by: James Young
Using the Ansoff Matrix to Position Your Association for Growth
This article will focus on a single, powerful, commonly used tool called the Ansoff Matrix, which is a strategic framework that helps organizations identify growth opportunities.
I argue that most associations focus on bread-and-butter revenue by selling existing offerings (products like membership, publications, or events) to existing markets. This is ok, but not enough.
Most associations have semi-regular strategic plans – a roadmap to help navigate what’s coming – but few invest in product strategy in which we are challenged to make specific, focused choices that guide our identity, help us reach new markets and create new products, and invest in the right capabilities.
The product community® is a product development learning community designed specifically for associations.
Definition and Uses
“One is always at home in one’s past.”
Two assumptions serve as bookends for digging into the Ansoff Matrix:
- Associations lack a nuanced understanding of their target market.
- Members don’t want more stuff. They want connection and persistent, ongoing value to help them solve problems.
Associations tend to take their market for granted. That is, we have – by nature – a built in niche market. This is our comfort space.
As I wrote in an earlier article, the market for trade associations is generally industry-based: the American Trucking Association, Motion Picture Association of America, or the National Retail Federation. In contrast, the market for professional societies is largely (but not always) based in job category or calling: American Nurses Association, American Bar Association, or the American Society for Quality.
In using the Ansoff Matrix as part of a growth strategy, associations have lots of options. It pushes us to think creatively and strategically about whether we should invest in new markets, new products, or both.
The Ansoff Matrix, also known as the Product Market Expansion Grid, is a strategic tool used by all types of organizations to analyze and plan this growth. It helps associations explore different approaches to expand their offerings (products, programs, services) into new markets or to develop new offerings for the existing membership community.
Like other strategy tools, the Ansoff Matrix is not a silver bullet. I recommend using it in conjunction with other tools, some of which are listed here: the integrated cascade of choices (“playing to win”), the growth readiness framework, the product community® maturity model, or the value ladder.
Here’s a quick example of how the Ansoff Matrix would work for a fictitious association.
Imagine an association called “Sports Enthusiasts Association” (SEA) that focuses on promoting fandom in major sports. They primarily operate in a single city and have been successful in organizing local tournaments and events. However, they want to grow and reach a wider audience. Here’s how SEA could use the Ansoff Matrix:
- Market Penetration. SEA could start by focusing on increasing its market share in its existing market. They could achieve this by intensifying their marketing efforts, improving the quality of their events, or offering discounts and promotions to attract more participants. For example, SEA could launch a social media campaign to raise awareness about their activities and provide incentives for existing members to bring in new participants.
- Market Development. SEA could consider expanding its reach into new markets. Instead of limiting themselves to one city, they could explore opportunities to organize events in neighboring cities or regions. This could involve partnerships with local sports associations or setting up new branches. For instance, SEA could collaborate with sports organizations in nearby cities to organize regional tournaments or open new clubs in those areas.
- Product Development. SEA could also focus on developing new offerings to cater to the needs of its existing members. They could introduce new sports activities, training programs, or additional services related to sports, such as fitness classes or sports equipment rentals. For example, SEA could introduce a new program for youth athletes that provides specialized coaching and skill development opportunities.
- Diversification. Lastly, SEA could consider diversifying its services by targeting new markets with new offerings. They could identify other sports-related areas or interests that align with their mission and expertise. For instance, SEA could venture into organizing sports tourism packages, where they offer travel experiences combined with sports events or sports-themed vacations.
By using the Ansoff Matrix, SEA can evaluate different growth strategies and make informed decisions about how to expand their association. It allows them to assess risks, identify opportunities, and determine the best course of action to achieve their growth objectives.
We will now dig deeper into each of the four quadrants, starting with the least risky: market penetration or reaching existing markets with existing products.
Market Penetration: Reach Existing Markets with Existing Products
“Now, here, it takes all the running you can do to keep in the same place. If you want to get somewhere else, you must run at least twice as fast as that!”
The bottom left quadrant of the Ansoff Matrix, called market penetration, is the least risky and likely the most common for associations. The aim is to increase market share with our known target market. To penetrate one’s existing association with existing products, let’s consider these examples:
- Intensive Campaigns. The association can launch an aggressive marketing campaign to promote its existing products, attract new customers, and increase its market share.
- Loyalty Programs. Implementing member loyalty programs, such as offering rewards or discounts to the existing membership community, can encourage repeat purchases and increase retention.
- Discounts or Promotions. Temporarily reducing prices or offering promotional deals can attract price-sensitive members and stimulate demand.
- Strategic Alliances or Partnerships. Collaborating with other organizations can also help penetrate existing markets. Here’s an example:
- Joint Marketing Initiatives. The association can form partnerships with complementary organizations to cross-promote each other’s offerings. For instance, a fitness association could collaborate with a health food brand to jointly promote healthy lifestyle choices.
As I’ve suggested many times in this newsletter, promoting existing products to existing members will probably never be enough to sustain (no less diversify) revenue nor deepen connection. This market is typically finite and aware enough of your association to have already made a decision to engage or not.
It’s better to complement market penetration activities with some market development.
Market Development: Reach New Markets with Existing Products
“Who gets to define goodness? The customer, of course. The customer has the last word.”
Dan Ward, The Simplicity Cycle.
Market development focuses on entering new market segments with existing products. Consider the following examples:
- Regional Expansion. The association can explore opportunities to enter new regions or expand its presence in under-penetrated areas by leveraging its existing product offerings. For instance, an association could establish regional chapters to cater to local professionals.
- Geographic Expansion. An association that offers educational training programs for professionals in a specific industry may decide to penetrate new markets by expanding its services to different geographic regions. For example, if the association currently operates only in the United States, it could enter new markets by offering its existing programs in Europe, Asia, or other regions.
- Demographic Expansion. The association may target new customer segments within its existing market by tailoring its products to appeal to a different demographic group. For instance, if the association primarily focuses on providing training for mid-level professionals, it could develop specialized programs for entry-level employees or senior executives.
- Strategic Alliances. The association could form partnerships or alliances with other organizations to access new markets. For instance, if the association specializes in providing healthcare-related training programs, it could collaborate with a pharmaceutical company to offer joint programs that combine medical knowledge with industry-specific insights.
- Online Presence. By leveraging technology, an association could establish an online platform or learning management system to offer its existing products and services to a wider audience. This would allow them to penetrate new markets by reaching individuals who may not have access to their local, in-person programming.
Gaining new market share in associations is tricky. We’re typically dealing with a finite audience who has previous familiarity with your association and has already made a mental buying decision. Fair or unfair, this means we have to develop and execute a focused strategy to reach new markets on limited resources.
To balance our risk, we might also invest in creating some new products to reach our current membership community (though not assured, these products might also have some interest to new markets).
Product Development: Reach Existing Markets with New Products
“We rush toward complexity, but yearn for simplicity.”
Of similar risk to market development is product development, in which an association invests in new value creation and builds new products for its existing membership community. Like market development, product development is considered medium risk.
- Product Line Extensions. The association could introduce new products or services that complement its existing offerings. For example, if the association provides software training programs, it could develop a new line of training courses focused on advanced software applications or emerging technologies.
- Diversification. The association might expand into related industries by developing new products that cater to the needs of different customer segments within its existing market. For instance, if the association primarily serves healthcare professionals, it could introduce products targeted at healthcare administrators or patient advocates.
- Upselling or Cross-selling. The association could develop premium or advanced versions of its existing products to cater to customers looking for more comprehensive or specialized offerings. Additionally, they could introduce complementary products that enhance the value of their core offerings, encouraging customers to purchase multiple products.
- Innovation and Research. The association could invest in research and development to create groundbreaking products or services that address emerging needs or trends within its existing market. This could involve leveraging new technologies, incorporating AI or automation into their offerings, or introducing novel learning methodologies
Placing small bets and taking a balanced approach to innovation is how associations can win with the Ansoff Matrix. Therefore, a strategic mix of market penetration, market development, and product development will help to guide one’s association for focused growth and a persistently engaged membership community.
Diversification: Reach New Markets with New Products
“You cannot succeed in business without taking risks. It’s really that simple.
As we’ve suggested, diversification is investing in new products to draw and engage new markets. Of the four Ansoff Matrix options, diversification is the most risky. Here are some examples:
- Tangent Value. An association that specializes in fitness and wellness programs could diversify its offerings by developing a new line of organic health supplements. This would allow them to enter the health and wellness market, targeting health-conscious individuals who are seeking natural and holistic solutions to support their well-being.
- Tangent Customers. An association focused on renewable energy and sustainability could penetrate new markets by diversifying into the production of solar-powered consumer electronics. They could develop and market solar-powered chargers, portable solar panels, or solar-powered lighting solutions, targeting environmentally conscious consumers who are looking for sustainable alternatives.
- Software. An association that provides financial services and resources to small businesses could diversify by launching a new product line of business management software. By developing user-friendly and feature-rich software tailored for small and medium-sized enterprises (SMEs), they can tap into the growing market of business owners seeking efficient and cost-effective management tools.
- Deepened Trust. An association focused on mental health and well-being could diversify its offerings by developing a new product line of mindfulness and meditation apps. By leveraging their expertise in mental health, they can target individuals looking for convenient and accessible tools to manage stress, improve focus, and promote overall well-being.
In each of these examples, an association identifies new product opportunities that align with their core expertise and values yet allow them to enter new markets and diversify revenue. By carefully considering the needs and preferences of each possible target market, they can develop innovative products that meet the demands of these new segments.
Here is a more fine-tuned version of the Ansoff Matrix. By emphasizing market expansion and product expansion, it may help an association make more targeted risks with their innovation investments.
“Most innovations diffuse at a surprisingly slow rate.”
Like I claimed in my article on innovation within constraints, most associations should take a balanced approach to investing in innovation: 70% on core activities, 20% on adjacent spinoffs, and 10% on transformational innovation.
This remains true for utilizing a tool like the Ansoff Matrix to guide your association’s growth strategy.
I believe that true innovation – breakthrough ideas that transform our lives – is rare. In developing the product community®, I took a risk at working with associations: organizations who have a deep wellspring of ideas, lots of content, and built in niche communities, but who simultaneously struggle with strategic focus, realistic innovation, and achieving deep impact.
This much is true, however.
A shrewd, focused, collaborative investment in innovation is a shrewd, focused, collaborative investment in our shared future. It is how we will move the needle together.
Yes, great change is typically incremental, but these increments add up over time and become cumulative. Investing our innovation resources on new products and new markets serves our people and our interests.
The outcome is an exciting, focused, healthy association that solves problems and makes an impact in a thriving community.
About the Author
James Young is founder and chief learning officer of the Product Community®. Jim is an engaging trainer and leading thinker in the worlds of associations, learning communities, and product development. Prior to starting the Product Community®, Jim served as Chief Learning Officer at both the American College of Chest Physicians and the Society of College and University Planning.