The Product – Market Matrix

A glittery Friday evening. Click. Click. Click. And pop!

Bottles of champagne were opened up and shared with the employees of Gringotts Ltd. Pictures were being clicked, and their respective social media handles were being flooded with them. Do you know the reason?

Gringotts Ltd. – a company which produces biscuits and owns a fast-food chain ‘Pinos’ – had a smashing success with the opening of 4 new stores in the city of Bangalore, India. The sales of their popular product ‘PinoCuits’ went up by 3% in this quarter, leading them to increase their market share in the biscuit industry.

The next steps for the company were to focus on bringing out new products (biscuits) for the existing Indian market and try to diversify and increase its product portfolio.

So, the management, in this case, would put the company in one of the boxes in the product – market matrix. The traditional one goes something like:

The Original

But.

I will give you the product-market matrix in another way. I’ll convert these blocks into the dialogues which you will often hear from your bosses regarding strategies.

Note: Go through the below matrix in the context of the traditional matrix. You’ll understand it better.

The New One

Now, this new matrix has four blocks:

  1. “Let’s Go Deep!”
  2. “I want to enter new markets and change the industry!”
  3. Why not launch a completely new product?”
  4. “We should change directions. Let’s move into new domains.”

‘Let’s Go Deep!’

You have a set product, which you already sell in an existing market. But you want to increase your sales and your market share. You layout extensive promotional campaigns, sales promotions, more personal selling and increase the advertising spend. Or you probably target those areas where you can drive away your competitors. There you have it! Think Puma & Big Basket.
Risk Level: Low
Existing Market – Existing Product – Market Penetration.

I want to enter new markets & change the industry!’

You have a set product, but now you want to expand your boundaries and sell your product through different ways to the customer. Or maybe you want to enter new locations. Or probably create new market segments to target new customers. Basically, you want to sell your already existing products into new markets. Think about IKEA entering India.
Risk Level: More risk than Market Penetration
New Markets – Existing Product – Market Development.

Why not launch a completely new product?’

Now here is some change. You are now tired of the same old product you sell. You want to develop a completely different product. Now you focus on selling new products into the markets you already are in. Because your competitors already are adopting this strategy, you have to remain competitive. So, you focus all your energy on innovation and R&D, and in knowing consumer behaviour and insights. Think about Reliance Jio.
Risk Level: High
Existing Markets – New Products – Product Development.

‘We should change directions. Let’s move into new domains!’

Think about Zomato. And its business model & revenue streams. Originally starting off as a restaurant discovery service, it has changed directions and entered domains like table reservations, live events, cafeteria business, wholesale retail and more.
Risk Level: Very High
New Market – New Product – Diversification.

Oh! By the way. This matrix is more commonly known as the Ansoff Matrix, in case your brain cells had started asking this fact.

This is how I would explain the matrix to anyone.

So, if you are in the management team of Gringotts Ltd., remember these new blocks and apply them.

Now coming back to reality. The next time you hear any of these lines, or somewhat similar lines, you’ll have an idea of what strategy to opt for. Also. The next time you explain Ansoff Matrix to anyone, keep in mind these new blocks. Trust me. It helps explain in a better way.

Till then. Leave your insights on how you would explain the concept in the comment box below, and probably we can have an updated article on it.

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