STRATEGIES FOR

GROWTH AND
DOWNSIZING
 Marketing has the main responsibility for
achieving profitable growth for the company.
Marketing needs to identify, evaluate, and
select market opportunities and lay down
strategies for capturing them.
 One useful device for identifying growth
opportunities is the PRODUCT/MARKET
EXPANSION GRID.
 Was created by the Father of Strategic
Management, Igor Ansoff, this is known to
be used by many Fortune 500 companies
such as Philips, IBM and General Electric.
Through his accomplished career and ground-
breaking books, Igor Ansoff’s contributions to
corporate strategic planning remain prominent
in academia and beyond. The Product Market
Expansion Grid is one such contribution to
corporate strategic planning that can be used
by any company looking to develop strategies
to grow a business.
What is the Product Market Expansion Grid?

 The Product Market Expansion Grid, also called the

Ansoff Matrix, is a tool used to develop business
growth strategies by examining the relationship
between new and existing products, new and existing
markets, and the risk associated with each possible
relationship. The matrix aids growth plans through the
introduction of existing or new products, in existing or
new markets.
FOUR MAIN STRATEGIES OF PRODUCT
MARKET EXPANSION GRID
1. Market Penetration
2. Market Development
3. Product Development and
4. Diversification.
 The Market Penetration Strategy creates growth
by focusing on introducing current products to
existing markets. In such instances, customers
may be aware of a product but for some reason
are not purchasing it. Therefore,

Market Penetration Strategy: Existing Products +

Existing Markets = Low Risk
 The Market Development Strategy creates
growth through the introduction of current products
to new markets. This strategy is used when a
company has identified markets that were
previously unidentified or when it wants to expand
its market reach. Here too, there are a number of
tactics to enter and develop a new market for
existing products.
 Focus can be turned to new and untapped
geographical areas
 New pricing procedures can be used to attract new
target audiences
 New distribution channels can be created to offer
products in new ways and to new customers.
Therefore,

Market Development Strategy: Existing Products

+ New Markets = Some Risk
 The Product Development Strategy is a
growth tactic used when a company
introduces new products into existing
markets. A company would typically use
this approach when current products are
no longer selling. New competencies and
skills may be required by the company to
successfully develop products.
 This strategy is likely to be more expensive than the
market focused tactics and requires more time.
Emphasis needs to be placed on a detailed analysis of
customer needs, research and development, and early
introduction to ensure products are first to market. The
company can use the following methods to stimulate
growth.

 Adding new features to existing products

 Innovative and new technologies can be added to
products or used to improve products
Product Development Strategy:
New Products + Existing Markets
= Some Risk
 The Diversification Strategy is used when new
products are introduced to new markets.
Diversification is the most risky of all the approaches.
This strategy requires the highest amount of
investment of both time and resources. Good
feasibility studies and research are key to ensure a
winning approach.
There are three diversification strategies that an organisation can
consider:
1. Concentric Diversification – leveraging a company’s core
technical know-how to diversify its current products into new
markets
2. Horizontal Diversification – the introduction of products that
are unrelated to a company’s core products to existing markets
3. Conglomerate Diversification – the purchasing of another
company in order to diversify

Diversification Strategy: New Products + New

Markets = High Risk
How to Use the Product Market Expansion Grid

To make the most of the Product Market Expansion Grid,

you’ll need to understand where your best opportunities are given
your current position, the amount of resources you can expend,
and how much risk your company is capable of carrying.
While the grid is useful for understanding how to think of
business growth options, it stops short of explaining what
actions you should take. Once you have identified your position
on the grid, what your internal capabilities are and how much risk
you can take on, the next stop is to conduct market research.
Adding in proper market research will transform this from a
theory to information you can take action on.
REFERENCES:

https://product2market.walkme.com/product-market-expansion-grid-
explained/
https://www.coursehero.com/file/p2urvcu/Developing-Strategies-for-
Growth-and-Downsizing-Marketing-has-the-main/
https://busy.org/@shoganaii/marketing-101-developing-strategies-for-
growth-and-downsizing