Published: February 28, 2022
Today’s competition is fierce. So, how to keep up with it, maintain your customers’ attention, and achieve more? The answer is simple — market strategy development. Every business must have an effective market strategy to keep up with the competition.
Our expert guide will walk you through the process of devising one, provide you with examples, and offer you some tips for effective implementation.
Let’s dive into it!
What’s a Market Development Strategy?
As the name suggests, it’s a strategy that companies and organizations develop to introduce their products or services to new markets they haven’t broken into yet. It’s an opportunity for growth and expansion into so far unexplored areas.
In a nutshell, it’s the expansion of your total addressable market (TAM).
Devising a market development strategy can be an arduous methodological process, even if your products are already successful in the existing markets.
But when done right, it can quickly push your company in the right direction — towards growth at an incredible pace and increased revenue.
Market Development Strategy Examples
The primary goal of market development strategies is to break into new markets with new or existing products or solutions.
Here are some examples:
One of the most popular ways to expand your market is to aim outside your current location, targeting new regions both nationally and internationally. This strategy is effective for both online and brick-and-mortar businesses.
Many big players (e.g., Amazon, McDonald’s, The Home Depot, etc.) go for global or international expansion and expand their markets outside their home country.
Allowing small business owners to use your brand and trademark is one of the low-risk market development strategies. Typically, franchisees pay a fee to the franchisor upfront to gain the rights to operate under their brand.
Sometimes companies expand their business by creating new products and sometimes even by entering a completely different industry. While this may be a high-risk product development strategy, the outcome can be more than rewarding when done right.
There are two ways of implementing this strategy:
1. Unique Product Diversification
Some businesses break into a new market by creating entirely new unique products different from anything currently offered in the industry.
2. Similar Product Diversification
In this approach, companies expand their reach and target new audiences by creating new products using raw materials or by-products of goods they sell.
Attracting Competitors’ Customers
To successfully implement this market expansion strategy, you could:
- Offer irresistible discounts and deals
- Set yourself apart by providing an unrivaled user experience
- Offer lower prices
- Increase your marketing efforts, etc.
You can attract non-users by offering free trials or starting outreach programs through email or phone.
How to Develop a Market Development Strategy
Now, onto the main event.
Creating a market development strategy is a methodological process. You should customize it to suit your particular business needs to implement it efficiently.
Business strategies for different markets may differ from one another. So, though your past strategy might have made your products successful in your current markets, you might have to try a different approach to penetrate other markets you haven’t explored yet.
That being said, this comprehensive guide will walk you through the process and help you determine the steps you need to take to implement an effective market–based strategy.
Determine Your Target Market
The first thing you should do is determine your target market. The target market is essentially a portion of the population that could become your potential customer.
Determining the target market largely depends on the type of product, services, and solutions you intend to offer.
There’s a specific set of criteria you should bear in mind when identifying it (e.g., potential customers’ age, location, and income level). This information can help you pick the best marketing strategy to reach your audience.
Creating buyer personas can also help. A buyer persona is a fictional representation of your target audience that can help you get a clear idea of who you’ll work with. That way, you’ll be able to create more effective custom content that’ll speak to your future customers.
For example, if you run an e-commerce store, Gen X-ers and Millennials would be an excellent target market for your business, age-wise. Why? They spend more time shopping online than any other age group.
Research and Analyze Your Target Market
Once you’ve identified your target market, the next step in your marketing strategy development process is to get familiar with your competitors and analyze their strengths and weaknesses.
You can do so using the following approaches:
SWOT stands for strengths, weaknesses, opportunities, and threats. Businesses use this framework to analyze a company’s competitive position in the market. This approach is factual and data-driven, and it gives companies accurate information they can use when developing a marketing strategy.
Porter’s Five Forces Analysis
Porter’s Five Forces model identifies and analyzes the five forces that shape every industry:
- Industry competition
- Potential of new players in the industry
- Suppliers’ power
- Customers’ power
- The threat of substitute products
It also points out the industry’s strengths and weaknesses.
This model is often used to determine competition intensity when developing a strategic marketing approach.
Set Your Goals for New Market Development
Setting clear and measurable goals is vital for any market development strategy. You should base them on market and customer research and include benchmarks that’ll help determine if your marketing strategy was successful or not.
These markers will also help you determine if you’re using the right approach. An efficient strategy for developing new markets takes into account many factors — sales and revenue, customers and products, locations, and users.
For example, if it’s geographic expansion, you can set your goals like this:
- Increase sales up to 100% within a year
- Increase users up to 80% within six months
- Add 10 more employees within three months
- Double the profits within a year
In this marketing strategy development stage, you should also consider your return on investment (ROI). Compare the costs of developing a new market against your projected revenue.
If the situation concerning your goals starts looking less promising along the way, you might have to revisit your plan and goals and create a new strategy.
Create a Compelling Marketing Plan
Building an effective market development strategy also means creating a compelling marketing development plan. The marketing plan has to be up-to-date and should include action plans you intend to implement to catch the attention of your target audience.
A logical first step is to research your customers’ likes, dislikes, and purchasing behavior using adequate resources and tools. For example, using artificial intelligence is a good idea, as over half of senior marketers use AI for their marketing practices.
Once you’ve identified the necessary information, you can look for the most effective channels for implementing your marketing plan.
Nowadays, as many as 73% of small businesses use social media for marketing. It’s an invaluable tool for developing marketing strategies and plans, as it can raise brand awareness as well as increase traffic and conversions.
Email marketing is also an effective tool when it comes to penetrating new markets. You can easily send offers and deliver your sales pitch to your prospective clients through this channel. Just make you’ve created a good mailing list first.
If you have a business that’s been operating for a while now, you most likely already have a website where you can add blog content specifying the value of your products and capture the attention of your potential customers.
When done right, blogging can be another effective channel for reaching prospective clients. And the fact that companies who use blogging for their marketing are 13 times more likely to have a positive ROI testifies to that.
Enter the Market
Once you’ve done your research, created a strategy for your market development, and started marketing to your target market, it’s time to enter the market and start implementing your strategy.
But there’s one more step you need to take before reaping the rewards of all your hard work and collecting revenue — analyze the results.
Evaluate the Results
Once you’ve entered a new market, the hard work begins. Market development is a continuous process that requires constant evaluation and assessment of the results to ensure that you’re moving in the right direction towards reaching your goals.
You have to make sure your new customers are pleased with your products or services, that the service is high-quality, etc.
It’s best to start analyzing your sales performance early on to be able to predict whether you’ll meet your targets or not. The earlier you know how your product is performing, the sooner you can tell if your strategy is working or not.
If there are indications you won’t meet your projections, consider adjusting your goals and strategy to ensure that you meet your goals in a timely fashion.
Use accounting software and tools to ensure that you’re collecting accurate data for analysis.
Market Development Strategy Examples that Worked
Our guide wouldn’t be complete without a few examples of companies with successful market development strategies.
Facebook, which started only as a platform for students to share posts about themselves, tops up our list. Today, it’s one of the largest social media platforms in the world.
The company offers only one product — the platform itself. But this doesn’t keep it from growing. Facebook has been continuously adding free features to maintain current users’ interest and potentially expand into additional markets.
The company earns from running ads, so trying to find ways to retain their user base is definitely worth it.
Walmart’s most significant recent geographical expansion occurred in 2019 when the retail giant opened 134 stores in Mexico. This market expansion framework made Walmart’s presence grow by 5%.
By 2021, Walmart was running a total of 3,407 stores in Mexico, making this country its most successful market besides the US.
This online ride-sharing platform is an excellent example of a successfully applied diversification strategy. Uber recorded enormous growth over the past decade by different products and services (e.g., bikes, scooters, luxury vehicles, and even food delivery services) to its offer.
It currently operates in over 700 cities worldwide.
Penetrating new markets is an excellent way to grow your business. Taking your time to research, plan, and identify the best strategy will pave the way for a successful implementation.
We wish you luck in your future endeavors.
What are the 4 types of marketing strategies?
The four types of marketing strategies are:
- Cause marketing — A company links its products and services to a social cause.
- Relationship marketing — A company strengthens its relationship with the customers through retention and excellent customer service to increase loyalty.
- Scarcity marketing — A company creates a perception of a shortage of a product. This, in turn, encourages consumers to buy for fear of its unavailability in the future.
- Undercover marketing — In this approach, customers don’t realize they’re being marketed to.
Why should companies develop and introduce new products?
Developing and introducing new products is vital to any business’ growth strategy. They represent a new source of revenue and present an excellent opportunity to attract more customers and expand into new markets.
What are the market development advantages and disadvantages?
The long list of advantages includes growth opportunities, gaining more customers, and earning more revenue. Furthermore, it’s an excellent way to keep up with changes in the industry and technology, as well as to create more jobs.
However, market development doesn’t come without disadvantages. For one, developing a new market means additional costs (from research and planning to marketing and execution), not to mention the stiff competition.
How do firms determine which strategy is the best?
Firms do a lot of research and planning before determining which strategy is the best for their specific industry. Our guide here provides you with a comprehensive step-by-step process and examples of different strategies many successful companies use to develop their markets.
We hope you’ll find it useful during your research for market strategy development.