What Are Matrix Design And Why Is It Important?
The Matrix, sometimes referred to as the Product/Market Extension grid, is an interactive tool used by many companies to analyze and design their plans for future growth. The future growth is the rate of expansion that a firm can anticipate seeing in the future. It is influenced by many factors like current market share, competition, and so on. This grid categorizes the products or services of a firm into sections or segments. The products or services are then sold or marketed to the segments with the corresponding description.
Matrix analysis is basically used in order to identify the different segments in a firm and the need for diversification. A firm then decides whether it needs to focus on one segment only or the whole market. The strategy here is to ensure that the firm focuses on the segment that is under-served and develop a product or service that can better serve this segment. On the other hand, if one looks at the matrix as a whole, then the company will be able to develop the products or services that will address all segments.
Matrix analysis helps in developing marketing strategies. Marketing strategies can be very complex. There are new products to be introduced, existing products to be re-introduced, or new brand strategies to be implemented. Any strategy adopted needs to address all these aspects. One important aspect that needs to be considered is whether the new product or the re-introduction of an existing product will be able to make a difference in the firm’s overall profit margin.
The concept of marketing a brand is not new. However, few firms have been successful in applying it in the past. Matrix modeling, hence, enables firms to adopt a well-developed brand image by selling its products or services in a way that makes a profit while still meeting the targeted goals of the firm. This process is referred to as price skimming. Price skimming involves a firm selling its product in a way that reduces costs while trying to maximize sales.
Matrix analysis in the context of pricing revolves around four different components. First, a firm needs to identify its target customer segment. Based on this, a firm can develop a series of factors that can influence how it will price its products. These factors could include product features, prices, service, and quality.
Next, a firm needs to identify the appropriate level of diversification. Diversification has four strategies. One strategy is to diversify by increasing sales volume. The other strategies involve reducing costs and/or introducing new products. The third strategy relates to maintaining a fixed mix of products within a particular pricing range.
A fourth strategy is to avoid the risk of product development. It’s a risk because new products can create significant challenges in the existing market. A firm can reduce this risk by investing in a series of test trials and pilot programs before introducing new products into the existing market. Matrix analysis can further be explained by adding matrix elements to marketing mix models such as marketing mix models (a series of selected metrics that are used to evaluate how marketing messages are presented to customers), customer segmentation, product development strategy, and customer preferences.
A final component of Matrix analysis addresses the aspirational brands’ response to market conditions. The analysis looks at brand performance based on the product and/or brand features it offers. The idea here is to determine the potential impact of a brand on customer preferences, brand value, and brand loyalty. This aspect of Matrix has strategic implications for two major reasons: identifying aspirational brands with the most potential; and measuring and evaluating the impact of a brand across the different product categories.