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How To Grow Your Product Offering

This document discusses strategies for growing a product offering. It outlines Ansoff's Matrix, which categorizes growth strategies as market penetration, product development, market development, and diversification based on existing or new products and markets. Market penetration focuses on existing products and markets. Product development introduces new products to existing markets. Market development sells existing products to new markets, while diversification involves new products and markets, making it the riskiest strategy. The document analyzes each strategy and provides examples to illustrate when each may be applicable.

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Vinodshankar Bhat
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57 views2 pages

How To Grow Your Product Offering

This document discusses strategies for growing a product offering. It outlines Ansoff's Matrix, which categorizes growth strategies as market penetration, product development, market development, and diversification based on existing or new products and markets. Market penetration focuses on existing products and markets. Product development introduces new products to existing markets. Market development sells existing products to new markets, while diversification involves new products and markets, making it the riskiest strategy. The document analyzes each strategy and provides examples to illustrate when each may be applicable.

Uploaded by

Vinodshankar Bhat
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Brand & Product Management

How to grow your product offering:


The focus of this lecture is to learn how to grow your product offering. Imagine that you
have launched your first product and it has been a success in the marketplace. And now
your R&D team comes back to you with an idea for a second product. What should you do?
First, analyse your strategic options before investing any resources in it. Although this
sounds counter-intuitive, the most successful companies begin to develop products by
identifying customer needs.
They might be today's needs or future expected needs, based on trends or changes in the
marketplace. But nonetheless, customer needs. I encourage you to be strategic about
growing your offering. I will show you one of the more successful proven theories, which has
been around since 1957 and was developed by Ansoff Igor. Ansoff simplified the competitive
precision of firms by defining two dimensions. Products, what is sold. The market, to whom
they are sold.
Managing growth effectively required that new products fit within the firm's missions,
organizational strength, and existing products. Imagine a two by two matrix, on the x-axis,
you have product category. Which could be an existent or a new one. On the Y axis, you
have markets. Again, you can have existent or new ones. Ansoff suggested that there are
four basic formulas to grow your offer. And each of them is at the intersection of product
category and market.

 Let us begin with market penetration. Which is a name given to a growth strategy where
the business focuses on selling existing products into existing markets. Market
penetration seeks to achieve four main objectives, maintain or increase the market share
of your current products. This can be achieved by a combination of competitive pricing
strategies, advertising sales, promotion. And perhaps more resources dedicated to
personal selling. Another objective is to secure dominance of growth market.
 Also, you could restructure a mature market by driving out competitors. This will require
a much more aggressive promotional campaign, supported by pricing strategy. Designed
to make the market unattracted for competitors. Or you could increase usage by existing
customers. For example, by introducing loyalty schemes. A market penetration marketing
strategy is very much about business as usual. The business is focusing on markets and
products it knows well. And it is likely to have good information on competitors and
customer needs. This strategy works best in industries where economy scales apply.
When the firm's average cost of producing and distributing products decreases as the
size of its operation increases. To execute a market penetration strategy, the company
requires a dependable competitive position. To avoid likely retaliation from competitors.
 Let us talk about the second strategy. Product development, which is a name given to a
growth strategy where a business aims to introduce new products into existing markets.
This strategy may require development of new competencies and requires the business
to develop modified products. Which can appeal to existing markets. The strategy of
product development is particularly suitable for a business where the product needs to
be differentiated in order to remain competitive. A successful part of the development
strategy places the market emphasis on research, and development, and innovation.
Detail insight into customer needs and how they change. Being first to market. The
organization needs to develop modified products that appeal to existing customers. In
order to encourage them to spend more on these products. This strategy is likely to
develop new organizational competences and requires improved sales coordination.
Uncompetitive or immature products in the portfolio create risk that can be counter-
balanced by a strong customer focus and innovation processes. An example might be the
launch of the new versions of the iPhone or the Coke Zero.
 The third strategy is market development, which is the name given to the growth
strategy. Where the business seeks to sell its existing products into new markets. There
are many possible ways of approaching this strategy, including new geographical
markets. For example, supporting the product to a new country, new product dimensions
or packaging. For example, of having a large bottle of family Coke. New distribution
channels, moving from selling via retail to selling using e-commerce and mail order.
 Different pricing strategies to attract different customers or create new market
segments. Market development is a riskier strategy than market penetration. Because
you are targeting new markets. An example might be, when the iPhone began to sell in
China, later than in other western markets, or when it began to be sold online. Or Coke,
when it offered a large new family form of, like I said before.
 The last strategy is diversification. Which is the name given to the grow strategy where a
business markets new product in new markets. This is an inherently riskier strategy.
Because the business is moving into markets in which has absolutely little or no
experience. For a business to adopt a diversification strategy therefore, it must have a
clear idea about what it expects to gain from the strategy. And an honest assessment of
the risks. However, for the right balance risk and reward, a marketing strategy of
diversification can be highly rewarded. An example might be the iWatch or the iPad. The
selection of a gross strategy depends on your firms level of risk. It is current set of
products and markets and the organizational preference for either products or markets.
As a drawback the Matrix firms products and markets portfolio must be coordinated. But
it provides no insight on trimming products in markets. Which many times is necessary
Thinking of our lemonade business, I think it might be too early to begin launching other
products. But please keep this framework in mind when you finally decide that it is time.
 One crucial criterion for deciding which of the above strategy you want to follow is being
able to calculate the demand for your product. How do you do it? Watch the next
lecture.

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