4 Types of 
This page is prepared by Prof. Tim Richardson for his students.

This page last updated 2015 July 7

The Ansoff Matrix 
Named after Prof. Igor Ansoff 1918-2002

Ansoff created this matrix to teach his students about strategic management. Over time the "Ansoff Matrix" has been used to explain the 4 basic ways business can grow and expand in marketing

In traditional marketing courses we speak of the 4 Types of Opportunities to pursue in marketing.
They are
    o Market Penetration  ...sell more to existing customers.. increase market share within existing segments...  getting people to buy breakfast cereal for breakfast and late night snacks
    o Market Development ... sell to new customers ...could be new customers overseas, or new customers in a new segment
    o Product Development... sell to customers by changing the FABs (features, advantages and benefits) of the product.. changing the flavour, or packaging, or adding new sizes
    o Diversification.. sell a completely new product to a new segment, like Nike getting into hockey equipment, or Jeep putting their brand name on mountain bikes
Market Penetration  "Selling more products in existing markets"
Market Development "Selling existing products in new markets (either geographic or new segments) 
Product Development.."Selling new products in existing markets"
Diversification "Selling a new product in a new market"

Marketing 9th Ed. by Crane et al used Jan 2015 in several courses


Lets look at them in the context of marketing on the Internet, and considering the fact that because the Internet exists, totally new situations can be created.

pic submitted by Eddie
Eddie A. was in TCS 301 in March 2007

He wanted to earn some extra "class contribution marks" so he wrote a long section on the "4 opportunities" using the example of the iPod

Eddie's example was quite good so we have added it in to our material below

Market Penetration
Increasing sales by selling more of the product to the same people.
- you sell to 40% of your customers, and you now try to get those 40% to increase the rate of consumption
- using the web to give people ideas how to use more of a product so the company can increase sales through consumers increasing consumption.
- example - getting more people to buy breakfast cereal because you "market to them" that it is good for breakfast, and a late night snack, so you can sell more of the product in the group of existing customers
- or for a cell phone company, give the customers new features, so the customer spends more on their data plan and the company can make more profit per customer
Eddie wrote

When the IPOD was introduced to the market, the purpose was to out sell the MP3 Player, MD Player, CD player and other Music player devisers.

  • Their (Apple's)  target market was the people that already use portable music devisers, such as, MP3 players, CD player and other.
  • In addition, they had wide spread propaganda, internationally, that made the product well known among the population, most important, their target market.
  • Furthermore, with the internet evolution, they matched the customers’ needs with the benefits of the product. Advertising on the web, people started to acknowledge the features, and it took the IPOD to a different level. It made the product popular worldwide.
Market Development
Trying to increase the sales of a firm's products in new markets.
Penetrating the market means selling to more customers within your target market segment
- instead of getting to 40% of the customers, you now "penetrate" the market to get 60%
- usually this means trying to get everybody in the segment to be exposed to the product and requires intensive advertising
This can also mean taking your product from regional sales to national sales, or by going from national sales to international sales.
- using the web to sell existing products in new markets is accomplished by having features on the web site showing how the product can be used by a larger range of people (than the previous narrower demographic)
- market penetration is done by using the Internet to sell an existing product to the same customers - the emphasis being on using the new and unique aspects of the net to sell "more"
- example - getting people to buy breakfast cereal, who previously never ate much breakfast - sell breakfast cereal by targeting other cultures or sell breakfast cereal overseas
Eddie explains
  • IPOD started giving the consumers ideas of how the product can be used, such as, on sport activities (running/ training/ workout), on long trips (on the bus/metro/airplane), and relaxation.
Product Development
Means changing the packaging, developing additional flavours, colours and other FABs
- example, sell breakfast cereal with extra raisins so people who like raisins will buy the new box
- Coke, now Diet Coke, now Diet Coke Caffeine
- new SONY Walkman called "Memory Stick Walkman" that allows you to download music directly from the Internet
Eddie explains
  • After a while the IPOD start making different colors beside the traditional white; they had the pink (that attracted their target-women), black, green and much more.
Developing new products to sell to take advantage of the power and fame of your brand
- sell breakfast cereal, and make breakfast cereal bars for people who have no time to put the cereal in a bowl with milk
- Amazon.Com diversifying out of books to all types of products, eg. digital cameras
- Nike watches
Eddie noted
  • Because the company (iPod)  is so popular and well recognized in the market, they started building new products for those who are loyal to the brand. So, they start with IPOD Nano, Shuffle, speaker, earphones, cases, ITunes Store and IPHONE now.
The music industry is very competitive. In 2004 it seems as if every STAR is developing a clothing line, working as a model, trying to get a movie role, appearing at Super Bowl, buying a restaurant, etc.
Part of the reason Stars are doing this is to "extend" their fame and make money of different situations so if their core income is effected, they have something to fall back on - that is the basics of Diversification. Other times the reason why Stars diversify is for simple greed - they think their fame and profile is so hot that people will want to buy crap with their name on it, eg. Sean John, P. Diddy, Madonna

Thanks to Cory F.  in MRK 410 Feb 2004 for the hip hop - vodka info
Big thanks to Edilson A. in TCS 301 in March 2007 for writing the sections showing an example re: iPod

pic of Eddie when he was doing his class presentation in April 2007 - so ya'll know he's not a total gangsta


  Prof. W. Tim G. Richardson © www.witiger.com