How to Use the Product Market Matrix


Are you a business enthusiast looking for ways to market your product? Have you heard of the Product Market Matrix but aren’t sure how to use it? Don’t worry, this blog post is here to help! In this article, I’ll explore the ins and outs of the Product Market Matrix so that you can make the most out of your marketing endeavors. So let’s get started!


The product market matrix is a highly useful tool for businesses that can be used for both short-term and long-term strategic planning. The goal of the product market matrix is to help businesses decide which products have the highest opportunity for success, in what markets and which marketing initiatives should be undertaken to achieve maximum success.

At its core, the product market matrix helps business leaders analyze their current activities, plan for future decisions, and develop ideas about how best to use their resources. It is essentially a graphical representation of all the data points needed in order to make an informed decision about a specific tradeoff or strategy within a competitive market.

The matrix serves as a visual presentation of some of the most basic market competitive elements like demand, profit potential, cost structure, and target audience. By conducting an analysis of these elements within certain boundaries on the product/market grid, businesses can gain insights into which markets are potentially most profitable as well as understand trends that drive current and future consumer buying behavior. This will allow them to craft strategies around pricing, positioning in particular markets, segmentation and targeting potential consumers more adequately than ever before:

  • Pricing
  • Positioning in particular markets
  • Segmentation
  • Targeting potential consumers

What is the Product Market Matrix?

The Product Market Matrix is a simple but powerful tool that can be used by businesses to identify market opportunities and map out strategies for successful product launches. It is based on the concept of substitution, where different products can potentially compete with each other in the same market. The Product Market Matrix divides products into four types: Horsepower (high quality and performance offering); Standard (average quality and performance); Economy (low quality, but good value); and Value (low cost).

By plotting the type of product versus the market it’s intended for, companies get an easy-to-visualize look at how their product stands against its competitors.

A strategic model for innovation, the Product Market Matrix can help companies develop products that are low cost, yet innovative. Companies use this tool to identify weaknesses in their current product offerings as well as to discover ways to capitalize on missed opportunities. Additionally, it’s important for companies to use this matrix to analyze external sources of competitive pressure – such as customer feedback or industry input – before making strategic decisions about new product launches.

By using the Product Market Matrix in conjunction with customer feedback models and consumer research techniques, a company can ensure that they are properly positioning their products within the competitive landscape. It allows them to accurately measure where potential customers stand alongside existing competitors in terms of satisfaction levels. Ultimately, utilizing this tool will help combine various factors from different perspectives into one comprehensive strategy that is tailored specifically to a company’s target market needs.

Benefits of Using the Product Market Matrix

The Product Market Matrix is a strategic tool used to help businesses evaluate the potential and suitability of entering new markets or developing new products. The tool can help to assess the potential of a product in an existing market or the suitability of a market for a specific product. By analyzing and considering the four elements of market attractiveness, product development, competitive strength and company strengths, organizations can identify opportunities in areas that have the greatest potential for success. This comprehensive analysis can be instrumental in helping firms make informed decisions about their future development strategies.

The Product Market Matrix offers numerous benefits for businesses that are looking to grow their market share or enter new markets. These benefits include:

  • It offers an organized approach for assessing potential opportunities.
  • It allows companies to make more informed decisions about whether or not to launch certain products or move into certain markets.
  • It provides a visual representation of how the various factors interact with one another in order to determine optimal courses of action.
  • It helps minimize risk when launching new products or moving into new markets by allowing companies to identify both positive and negative aspects associated with certain decisions before implementing them.

Steps to Create a Product Market Matrix

Creating a product market matrix can help organizations determine the most profitable and strategic position for the organization amongst the competitive environment. Having a well-crafted product market matrix allows organizations to address questions about target market segments, competitive strategies, and differentiation approaches. There are four steps to creating a product market matrix.

  1. Research your competitors: The first step to creating a product market matrix is understanding your competitors’ approach to their respective markets. Assess their products, marketing techniques, and customer value propositions as well as their pricing strategy and promotions.
  2. Audience segmentation: Once you understand where the competition stands with regard to their respective markets, it’s time to consider your target audience’s needs. Segmenting users by gender, lifestyle, location can help customize your value proposition and trigger more successful buyer actions such as purchases or sign-ups that make customers more likely to return in the future.
  3. Organize data into clusters: Clustering together like data helps identify similarities between groups of customers that call for different products or services within the same business area or marketplace. This way you can create custom offerings that better suit specific customer needs thus leading them towards opportunities in which they can optimize discounts or improved services tailored for them individually.
  4. Analyze Data & Draw Conclusions: The last step is drawing a conclusion from analyzing collected information on competitor activities, target segments and their characteristics from which an appropriate strategic positioning of one’s brand in terms of products and markets could be devised by making adjustments where necessary in order to satisfy customer needs better than competitors do currently. With this information you are able develop an overall approach in regards to strategically positioning yourself amongst others within a given marketplace given all gathered data points within said created clusters based around segmentation.

Analyzing the Product Market Matrix

The Product Market Matrix is an analytical tool used to assess a company’s competitive position. It helps to understand the company’s competitive landscape and how product differentiation could be achieved. The Product Market Matrix graphically represents a company’s competitive position relative to its competitors and target markets within an industry.

The matrix is divided into four quadrants which represent the product/market positions:

  • Quadrant 1 – Emerging Technology and High Growth Markets
  • Quadrant 2 – Established Technology and High Growth Markets
  • Quadrant 3 – Established Technology and Mature Markets
  • Quadrant 4 – Emerging Technology and Mature Markets

Within each of these quadrants, businesses can identify their product/market position by considering both the degree of technology usage within their product as well as the size/growth rate or opportunity available in the external market. This analysis can help inform strategic decisions around market penetration, technology development, new product launches, etc. It is important to remember that no matter where a business falls within one of the quadrants, there are always strategies they can implement to capitalize on their current position or move into another quadrant.

Developing Strategies Based on the Product Market Matrix

The Product Market Matrix is a tool used to analyze product markets, evaluate and develop marketing strategies, and assess market opportunities. This matrix can help evaluate the attractiveness of different markets to an organization and determine what kind of strategy should be pursued in each market. The Product Market Matrix consists of four sections: growth rate, competitive intensity, economic viability, and knowledge level.

  • Growth rate measures the rate at which a market segment is expected to grow or decline over time.
  • Competitive intensity measures how competitive the environment is in that particular market segment.
  • Economic viability refers to the ability of a product market to generate revenue in terms of potential profits or return on investment.
  • Knowledge level describes how much knowledge an organization has about its target consumers’ needs and preferences when entering a product market.

Using this matrix allows companies to assess their potential success in each segment based on industry research data such as sales trends and competitor information when developing strategies for new products or entry into existing markets. Companies should then decide which segments they want to pursue by analyzing the four categories of the Product Market Matrix and evaluating where they have a competitive advantage versus their competitors.

Examples of Using the Product Market Matrix

The Product Market Matrix is a powerful tool used by marketers and product managers to identify the most profitable opportunities for investments and growth. The matrix requires four stages of assessment, with the goal of identifying markets that best match the product’s capabilities and resources. Once these markets have been identified, a strategic approach is needed to determine how to maximize the return on investment from each one.

Examples of using the Product Market Matrix include:

  • Analyzing various aspects of products or services (e.g., features, capabilities, performance).
  • Identifying potential new markets to target.
  • Examining existing markets where a company’s product can be strengthened.
  • Analyzing potential opportunities in adjacent markets within the same industry.
  • Assessing whether it is appropriate to develop new products or services in order to explore more attractive options in those other markets.
  • Investigating existing competitors’ marketing approaches in particular target markets.

Once all this information has been gathered, representatives from multiple departments within an organization can use it to collaborate on a plan for refining their existing products or developing entirely new ones for specific target markets. With a clear understanding of what makes each market special, as well as which features are required by consumers in that market, companies can craft tailored strategies with maximum impact and pricing leverage.


To summarize, the Product Market Matrix provides a basis for understanding existing markets and positioning new products appropriately. It can be used to segment consumers and to identify potential niches in the market. Moreover, it offers a starting point for considering key elements that span multiple markets, such as pricing scheme and promotion activity.

As part of your strategic planning efforts, it is important to consider both the positioning of your product in a market and the competitive environment. The Product Market Matrix will help you do this efficiently and effectively.