1.6 Product-Market Expansion Matrix

Options for Growing a Business

Another useful way to think about growing a business is the product-market expansion matrix. Using products and markets as the two dimensions in the model, marketing managers have the following options:

1. Market penetration—selling more of the existing products in existing markets

2. Product development—introducing new products to existing markets

3. Market development—introducing existing products to new markets

4. Diversification—introducing new products to new markets

In 2015, Nike announced a bold goal to hit $50 billion in sales by 2020, while battling increased competition from resurgent Adidas and new pressure from Under Armour. Nike’s projected growth includes strategies in each area of the product-market expansion matrix.

Market Penetration

To achieve deeper market penetration, Nike expanded company retail stores, increased the number of authorized retailers, and developed e-commerce offerings. With this market penetration strategy, Nike seeks to sell more footwear, apparel, equipment, and accessories (existing products) to Nike consumers (existing market).

Product Development

Product development is at the core of Nike’s business. Indeed, Nike’s mission is to “bring inspiration and innovation to every athlete in the world.” Further, Nike claims, “If you have a body, you are an athlete.” So, Nike continuously develops new products for Nike consumers (existing market). For example, in January 2018, the company introduced Nike React, the latest cushioning innovation and significant breakthrough in footwear foam. This product is in response to athletes (current market) who want better cushioning, better energy return, lighter weight, and higher durability in footwear (new product).

Market Development

Nike seeks growth opportunities by entering new markets with existing products. Specifically, the company is expanding distribution in targeted geographic markets—Africa and the Middle East. For example, to stimulate sales of existing Nike products in South Africa, the company entered a partnership with the South African Football Association (SAFA) to provide footwear and apparel (existing products) for the South Africa men’s and women’s national football teams (new markets).

Diversification

Nike’s footwear business started in track and field when Phil Knight, a middle-distance runner at the University of Oregon, and his track coach, Bill Bowerman, started importing Tiger brand running shoes from Japan. The business expanded from running shoes to basketball shoes to footwear for other sports—new products in new markets. For example, in 2002 Nike entered the skateboarding market (new market) with the release of the Nike SB line of shoes (new product). Look for Nike to announce new footwear and apparel products for new markets to reach the $50 billion sales goal by 2020.