What do you do when you’ve been successfully steering your company across the global market waves for quite a bit and are now longing for more? You go into the unexplored. You expand.
As daunting as this growth undertaking may appear, it is what stands between you and new business opportunities, increased profits and more customers. The Ansoff Matrix lists four strategies to expand, namely: market penetration, product development, market development, and diversification.
In market penetration strategy, you work on growing your market share while catering to the existing markets with your time-proof offerings. The market development strategy pushes your company towards new markets, expanding both geographies and clientele. Product development speaks for itself as you invest in improving your product or service line within the same market segment. Lastly, the riskiest path is diversification, meaning new offerings across new markets.
Shopify use case
Clear and concise, this matrix raises the question of being applicable to today’s triple V times, defined by volatility, variety and volume. Take, for example, e-commerce platform Shopify that has recently expanded into Shopify Email. The company’s chief product officer Craig Miller claimed to give the market “the first email product designed for e-commerce”. This sounds like a straightforward product development tale, doesn’t it?
The hailed email service is fully integrated with Shopify’s merchant store, enabling the company to sync their emails with the brand assets, product listing and original content. Michael Perry, director of product for marketing technology at Shopify, expressed the company’s hopes to become the expert for the clients by offering value-laid lists. These hopes are to be achieved thanks to an in-built business analytics feature that reports the type and number of emails that lead to transactions and identify new customer segments.
This last feature effectively blurs the line between product development and market development, as the two are closely knit together. In fact, in most cases you will expect a new product help you venture into an unfamiliar market, too. Now this last bit is by definition diversification.
Shopify Email is not the first fresh-of-the-oven product in Shopify’s basket. In September 2019, the company rolled out a sleek set of ad buying tools for its merchants under the name Shopify Marketing. Completely integrated with Microsoft Advertising, this brand software enables subscribers to create and manage ad campaigns automatically. This product piece, in turn, followed the company’s attempt in April to break into brick-and-mortar retail by launching a hardware lineup.
As this case study shows, brooding on terminology does not get you very far on your expansion mission. What does, instead, is innovation. Blurring the line between the digital and the physical is a trend worth pursuing as you seek to expand your business. In fact, vendors partner up with business owners to realize daring expansion endeavors by means of developing custom solutions.
This approach boasts some solid reason whys such as a custom fit, meaning this software responds to your particular business situation and is defined only by your wants and needs. Delivered tailor-made solution immediately adds a competitive edge to your operations if only because you are the only one in possession of this specific software. Finally, it is scalable, which means it is programmed to weather any coming changes and ready to accommodate your company’s growth. The downside is, of course, the cost of customized service.
In the end, whether you decide to stick to a particular Ansoff-devised strategy or experiment with your own expansion mix, be sure to encourage innovation and progress as in the words of great Benjamin Franklin, these are the two activities that give meaning to achievement and success.
Nikita Kotliarov is a business development manager at SmartexLab, a custom software development company providing innovative solutions to companies in financial and healthcare industries.