Product Development Matrix

The Product Development Matrix is a strategic tool used to evaluate and guide the development of new products. It helps businesses decide whether to introduce new products to existing markets, develop new markets for existing products, or both. The matrix is divided into four quadrants, each representing a different strategic approach.

At a very high level, the Product Development Matrix is used in the context of business, marketing, strategy.

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What is the Product Development Matrix?

A visual explanation is shown in the image above. The Product Development Matrix can be described as a matrix with the following quadrants:

  1. Market Penetration: Increasing sales of existing products in existing markets. Example: Boosting sales of a popular smartphone model through a marketing campaign.
  2. Product Development: Creating new products for existing markets. Example: Developing a new smartphone model to appeal to current customers.
  3. Market Development: Entering new markets with existing products. Example: Launching the current smartphone model in a new country.
  4. Diversification: Developing new products for new markets. Example: Introducing a new line of wearable technology in a new geographic region.

What is the purpose of the Product Development Matrix?

The Product Development Matrix, also known as the Ansoff Matrix, is a strategic planning tool that provides a framework for businesses to devise strategies for growth. The matrix is divided into four quadrants, each representing a different strategy for product and market development:

  • Market Penetration: Focuses on increasing sales of existing products in existing markets. This can be achieved through marketing efforts, price adjustments, or improving product features.
  • Product Development: Involves creating new products to serve existing markets. This strategy is often used when a company has a strong market presence and wants to leverage its brand to introduce new offerings.
  • Market Development: Entails entering new markets with existing products. This can involve geographic expansion, targeting new customer segments, or exploring new distribution channels.
  • Diversification: Involves developing new products for new markets. This is the most risky strategy as it requires both product innovation and market exploration.

Each quadrant represents a different level of risk and potential reward. Companies use this matrix to assess their current position and identify opportunities for growth, helping them to allocate resources effectively and make informed strategic decisions.


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What templates are related to Product Development Matrix?

The following templates can also be categorized as business, marketing, strategy and are therefore related to Product Development Matrix: Product-Market Matrix, 4 Ps Marketing Mix Matrix, AI Capability-Value Proposition Alignment Matrix, AI Innovation-Value Alignment Matrix, AI Maturity Matrix, AI-Value Proposition Alignment Matrix, AI-Value Proposition Matrix, AIDA Marketing Matrix. You can browse them using the menu above.

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