Interested in launching a watch brand and growing your business? There are a variety of ways to do so; but how do you know which strategy is right for your venture? A market product grid helps companies plot out their growth strategy and visualize the risks associated with expansion.
WHAT IS A MARKET PRODUCT GRID?
A market product grid, also known as an Ansoff Matrix or a product-market expansion grid, is a tool that businesses use to develop a growth strategy by considering new and existing markets, new and existing products, and the risks of each possible relationship.
The market product grid divides strategic outcomes by four major categories:
Market penetration: a business creates growth by bringing its current products to existing markets
HOW TO MAKE A MARKET PRODUCT GRID
The simplest market product grid uses two axes: the x-axis for products (new and existing), and the y-axis for markets (new and existing). To use the matrix effectively, business leaders must have a firm understanding of where the best opportunities lie given the company’s current position. Recognize how many resources you can expend, as well as what your risk tolerance is.
Typically, strategic leaders start in the market penetration quadrant, where they’re bringing an existing product to an existing market. This quadrant is considered the most obvious starting point for any company: it attempts to gain market share in an existing market. This approach “does not require the company to venture into unexplored markets and products. As a result, it provides a lower amount of risk because essentially the organization’s scope remains unchanged.”
However, sometimes increased competition or economic and legal constraints prevent a company from pursuing further market penetration. In these instances, a company might choose to pursue product development: bringing a new product to an existing market. This strategy is one level up on the risk scale. It involves diversifying to new products, but not to new markets; often, companies mitigate this risk by using the same core technology, instead of developing entirely new products. Likewise, this strategy is likely to be more expensive as new talent and tools may be needed to create a new product.
Lastly, the riskiest growth strategy for a company is full diversification: bringing a new product to a new market. This risk, however, can be offset by the potential gains. Diversification inoculates a company against economic upheaval; when one market fails, or one product goes out of style, the company is protected. Diversification may have the highest investment in terms of research, distribution, and marketing, but it can pay off big-time.
Does your market research properly to increase your ROI and make every dollar counts.
Make your dream watch and stay tuned.