Ansoff's product-market model is a simple model that many businesses use to organize and define their marketing strategy. It breaks marketing into two dimensions: Products and markets.
These two dimensions result in four possible cases to consider (and direct investment toward):
Current products in current markets is market penetration---trying to ensure that you reach as much of your current market with your current product as possible.
Current products in new markets is market development---trying to expand the customer base of your existing products.
New products in current markets is product development---making new products (or versions of products) to satisfy your existing customer base.
Finally, new products in new markets is diversification---expanding your business in fundamentally new directions, making new products and finding new customers for them.
Organizing thinking in this way can help businesses prioritize their investments and make sure they are not spending too little on one part of the market and too much on another.
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