Market development is a growth strategy that finds and creates new market niches for existing products. This article will define growth strategy, evaluate why it is vital, and then identify the key components of developing a good growth strategy before analyzing four marketing methods from the An off Matrix that could help firms grow. It is not easy to propel a business forward. Sixty-five percent of new businesses fail within the first decade, and just one percent reach a revenue of $250 million. While a lack of product demand, poorly managed marketing, or unclear finance can all lead to slow sales and even closure, a well-planned expansion strategy can help soften the blow. Measuring and analyzing data, decreasing costs, and focusing on new B2B marketing methods are all necessary to help firms thrive rather than simply survive. The purpose of a company's growth plan is business expansion. It is the process of defining in detail how you will defeat your competitors in a race and determining the most effective method of doing it. Furthermore, it may be applied in almost any aspect of marketing, including sales and product-driven expansion . An effective strategy consists of three components:
- A problem analysis,
- An overarching policy, and a
- Numbered list item concerted effort.
When establishing a diagnosis, consider the whole picture, which includes investigating your competition and evaluating how you stack up.
A frequent strategy is to enter a new market with caution. Many organizations are turning to market penetration tactics to increase sales of existing items in existing locations in order to increase their overall market share. Market penetration, also known as market development, is a strategy for customer retention and brand loyalty that employs marketing materials to engage customers who are already utilizing the product or service in issue. This can be performed in a variety of methods, such as offering discounts or bundles to lure customers away from competitors, or producing more high-quality leads through more innovation. You might also consider targeting your present clientele with exciting new offers. The company's expansion is difficult without a strategy for entering new markets. It can be catastrophic to rely too heavily on a small number of clients. A market development plan can separate and decrease the impact of potential disasters in a variety of ways .
Market development has enormous potential for reward, but it also carries a significant level of risk. To proceed with this plan, you must first ensure that you have sufficient finances and assets on hand. Market development, as opposed to market penetration, focuses on expanding or moving one's focus inside an existing market. It may be necessary to change your product to appeal to a different set of buyers, or it may be necessary to totally restart in a new market. Conduct extensive market research to discover market segments, which are subgroups of the target market that can be targeted more effectively utilizing the strategy's messaging and price. Location, age, money, and employment are just a few examples of identifiers that can be utilized to create these groups . When you've identified your target market, to develop a marketing and branding plan to spread the word about your current product range. Adding new features or benefits to an existing product may allow you to reach a larger audience and expand into new markets. Market expansion is now a collaborative endeavor between the product and marketing groups of Saabs. For this strategy to be successful, every new product or service must be on-brand and align with messaging goals; thus, internal alignment is critical.
New Product Development
Product development refers to growth strategies that focus on the creation and commercialization of new products. No, the purpose is not to boost sales by entering previously unexplored worldwide markets. Rather, it is about expanding your product line to attract more people in your current market. Consider a restaurant that specialized in ice cream as a dessert option. Including waffles on the menu may entice current customers to return. When deciding on new things, extensive customer research based on needs and competitor analysis is required. Cross-functional teamwork is required throughout product development for a product to realize its full potential .
Diversification, the fourth growth option, poses the most risk. Using this strategy requires you to enter a market with which you are unfamiliar and sell a new product. This could entail introducing your products to new markets and educating the local population on how they can profit from using them. It's dangerous to try this without the assistance of growth marketing experts, but the rewards might be considerable. Diversification can be an effective tactic in minimizing damage and preventing a company from failing when an industry is hit by a severe economic downturn or a corporation suffers a significant loss of market share in a critical division. When markets are turbulent and competition is fierce, many companies choose to strengthen their core activities while expanding into related areas. Nevertheless, it also allows an organization to score better in terms of customer-enticement and new production introductions .
In a nutshell, a market development strategy excels from assessing client data for marketing purposes as well as learning how to improve involvement from various groups. A well-crafted guiding policy describes and clarifies the processes required to achieve the intended end state for all parties concerned. Finally, the collaborative effort digs into the minutiae of strategic concerns, operational details, and institutional structure . Every growth strategy worth its salt should consider these three criteria and their individual parts. Market development refers to the process of growing sales of a current product line into undeveloped markets. This is a godsend for businesses looking to expand. It discovers and develops previously untapped markets as prospective revenue sources for the existing product range. The market's purpose is to strategically expand into existing markets rather than explore new ones. The business constantly seeks out new clients in order to reach a larger audience. Businesses use this strategy to expand into new markets and enhance revenue sources. The strategy for market expansion is launched after conducting extensive market research.
Examples of Market development
- Market penetration: Market penetration is a strategy used by companies to increase their market share by selling existing products to existing markets. This is done by increasing the number of customers, raising prices, or offering discounts and promotions. A company may also use this strategy to enter foreign markets or to gain a competitive advantage over its competitors.
- Product Development: Product development is a growth strategy that involves creating new products or services that meet customer needs. Companies can use this strategy to expand their product lines, reach new markets, and differentiate themselves from the competition. Product development can also help companies stay competitive in the market by providing customers with unique products or services.
- Diversification: Diversification is a growth strategy that involves entering into new markets or industries. This strategy can help companies expand their customer base and reduce their risk by diversifying their product portfolio. Companies can diversify by entering into new markets, launching new products, or developing new services.
- Market Expansion: Market expansion is a growth strategy that involves entering into new geographic territories. Companies can use this strategy to reach new customers and markets that may not have been accessible before. This strategy can also help companies increase their market share and expand their customer base.
Advantages of Market development
The advantages of market development are numerous and can help businesses grow and expand. These include:
- Increased Awareness: Market development helps businesses increase their visibility in the market. This can help increase brand recognition and loyalty, leading to more customers and higher sales.
- Improved Profitability: Developing new markets can result in higher profits as businesses gain access to untapped customer segments.
- Reduced Risk: By diversifying its market, a business can reduce its risk of relying on one market or customer segment.
- Increased Market Share: By targeting new markets, businesses can gain a larger share of the overall market.
- Improved Product Innovation: Entering new markets can spark innovation as businesses are exposed to different customer needs and preferences.
- Increased Networking Opportunities: Market development can open new networking opportunities as businesses connect with new customers and partners.
Limitations of Market development
- Market development is a costly strategy, as it requires a lot of money to create new market niches for existing products.
- It is also a risky strategy, as it can be difficult to predict how a particular market will react to a product.
- It is also a time-consuming process, as it requires considerable effort and dedication to research and analyze the market.
- It is also difficult to change a product to meet the needs of a particular market.
- Finally, it can be difficult to maintain a sufficient level of customer loyalty if the product does not meet the expectations of the market.
A company’s growth strategy can be implemented in many ways. In addition to market development, the following approaches may be used to increase sales:
- Customer Retention: A company’s current customers are its most important asset. Retaining customers is key to driving more profitable sales, as customers who have already bought from the company are more likely to buy again. Strategies such as customer loyalty programs and customer service can be used to ensure customers remain loyal to the brand.
- Market Penetration: Market penetration refers to selling more of the same product to existing customers. Companies can use promotional tactics, such as discounts and coupons, to increase customer demand for their products. Additionally, companies can use pricing strategies, such as lowering prices, to increase sales.
- Product Development: Product development involves creating new products or services to meet customer needs and desires. Companies should continuously innovate their products to stay ahead of the competition. Additionally, companies should conduct market research to better understand customer needs and develop more desirable products.
- Mergers and Acquisitions: Mergers and acquisitions can be a powerful tool for companies seeking to increase their market share. Companies can acquire competitors, allowing them to combine resources and increase their customer base. Additionally, companies can acquire other companies in order to expand into new markets or gain access to new technologies.
In conclusion, there are many approaches to increasing sales and growing a company. Market development is just one of these approaches; other methods, such as customer retention, market penetration, product development, and mergers and acquisitions, can also be used to help companies increase sales and grow their business.
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- Hussain, S., Khattak, J., Rizwan, A., & Latif, M. A. (2013). ANSOFF matrix, environment, and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2), 196-206.
- Loredana, E. M. (2016). The use of Ansoff matrix in the field of business. In MATEC Web of Conferences (Vol. 44, p. 01006)..
Author: Noé STEPHAN