Being an entrepreneur you to deal with many challenges and make small decisions, and those small decisive steps would determine the success of the organization. Like who to hire and when to share the responsibility, they may seem small steps. But they would impact maximizing your growth, sales, and pricing models.
But when you have a product/service and ready to grow your business you might use various strategies for the growth and development of your business.
Igor Ansoff mentioned four strategies for business growth;
- Market development strategy
- Product development strategy
- Diversification strategy, and
- Market penetration strategy
Today, we’ll be discussing market development strategy in detail with examples.
Table of Contents
What is Market Development Strategy?
Market development strategy falls under the category of business growth strategy, and it means introducing new existing and current products into the new market. It helps companies in the growing period to identify new opportunities and sell their current products in the new unexplored market.
For instance, a software house designed a new software product. Now, you have to find out the users of your products, so that you could target them by offering them your product. That’s how market development strategy works.
Importance of Market Development
Market development strategy helps companies and businesses to approach new customers in a properly planned way. When you expand your customer market, then it brings a lot of new opportunities in terms of more revenue, sales, and new leads. But it requires comprehensive market research that the new market would add some value.
Market Development Vs Market Penetration
The focus of the market penetration is to sell the current product stock to the existing market. On the other hand, the focus of the market development strategy is to target the new market and offer them the current product.
Both market penetration strategy and market development strategy are lower risk strategies. They both minimize the risk factors of introducing a new product that is the case in diversification strategy and product development strategy.
When a particular market is going through a saturation phase, then market penetration is a preferred strategy. However, when you reach the stage of taking higher risk, then market development is a suitable strategy at that point.
What to Consider You Developing a Market Development Strategy
There are many things to consider before implementing the market development strategy, and they’re as follows;
- Is it worth investing in the new market and approaching new customers?
- Do you have a bandwidth tool or a team that could measure the performance of the market development strategy?
- Do you a specific target market where you haven’t entered yet?
- Are they going to benefit from your offer?
- Do you have to launch a new product or modify the existing product?
Implementation of Market Development Strategies
Market development strategy would be different for various types of businesses. Therefore, you should implement this strategy in such a way that best suits your business operations and product and service.
New Geographical Markets
If your product/service was small, then expanding it into the new geographic global market would be the next step of your business. If you find out some emerging segments in your market, then you should carefully consider these points;
- Whether you could achieve any competitive advantage, whether the market has already been through the saturation phase,
- Does the market have enough value to invest your resources in the market expansion?
- Would your product be successful in the new market?
- Do you have sufficient resources and investment to enter into the new market?
New Demographic Markets
A new demographic market means studying a specific segment of the population and targeting it. For instance, you can specify and target men or women. The cosmetic companies have been focusing on men for the past 20 years. Earlier they used to target and focus only female segment of the market.
Up-selling to Your Existing Customers
You realize various new uses of your products and then promote them among the customers of your existing market. Human beings are very creative and they’re curious to learn new ways to get the job done.
If you think that customers are using the product, then you could be wrong. Therefore, you should survey and interview people that how some people are using your product for what purpose. It would give you new ideas to market and promote your product.
Attract Non-buyers in the current market
You could attract the non-buyers of your current market by offering new prices, speeding up the marketing and promotions, and providing free-trials. Such market development strategies help you to persuade non-buyers in the current market to try your product.
Target Your Competitors’ Customers
It doesn’t matter in whatever category you’re running your business, there would always be competitors. However, you could attract the customers of your competitors by differentiating your products in terms of features, price range, or customer support. All of these techniques would make customers switch their brands.
How Market Development Is Two-way Process
A business should analyze various segments of the market, and then you should finalize the segment that you want to target. The goal is to find out the new interested customers in the current market.
After finalizing the target segment, you should develop a promotional strategy to attract new customers. The Economic Times says;
The company “May have to take the support of both audio and visual media to push the product deeper into the market.”
The marketing team should also adjust the price to achieve a marketing competitive advantage.
Examples of Market Development Strategies
Poached Jobs is an online recruitment platform, it provides reliable talented candidates to businesses, companies, and managers. The platform follows the market development strategy. Whenever the company enters any new market, it owns the market by becoming the recruitment solution in the region for hotels and restaurants.
The recruitment company started its journey from Seattle and Portland. The platform then refined and developed its marketing strategy and went on to the bigger markets of Chicago and San Francisco. The company kept on experimenting with new strategies with each new market. Poached entered the New York market in 2014. The company spent the whole year of 2015 focusing on the one market, the focus was to establish growth, success, and credibility, and then move on to the next market.
The market development strategy helped Poached Jobs to stabilize its growth and focus on the current market one at a time.
Facebook started as a small platform for college students where they could share their headshot and check out who is more attractive. Today, we see Facebook as the world’s largest social media platform, and the platform is still expanding and entering into newer markets.
Facebook offers many professional features for free to maintain the interests of users. As long as, people stay on the platform, the company earns money by running ads. The platform keeps on growing with its existing product.
Uber is an online ride-sharing platform. The company has made significant growth for the last 10 years. It’s because of diversification (scooters, bike, food delivery, etc.) and market development strategy (luxury vehicles and ride-sharing). Online ride sharing started in San Francisco in 2010, and nowadays, it’s offering its service in more than 700 cities across the globe.