Why a new approach to the product-market growth matrix?
Almost every textbook explains these concepts in a different way.
Almost every marketing textbook explains the product-market growth matrix in a different way, and many of the explanations are inconsistent or don't make sense. In a study of marketing textbooks,1 this is what we found:
In other words, not only did different authors interpret the product-market growth matrix in different ways, but the same authors often used inconsistent definitions and examples in their own textbooks!
Here are some examples. Aaker says that selling to nonusers is an example of market development but Guiltinan and Gordon say that selling to nonusers is market penetration. Lewison says that serving new groups of customers (new market segments) is market development, giving the example of of a fashion designer who develops a less-expensive line of clothing for the mass market, which surely is a strategy to "identify unmet consumer needs and develop new products to meet those needs," this being his definition of product development.
Dalrymple and Parsons say that "promotion of more frequent and varied usage among current users" (market penetration) involves finding and promoting new uses (italics added) among existing customers, which seems like it would be finding new target markets for the product, Lamb, Hair and McDaniel's definition of market development. For example, the makers of Silly Putty have found a new target market in adults who use the product as a stress reducer, so in this case the new use implies a new target market.
Aaker says that developing new products for existing markets such as Arm & Hammer introducing a new laundry detergent is product development even though laundry must be a new market since it is a new market segment, his definition of market development. Aaker further notes that developing new generation technologies is product development, but Booth gives the example of developing an entirely new product based on new technology as one showing "diversification" (product diversification).
Urban and Star describe "enter new markets with new products" (product diversification) as undertaking major product design and implementation programs, something that virtually everyone else calls product development, even them! Their definition of "new products to serve existing markets better" (product development) is "emphasis on product development," exactly the same thing.
For the most part, any discussion of product diversification in these textbooks is about corporate diversification or without any examples at all. And so it goes with the marketing textbooks.
Even the originator of the product-market growth matrix, Ansoff, is inconsistent. He describes market development as "a strategy in which the company attempts to adapt its present product line (generally with some modification of the product characteristics)—italics added—to new missions but then goes right on to describe product development as a strategy that "retains the present mission and develops products that have new and different characteristics such as will improve the performance of the mission." (p.114). To be fair, he's talking about different missions, but the fact of the matter is that everyone else is talking about product changes as the point of differentiation between the two concepts.
By introducing the concept of product diversification and refining each of the other definitions the product-market growth matrix is more understandable and usable.