Hello again, I’m Jim Glover, That Branding Guy, for Once a Day Marketing, where business takes shape. I just want to remind you that I am your marketing coach. I hope that you are taking to heart the ideas and inspirations that I provide and that you dive in a little bit deeper and make this content work for you.
Today is Strategic Tuesday and today our topic is “Product Strategy: Meeting Customer Needs.” There are many product strategies out there. Today we are going to start with the Ansoff Product/Market Matrix. This classic paradigm has been used by marketers for a long time.
I want you to think about your business. You have existing products in an existing market or markets. What we want to elaborate on is where existing products/markets intersect with new products and markets and development of new strategies. We are going to use the example of a taco stand on the corner as a business that is trying to attract new business through product and market strategies.
We’ll dive a little deeper into the Ansoff Product/Market Matrix. Let’s begin with market penetration. Now this is where you already have an existing product in an existing market. And that’s a good thing. You’re familiar with your product and you are familiar with your market. It will be easier to communicate and develop a strategy here.
Why might you use market penetration? You might want to gobble up a little more market share from your competition. They are trying to take your market away from you; you try to take it back. This strategy helps you grow your market share.
Now let’s take a look at our taco stand business. The owner has been selling his tacos on the same corner for a long, long time. So how does he launch a market penetration strategy? He might begin by just staying open late. It may be that customers are coming home and have a hankering for his tacos and he isn’t open. By staying open late all of a sudden these people who might have gone to another “open late” taco stand now come to him. He’s penetrating the market by that one simple strategy.
Another intersection of the matrix is market development. That’s where you have an existing product and you are trying to tap into new markets. You might use pricing or promotion strategies, or bring on additional sales people. You might have new distribution strategies where you are targeting customers in new places. You might revamp the whole look of your business or revamp the whole process of your business.
Now how about market development for our taco stand? Let’s say he’s on the same corner and has a certain flow of business every day selling his tacos. The owner notices lots of high school kids going by after school. He decides to create a promotion to attract some students to the stand and offers a FREE taco with a student body card. The promotion works and the students love it. So what does our high school student do? They tell friends who then tell their friends who buy tacos, then more and more tacos. Before he knows it every afternoon his little taco stand has attracted a whole new market for high school students. That’s good market development strategy.
Next is product development. This means you have an existing market but you are trying to push more product into that existing market. So what might you do? Let’s look again at our taco stand. It’s branded as a taco stand but what if he introduces burritos? All of a sudden his customers have more variety and may stop more often for something new. He, in fact, is increasing his potential business through product development. Keep this strategy in mind regardless of the kind of business you might have.
The last intersection of the Ansoff Product/Market Matrix is what’s called diversification. This growth strategy is where you create new products for new markets. This is the riskiest of all ventures because you don’t have a familiarity with that product or the success of that market. But it can payoff. Let’s look again at our taco stand. Let’s say that he is going to launch with new burritos and thinks that China is a great market. The owner determines a means to package up those burritos and ship them off to China. New product, new market. He still doesn’t know what the results might be but at least he’s trying to diversify with a new challenge or new venture like China. The payoff may or may not be there.
You should think critically of all these strategies, whether it be market penetration, product development, diversification or market development, as you move forward. Find out what’s going to work best for you and your business.
That’s our blog for today on Strategic Tuesday. Join me tomorrow for Action Wednesday. I hope you are now thinking about product strategy and how you can offer products that better meet your customer needs. I’m Jim Glover, That Branding Guy, for Once a Day Marketing, where business takes shape, and we will see you next time.