The Ansoff Matrix is a framework that provides four classifications of strategy. It's designed to help you work through potential strategic options and establish the future focus for your business. You can read more about this model in our guide to the Ansoff Matrix.
In this article we'll look at Market Penetration. It's the lowest risk strategy because it does not involve significant change for your business model or operations. Although it may not always be the box to ultimately focus on to ensure the future of your business, we would suggest it is always an important starting point.
What is Market Penetration?
Market Penetration is about digging deeper into your existing market by selling more of your current product or service. A Market Penetration strategy is focused on growing revenue by increasing market share.
It may be that, during these turbulent times (or any time for that matter), you are considering a Product Development, Market Development or Diversification strategy to bring about growth for your business or to ensure its survival. Those strategies are all about diversifying your operations to some extent.
However, you’ll see from looking at the Ansoff Matrix that those three strategies come with higher risk than the first box in the model.
After all, any diversification strategy is going to need funding of some sort, and your existing revenues and working capital are at least the easiest way to do this. Before & during any sort of diversification strategy, lots of businesses don’t focus enough on making sure they are doing a brilliant job selling their existing products to their existing customers – this is crucial as it provides important revenues that fund things.
So, especially at the moment with the turbulence going on, what should your business be doing to make sure you are maximising revenues from your existing activities to drive your growth or fund a more viable future?
What preparation should be done for Market Penetration?
When focusing on a Market Penetration strategy you need to revisit your customer and market assumptions on a regular basis and be prepared for tweaks and changes based on changing market influences, consumer behaviour and the political landscape.
Reassess who your core customer is
It may be that your old definition of who your core customers are, even a few months old, is now inaccurate as things have changed.
Reassess your core value proposition and messaging
Again, if your customers have changed then your value proposition and messaging will need to. Check this out!
Test out your revised messaging
Do this in small ways. Don’t go revamp the website, just test the messaging out in conversations to see if it gets traction.
Create a temporary price/offer
To support everything we suggest doing in this guide, why not sharpen your pricing or your offer in some way, for a temporary period.
Make sure out have some decent sales & marketing tools
You don’t need to go overboard, but you should have some basic CRM capability in place and perhaps be using some of the easier automation tools in it, even if it’s just message templating. You should be trying to drive some efficiency in what you are about to do.
Some preparation and a bit of organisation are key precursors to running successful campaigns which form the backbone of Market Penetration.
You’re now ready to focus on the Growth Tactics – download the guide below for more information.
Strategically this is all good practice, it will improve your business today and you can use this increased working capital to help fund any diversification that can help drive your growth tomorrow.