In the current competitive world of business, business survival depends on growth. Although companies tend to concentrate on how to make their goods or services better, it is also important that their market coverage is expanded so that they can experience sustainable growth. A Market Development Strategy is one of the best approaches to attaining this expansion.
A Market Development Strategy is associated with launching your old products or services to new markets, new groups of customers, or unexploited geographical locations. Such a strategy ensures that businesses touch on a greater number of prospective clients to drive revenue channels and online success in the long run.
Today, we are going to take a deep dive into what market development is, why it is relevant what the best practices of adopting a market development strategy are, and the advantages of such an approach. We will also be looking at some of the general problems that businesses encounter and the ways of overcoming them.
What is Market Development?
The growth strategy is known as market development, which involves the process of finding new markets and marketing the existing products or services. This may indicate going to new geographical areas, moving to new groups of customers, or using new channels of sale to acquire more customers.
The first major difference between market development and product development lies in the fact that an established product or service is already provided by the business. This will be in the quest of acquiring new customers who may have not been aware of your business but can use what you offer.
An example can be given to that of a company dealing with selling skincare products mainly in the United States which may need to use a market development approach where it will extend its products in other markets like Europe or Asia. In the same regard, a company that specializes in software may consider serving small and medium-sized businesses (SMEs).
Why is a Market Development Strategy Important?
Additional Income Possibility
Coming up with new markets or clients is an opportunity that creates revenue for businesses. The higher the number of customers you satisfy, the greater the possibility of improvement of profits.
Risk: Diversification of risk:
Through new markets, you manage to cut the reliance on your existing customers. This diversification assists in cushioning the business against economic rise or congestion on your initial market.
Brand Recognition and Loyalty Small-scale businesses create brand recognition and brand loyalty because they have a control system and an agency system.
Expansion to new markets is usually accompanied by increased exposure. When your brand starts to be recognized in different parts of the region, then customers will also be loyal to your brand, resulting in long-lasting and sustainable success.
Competitive Advantage:
A market development strategy would help your business stay in an advantageous position over other businesses, mainly when you are the first party in a market. This enables you to get the market advantage and before other competitors realize what has happened, you have taken the majority of the market.
Enhanced Innovation:
When you experiment with your product in new markets or with new groups of customers, you get useful feedback that can generate innovation. This assists in refining your products and services in a way that perfectly fits the needs of different customers.
Key Components of a Market Development Strategy
To come up with an effective market development strategy, consider these following important elements:
Market Research:
Any market development strategy is based on the extensive research of the market. Know the market forces, the customer demands, their buying behavior, and the activities of competitors. The barriers to entry like regulations or cultural differences should also be noted in this research.
- Market Research tools:
- Focus groups and Surveys
- Competitor analysis
- Customer feedback
- Industry reports
Target Market Identification:
You must be able to identify the new kinds of markets or customer groups to pursue. This may include the following:
- Domestic or foreign new geographical locations
- Other demographics (income, age, gender, lifestyle)
New (e.g. online, brick-and-mortar, and more) channels Having created the functionality, new possibilities are available. It is an opportunity to open new additional channels (including online, brick-and-mortar stores, and more).
It is important to pitch any of your offerings to the needs and wants of these new target markets.
Market entry strategy:
After determining your target market you need to make the right entry strategy. It can be five approaches to enter a new market:
- Exporting: moving goods to new areas.
- Licensing/Franchising: With this option, you permit local entities to sell your products under your brand.
- Joint Ventures/Partnerships: Going into a venture with local businesses.
- Direct Investment: Establishing itself in a different zone.
Your decision in terms of entry strategy shall be guided by factors such as cost, availability of resources, and overall intentions of the business.
Marketing and promotion:
Doing that you require a special marketing and promotional campaign to present your brand to the new market. This can include drafting messages that have not been used before or altering the existing marketing plan to suit the cultural or social norm of the new target market.
Examples Marketing Techniques:
- Campaigns on social media
- Influencer marketing
- Content promoting (article, videos, blogs)
- Paid adverts (Google ads, Facebook ads)
Product / Service Adaptation:
You may have to alter your product or service depending on the market you are getting into. This may entail a change of design, packaging, or feature to fit the local tastes or compliance with local laws.
Best Practices for a Successful Market Development Strategy
Local Adaptation Credence:
Markets are not the same and it is impossible that one strategy fits all the markets. You will need to be ready to modify products, pricing, and advertising to meet specific requirements of the new target market.
Make Local alliances work:
Instituting alliances with local companies would assist you to learn about how to approach the new market. Such collaborations can go ahead to give you the support, networks, and market insight needed to make an easy entry as well.
Establish a great brand awareness:
It is necessary to obtain visibility in a new market. Spend on branding and marketing approaches that will render your brand comfortable and acceptable to potential consumers.
Watch and Stick to Success:
Follow your performance in new markets using key performance indicators within your new markets, which can include sales growth, customer acquisitions, and market share. Be sure to assess the efficacy of the strategizing you implement regularly and make changes where needed.
Challenges in Market Development and How to Overcome Them
Cultural Barriers:
Differences in culture may be a problem particularly when venturing into international markets. All these differences may influence the purchase patterns, interaction, and even, product tastes. Address this by doing cultural research and hiring local talents who know the market.
Regulatory Issues:
Various nations have dissimilar guidelines on products, advertisements, and the running of businesses. Study the legal environment in new markets and ensure you consult the experts on the ground as the local players to understand the regulatory provisions.
Financial Risk:
The development of a market could be costly, and it could be dangerous to spend a lot of funds on building some market when nothing happens to the anticipations. It cannot endure much monetary risk, so, grow slowly, testing in pilot programs to do the necessary research first.
Competition:
There can be competitors in new markets. In order to establish a foundation, distinguish your brand by providing distinctive value statements or specializing in the needs of a specific category of customers.
Conclusion
Proper execution of market development strategy may prove as a milestone to the growth of your business. When you are able to know the market, determine your proper target audience, and make offerings that fit their need, you are in a position to achieve long-term success.
Although difficulties of cultural problems and competition are possible, they can be overcome through waging research, affiliating with companies, and making it specific which will lead to an easy market entry. Finally, market development gives you an opportunity to increase the customer base, reduce risks and commitment in addition to becoming more profitable, and as such ensure your business maintains a market in the very dynamic global market.
FAQs:
What is the role of market research in the market development?
Market research assists a business to get acquainted with the needs of the customer, the rival moves as well as the opportunities that exist in the market. This information is important in terms of making the right decisions concerning the introduction of new markets.
What are the typical market development strategies for entering a market?
The common entry methods are exportation, licensing/ franchising, joint ventures/ partnerships, and direct investment.
Is market development all about geographical expansion?
No, the market development may also be done by targeting new customers in the market, introducing new sales channels, or even selling your product in different forms.
What are the ways of measuring the effect of a market development strategy in a business?
Some of the measures that can be used to monitor the success of the businesses include the growth of sales, market share, the customers that they are acquiring, and brand awareness in the new market.
