Introduction to Ansoff's Product/Market Mix

The Marketing Mix: a strategic tool

The Product/Market Mix is a crucial tool for helping organisations to grow, strategise and market their products. Developed by Russian-American business manager Igor Ansoff and outlined in the Harvard Business Review in 1957, the model still remains an important framework utilised by senior leaders around the world today. 

The idea is simple: there are two variables that define an organisation's business development strategy. These are markets and products. In order to avoid stagnation, companies can work within existing markets and with existing products, or with new markets and new products, in any combination. However, the arena they choose will define the startegy they adopt. 

You can illustrate this idea with a diagram:

As you can see, each combination of new/existing products/markets relates to a quadrant, i.e. a strategy for business development. These are:

1. Market penetration (existing markets/existing products) – this strategy focuses on how you can sell more of your existing products to the same market segments. To do so, you may adjust your marketing strategy, reconsider your value proposition, keep stores open longer, etc.
2. Product development (existing markets/new products) – this strategy involves selling the same products but to different market segments. For example, you may expand abroad, or use different marketing channels to target new audiences.  
3. Market development (new markets/existing products) – this means to expand your product offering in the same market in which you currently operate. You may create a new product based on market needs, brand a white-label product, etc.
4. Diversification (new markets/new products) – this involves creating new products targeted at new market segments. For example, you may have identified that people in a different country or demographic are looking for a product that suits their needs. This may be the toughest strategy to adopt as you have to develop both a new product and a new strategy to market it, often outside your current target audience.   

You can use Ansoff's four strategies to direct your approach to business development, marketing and sales. However, before adopting any approach you should consider both the risks involved and the specific circumstances of your business. 

Do you have the resources to take on your approach? Do you have the expertise? Will the market buy your product? Do you truly know your value proposition? Make sure you have performed a full horizon scan and risk assessment before going ahead.