Table of contents:-
- What is Market Development Strategy?
- Factors to consider for market development strategy
- Importance of market development strategy
- Common market development strategies
What is Market Development Strategy?
Market development strategy is a business growth strategy in which existing products are introduced to new markets. A market development strategy supports businesses in a growing period to recognize and enhance new sales opportunities for the current range of products in the otherwise untapped markets.
Market development is a strategic move to develop the current market instead of seeking a new market. The company searches for new customers to introduce the product to a varied segment of consumers with the aim of diversifying and expanding the sales.
The first part of the market development strategy is to perform a detailed market research. The motive of the research is to
- Do a segmentation analysis of the current market.
- Mark out the segments of the market that you want to approach. This is the target segment.
A target segment can be decided on the basis of demographic, customer needs, lifestyle, interests, and preferences of the new section of customers.
Factors to consider for market development strategy
Certain points are to be considered while making a market development strategy:
- Is the target segment ready for your product, do they need it?
- Is there any segment that you might have ignored?
- Is the company (or the concerned teams) prepared to undergo the market development process and is capable of implementing the strategies?
- What is the ROI? Is it profitable at the moment to explore the untapped markets?
Importance of market development strategy
The process of market development is very important for the growth of the business. It’s not safe to be dependent on a niche customer base, because if that slips then its a total downfall.
Market development divides and reduces disaster possibilities in many ways.
Market development strategy drives the market development process in a structured way involving risk management and in-depth market research.
Common market development strategies
- Geographic expansion: To develop your market, one way is to expand it geographically to gain new leads and opportunities. Research and then reach out to those areas where your product or service has not registered its presence. If the existing market is in one geographic region then analyse the market of another region, measure the risks and enter it.
- Pricing: Introduce offers and discounts to attract more customers and specifically those who are not the existing users or clients.
- Distribution: Create innovative distribution channels through which you can reach out to the customers.
- Attracting competitors’ customers: They are delivering the same product as you are, so to attract their customers to your side you need to provide better user experience, discounts or lower rates, better marketing.
- Branding: Another way to develop your market is to introduce a new brand for a specific target market.
- Product development: Tailor an existing product or even introduce a new one for a new market.
Q: What is meant by market development strategy?
A: Market development is a growth oriented strategy according to which the existing products are sold in an untapped group of consumers.
Q: When does a company implement market development strategy?
A: When a company wants to expand its market, to reach new customers of a different region, to attract new customers in the existing market, and to measure the risks and returns involved.
Q: What are the risks of market development?
A: Market development requires capital investment and resources. And, after that, it’s a larger process of striving in the new market, so if it doesn’t pay off then it’s a significant loss for the company.