Ansoff's product-market matrix

What is the equation for market penetration?

Market penetration = existing products + existing markets

What is the idea of market penetration?

To increase market share in the current market

“A dealer already selling cocaine in Madrid nightclubs tries to increase sales by offering lower prices or recruiting more street dealers to reach more buyers in the same clubs.”

What way of expanding does this case describe?

Market penetration

What is the equation for market development?

Market development = existing product + new market

What is the idea of market development?

Idea: same product, new location or new customers.

“A group selling methamphetamine in one region expands into a new city or country while still selling the same drug.”

What way of expanding does this case describe?

Market development

What is the equation for product development?

Product development = new products + existing market

What is the idea of product development?

Idea: new product for existing users.

“A dealer who already sells cocaine to nightclub customers starts offering MDMA pills or ketamine to the same group of partygoers.”

What way of expanding does this case describe?

Product development

What is the equation for diversification?

Diversification = new product + new market

What is the idea of diversification?

Idea: new products + new markets.

“A group that previously sold heroin in one country starts producing and selling synthetic drugs in a different region where they have not operated before.”

What way of expanding does this case describe?

Diversification