Igor Ansoff’s Product-Market Expansion
Grid
By Mohamed Refaat, MBA, CPHHA.
Healthcare marketers must strive to proactively monitor their surroundings to, among other things,
detect growth opportunities that can be exploited. The long term viability of hospitals, clinics, home
health agencies and other healthcare entities largely depends on the successful identification and
exploitation of growth opportunities. To capitalize on growth opportunities, marketers must
carefully formulate appropriate expansion strategies. Igor Ansoff’s Product-Market expansion grid
provides marketers with a very powerful and effecting tool for recognizing and evaluating these
opportunities. The product-market expansion grid consists of a vertical axis representing markets
(current and new), a horizontal axis representing products (current and new), and four cells that
identify the four basic growth alternatives: market penetration, market development, product
development, and diversification. This too assists marketers in the development of appropriate
expansion strategies.
Market Penetration
Market penetration is a growth strategy that seeks to increase the use of current product offerings by
current customers. Marketing techniques used to achieve marketing penetration include increased
advertising, identification of new uses for products, price reductions, use of incentives and so on.
Market Development
Market development is a growth strategy that involves the introduction of current products into new
markets. Current products may, for example, be placed in different geographic markets or directed
toward new demographic segments to stimulate demand and increase growth.
Product Development
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Product development is a growth strategy that involves the introduction of new products into
current markets. With this strategy, marketers focus their efforts on developing new goods and
services that will be attractive to current customers.
Diversification
Diversification is a growth strategy that involves the introduction of new products into new
markets. By focusing on new products and new markets, this strategy calls for organizations to
enter completely unfamiliar territory. Diversification is the riskiest of the four growth strategies.
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