.  By considering ways to grow through existing products and new products, and through existing markets and new markets, he shows there are 4 possible product-market combinations.

So Which One Is Right For You?

Market Penetration – Selling the same products to the same markets, but going harder…

The least risky of the strategies as it leverages many of your existing resources and capabilities. Maintaining market share will result in growth and there may be existing opportunities to increase your market share if competitors reach capacity limits. However, market penetration has limits and once the market approaches saturation another strategy must be pursued to continue growth.

Market Development – Selling your existing products, to new markets…

The development for new markets for the product is be a good strategy if your core competencies are related more to the specific product more than to its experience with a specific market segment. Expanding into a new market typically has a higher risk than a market penetration strategy.

Product Development – Developing a new product to sell to your existing markets…

Appropriate when your strengths are related to specific customers rather than a specific product. You can leverage your strengths by developing a new product targeted to your existing customers. Similar to the case of new market development, product development carries more risk than simply expanding into a new market.

Diversification – A completely new product, for a completely new market…

The most risky of the four growth strategies since it requires both product and market development and may be outside your core competencies. It is a reasonable choice when high risk is compensated by the chance of a high return. It also has the potential to give you a foothold in an industry that you may not

We can help you identify the right strategy for your company and help you turn that strategy into action.  To find out how best you can grow your company faster, contact us today.