Developing strategic direction is not simply throwing a dart at the dartboard, aiming in the general direction, and hope you hit the bullseye. Knowing what you are aiming for is critical. You have to know what objectives you are aiming to accomplish. Ansoff’s Strategic Opportunity Matrix details four options. Each of these options has specific courses of action to accomplish the objectives.
Market Penetration: This strategic option pertains to a firm focused on increasing market share among current customers. This is a low risk strategy with high growth potential, especially as supported by the 80/20 rule that 20% of your customers attribute to 80% of the revenue generated from a firm. This can be accomplished through volume discounts, customer loyalty programs, “secret menus,” targeted email and digital campaigns, targeted radio messages specifically aligning messages to a certain region or demographic, and more.
Market Development: This strategic option pertains to a firm focused on attracting new customers to existing product/service offerings. Initiatives may involve new-targeted direct mail or digitally targeted campaigns focusing on attracting new people. This can also be “refer a friend” campaign.
Product Development: This strategic option is aimed at creating new products for existing markets. Through market research and competitor analysis, opportunities can be mapped and then products created to meet demand in existing markets.
Diversification: This strategic option introduces new products into new markets. This can be considered a high risk strategy and can more a firm away from their core competency, but may be needed to diversify a portfolio and, thus, reduce long-term risk (“not having all of one’s eggs in one basket”). Yet, the costs in venturing in completely new directions, can be high and require venturing into “uncharted waters” where expertise may be lacking.
Most organizations are pursing more than one of these options at a time, but are carefully tailoring the messages to fit the objective. Furthermore, don’t be confused by the significant differences between “market penetration” vs. “market development.” Market development redefines the target market, whereas marketing penetration seeks to gain greater market share from an established customer base.
Overall, marketing objectives typically fit into one of these four options. Each of the options requires different messages and marketing initiatives. Having a clear understanding of which option is being pursues is critical to an aligned and successful marketing message and plan. ~ Written by: Sabrina Pack-PCM