Customer Acquisition

Do you excel at customer acquisition?
A. No, we don’t know where to start.
B. We can be effective at generating leads, but do not do so consistently.
C. We appreciate that marketing is a ‘numbers game’ and we consistently spend time generating leads.
D. We are good at customer acquisition – proactively and consistently generating and converting leads.
E. We excel at customer acquisition – communicating our value proposition to new customers in targeted segments, building awareness, customising segment specific marketing campaigns, proactively and persistently generating and converting leads. 
[Score:  A=0, B=1, C=2, D=3 and E=4]
Why is this question important?

Successful businesses spend a lot of time thinking about how they can increase revenues and profits.  They’ll typically have many ideas about things they could do, including developing new products, opening up new markets, and launching new sales and marketing campaigns.

Using a strategic approach, such as the Ansoff Matrix, is very useful to screen your options, so that you can narrow these down and choose the ones that best dovetail with your strategy.



Ansoff Matrix

The Ansoff Matrix was first published in the Harvard Business Review in 1957, and has given generations of marketers and business leaders a quick and simple way of thinking about growth.

Also called the Product / Market Expansion Grid, the matrix shows four ways that businesses can grow, and helps people focus on the risks associated with each alternative.


Market Penetration

Here we market our existing products to our existing customers. This means increasing our revenue by, for example, promoting the product, repositioning the brand, and so on. However, the product is not altered and we do not seek any new customers.

Market penetration seeks to achieve four main objectives:

  • Maintain or increase the market share of current products – this can be achieved by a combination of competitive pricing strategies, advertising, sales promotion and perhaps more resources dedicated to personal selling
  • Secure dominance of growth markets
  • Restructure a mature market by driving out competitors; this would require a much more aggressive promotional campaign, supported by a pricing strategy designed to make the market unattractive for competitors
  • Increase usage by existing customers – for example by introducing loyalty schemes

A market penetration marketing strategy is very much about “business as usual”. The business is focusing on markets and products it knows well. It is likely to have good information on competitors and on customer needs. It is unlikely, therefore, that this strategy will require much investment in new market research.

Market Development

Here we market our existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region, are examples of market development.

There are many possible ways of approaching this strategy, including:

  • New geographical markets; for example exporting the product to a new country
  • New product dimensions or packaging: for example
  • New distribution channels
  • Different pricing policies to attract different customers or create new market segments

Product Development

Product development is the name given to a growth strategy where a business aims to introduce new products into existing markets. This strategy may require the development of new competencies and requires the business to develop modified products which can appeal to existing markets.

This is a new product to be marketed to our existing customers.  Here we develop and innovate new product offerings to replace existing ones.  Such products are then marketed to our existing customers.


Diversification is the name given to the growth strategy where a business markets new products in new markets.

This is where we market completely new products to new customers.  There are two types of diversification, namely related and unrelated diversification.  Related diversification means that we remain in a market or industry with which we are familiar.

This is an inherently more risk strategy because the business is moving into markets in which it has little or no experience.

For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it expects to gain from the strategy and an honest assessment of the risks.

Modified Ansoff Matrix

Some analysts use a nine-box grid for a more sophisticated analysis. This adds “modified” products between existing and new ones and “expanded” markets between existing and new ones.

This is useful as it shows the difference between product extension and true product development, and also between market expansion and venturing into genuinely new markets – see below.

A word of caution – the three “modified options” (in green) involve trying to do two things at once without the one benefit of a true diversification strategy (escaping a downturn in one product market).

customer acquisition-3