Market Strategy in 3 Minutes - Minute 3
Minute 3: How Will Your Business Grow?
Understanding the possible growth options for your business is a fundamental part of your market strategy. Even if your business has unlimited investment you will still need to plan how you will grow your market share.
The good news is that you now have a good idea of what your potential market share is (TAM SAM SOM in Minute 1). Let’s now look at your options for growth.
In 1957, Igor Ansoff, a mathematician who was the founder of modern business strategic thinking, published his Ansoff Matrix. It’s still as relevant today and helps visualise simply how to think about business growth plans. Here’s his grid, with my translation of what he meant:
There are some universal truths about how to think how to grow your business, and unless what you do today is a disaster, they will apply equally to your business.
How To Use Ansoff’s Matrix
The easiest path to growth is by a) keeping existing customers and then b) selling more to them. Doing this well will grow your market share and create advocacy for your business products and services, i.e., people will tell other people about you. It’s the reason why a customer-centric approach, backed by excellent customer service, should be front and centre of everything you do (Minute 2: Know Your Customer).
By building on the advocacy you create, and a successful marketing plan, you will sell more of your existing products and services to new people (Arrow 1), who could be in existing or new markets which you identified using TAM SAM SOM.
All the while you will be thinking about new product and service features that your customers will value (Minute 2: Know Your Customer). This gives you the opportunity to market and sell ‘new stuff’ to existing customers (Arrow 2) and build again on the advocacy for your products and services which already exists, which, in turn, gains new customers.
Diversifying what you do (Arrow 3), and ignoring your existing and core business without creating a strong customer base, requires careful thought and planning and real investment.
For example, our health product company in Minute 1, couldn’t just enter the US market even though this is the largest global market for their category of health product. No one has heard of them, they have no customers and their product is not licenced by the Food & Drug Administration.
Ansoff’s Matrix matters for your business. More than a theory, it’s a practical guide that signposts pathways for how you can grow your business successfully backed by valued products and services, and great marketing.