Updated: Dec 20, 2022
Do you want to grow your food or drink business, but not sure how to go about it? The Ansoff matrix might be a handy way to think through the process.
The Ansoff matrix is a simple four box business model that starts with your current business in the bottom left box and moves through to finding more business from existing, more custom like the current business, then through to what else those people might buy (NPD) through to new products and markets (diversification). Key to making the process work is to ensure that you are honest about the growth plan and its costs.
Ansoff helps you address the key aims of the business, and makes you focus on what business you are in. Who are you selling to, how often do you sell to them, how could you get them to buy more or more often? Is it awareness, through advertising? Is it promotions to increase the weight of sales? Bigger sizes, multiple-packs, or even pack-functionality to make it win on convenience? Sometimes a pack format such as a new closure can increase the usage occasions (think sports-cap on a conventional bottle, making in-car usage or during sports easier).
Where will you find more customers like the ones you have? Is it a simple geographic area that you can extend into i.e. you know a wholesaler serves a certain geographic area, can you find another wholesaler offering similar customers in a different geographic area? That should offer incremental sales. Perhaps it’s more about the channels, such as retailers or e-commerce. Here we must be careful not to cannibalise our customer base by moving existing customers between channels, but equally, adding an e-commerce channel might access a new user base.
New Product Development
What else would your customers or potential customers buy from you? Does the brand or the products (e.g size, flavour, usage occasion) lend itself to being extended? This could be as crude as taking a breakfast-cereal and re-positioning it as a dessert with just a new cardboard box and different graphic to convey the new usage. You could even give it a whole new description so that the users don’t realise it’s the same product. Try reviewing the business' capabilities, what else can be made or filled on the same equipment, or slightly augmented kit, that your existing customers might buy? These days it could be the plant-based version of an existing product e.g. ice cream made with oat milk.
Lastly, if you diversify into other products or markets, does your brand carry some customers along to give you a head start? Think of a powerful trusted brand that can deliver diverse products on the strength of its reputation e.g. sports drinks that move into energy bars. Or something more diverse, a brand associated with technology perhaps becoming a functional food? If you are familiar with Porter's Five Forces model, then this exercise could include thinking about where your customers become competitors as they seek to diversify too. The Costa Coffee shops producing ready-to-drink flavoured milk on a license basis. Perhaps you can license in or out a brand to tackle a new market opportunity.