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If you run a business, you know that taking a product to market is one of the most challenging aspects of the job. Because it can feel like such a formless, challenging process, people have been fighting to bring some structure to it for years.
One of the most effective methods is the product market expansion grid. Used by companies to plan for expanding product range, entering new markets, or boosting the sale of existing products, this grid provides a tried-and-true roadmap that can help you succeed.
Here’s what you need to know.
What is the Product Market Expansion Grid?
Also known as the Ansoff Matrix (named after Russian business manager and applied mathematician Igor Ansoff), the Product Market Expansion Grid is a tool designed to help companies grow (1). It does this by examining the link between existing products and new offerings, new and existing markets, and the risk associated with the relationships between these various elements. The matrix aids growth plans by introducing new or existing products in new or existing markets.
While this doesn’t exactly sound revolutionary, the matrix works uniquely: it’s designed to allow companies to plot their new and existing products according to the markets they will be launched in. The matrix also considers the level of risk associated with a given strategy and provides it a corresponding spot on the grid. For example, developing a strategy that relies on existing products in existing markets is considered low-risk, while launching a new product in a new market is a high-risk venture.

When Should eCommerce Companies Use the Product Market Expansion Grid?
The beautiful thing about the product market expansion grid is that it’s flexible. It can apply to many different companies in many different eCommerce settings, depending on the circumstances. As a general rule, these are good times to consider product market expansion:
- Your company wants to grow or increase the market share of your current products via promotions, pricing strategies, increased sales efforts, and new advertising.
- You want to gain market dominance and drive competitors out via promotional campaigns and aggressive pricing.
- You’re interested in securing or maintaining the dominance of growth markets and identifying the markets and channels that provide the best prospects for your current products.
- You’re interested in increasing the usage of a product with your existing customers by providing them with loyalty programs and special offers.
- You have a niche product, and you’ve reached a limit on your market’s sales. You need to expand your market!
The Product Market Expansion Grid
The Product Market Expansion Grid is simple yet powerful. It works by offering four suggested strategies: Market Penetration, Market Development, Product Development, and Diversification (2). Here’s a breakdown of each:
Market Penetration Strategy
This strategy is considered low-risk, as it involves existing products and existing markets. This strategy generates growth by focusing on leveraging a company’s current products within its existing markets. In these instances, customers are generally aware of a product but are not purchasing it due to a flaw in the company’s marketing strategy (3).
Thus, the market penetration strategy focuses on the following:
- Using promotions, advertising, and pricing structures to increase or grow the market share for current products.
- Researching markets to identify which provide the best prospects and sales potential for existing products.
- Using competitive pricing and promotional/sales campaigns to push competitors out of existing markets.
- Providing loyalty programs and special offers to encourage existing customers to interact with a product more.

Market Development Strategy
This strategy involves some risk, as it leverages existing products in new markets. This strategy is ideal for companies that have identified previously overlooked markets or who want to significantly expand their market reach (4). The market development strategy utilizes the following tactics to drive results:
- Focusing on markets in new, unexplored geographical areas.
- Attracting new audiences through new pricing structures.
- Using new distribution channels to deliver products to customers.
- Leveraging advertising and content marketing to reach new audience segments.

Product Development Strategy
Like the market development strategy, product development strategy involves some risk. This one leverages new products in existing markets. This tactic is ideal for companies who want to launch a new product in an existing market.
It’s great for times when products that used to be popular aren’t selling any longer. Companies must approach this strategy with caution, though, since it tends to be more expensive and time-consuming than market-focused tactics.
To work, companies must collect detailed market analysis, including data on customer needs. This early research helps ensure products are useful and will stimulate growth.
The product development strategy uses the following methods:
- Taking existing products and adding new features or elements to them.
- Improving existing products through innovation. Improving existing products through innovation.

Diversification Strategy
The Diversification Strategy is the highest risk strategy in the product market expansion universe. Used when companies want to introduce new products to new markets, diversification requires a significant commitment of both time and resources.
Don’t let that stop you, though: while diversification is likely to be the most expensive approach, it’s also one of the most productive. By leveraging diversification strategy, a company basically “hedges its bets.” In other words, the company ensures that should its products suffer in one sector, it will be able to rely on another, less affected sector. Additionally, this strategy helps brands grow their skills, utilize new technology, and master data and advertising in a more functional way (5).
As it stands now, there are three separate, unique diversification strategies: concentric diversification, horizontal diversification, and conglomerate diversification.
- Horizontal Diversification. Horizontal diversification is the introduction of new products. These products are unrelated to the company’s primary product offerings and its current markets.
- Concentric Diversification. Concentric diversification leverages a company’s technical skill and experience to bring existing products to new markets.
- Conglomerate Diversification. Conglomerate diversification happens when a company buys another company to diversify offerings.

Bringing it All Together
While the four arms of the product market expansion grid are useful, there’s a time and a place for each, and understanding how (and when) to use them is critical to their success. To ensure this, you need a professional that can move fluidly through the different phases and considerations of the product market expansion grid.
As a general rule, full-stack marketing experts are best suited for this role (6). Because they’re “multi-lingual” when it comes to the technology and marketing strategies used by high-performing businesses, they’re the ideal team members to help you leverage different tactics (including advertising, content marketing, and market research) to expand your product’s market and increase sales (7).