INMA_A01.QXD

Decision 1: Market and product development strategies

In Chapter 1, we introduced the Ansoff matrix as a useful analytic tool for assessing

online strategies for manufacturers and retailers. This tool is also fundamental to mar-

keting planning and it should be the first decision point since it can help companies

think about how online channels can support their marketing objectives, but also sug-

gest innovative use of these channels to deliver new products and more markets (the

boxes help stimulate ‘out-of-box’ thinking which is often missing with Internet market-

ing strategy). Fundamentally, the market and product development matrix (Figure 4.10)

can help identify strategies to grow sales volume through varying what is sold (the prod-

uct dimension on the horizontal axis of Figure 4.10) and who it is sold to (the market

dimension on the yaxis). Specific objectives need to be set for sales generated via these

strategies, so this decision relates closely to that of objective setting. Let us now review

these strategies in more detail.

1 Market penetration

This strategy involves using digital channels to sell more existing products into existing

markets. The Internet has great potential for achieving sales growth or maintaining sales

by the market penetration strategy. As a starting point, many companies will use the

Internet to help sell existing products into existing markets, although they may miss

opportunities indicated by the strategies in other parts of the matrix. Figure 4.10 indi-

cates some of the main ways in which the Internet can be used for market penetration:

CHAPTER 4· INTERNET MARKETING STRATEGY

Figure 4.10Using the Internet to support different growth strategies

New markets

Market growth

Existing markets

Market development strategies

Existing products New products

Product growth

Diversification strategies

Using the Internet to support:

• Diversification into related businesses


• Diversification into unrelated businesses


• Upstream integration (with suppliers)


• Downstream integration
  (with intermediaries)

Market penetration strategies

Use Internet for

• Market share growth – compete
  more effectively online


• Customer loyalty improvement – migrate
  existing customers online and add value
  to existing products, services and brand


• Customer value improvement – increase
  customer profitability by decreasing
  cost to serve and increase purchase or
  usage frequency and quantity

Product development strategies

Use Internet for:

• Adding value to existing products


• Developing digital products
  (new delivery/usage models)


• Changing payment models
  (Subscription, per use, bundling)


• Increasing product range
  (Especially e-retailers)

Use Internet for targeting:

• New geographic markets


• New customer segments