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Market development is a strategy that is geared towards the growth of a business by simply expanding the existing market through new users.
If you read till the end, you will understand what market development is, why market development strategy is important for business growth, as well as the advantages and disadvantages.
Market development is simply targeting new markets.
Let’s take a look at a proper definition:
Business dictionary defined it has the expansion of the total market for a product or company by entering new segments of the market, converting non users into users, or increasing usage per user.
It is a process whereby a company tries to sell an existing product to a new set of customers.
For instance, if your product has been targeting men, when you aim to expand your market, you might consider targeting more women.
The main objectives for considering expanding or developing an existing market is to:
• Target new customers with an already existing product
• Suggest new users for your existing product.
• Boost sales and increase revenue.
Market development model is about the product category stage the product is in and how that category is.
The stages of the model displays how a customers’ buying behaviour can change depending on how the product category matures.
Market development strategy
This involves adding already existing products to new markets.
It helps businesses identify and develop new opportunities to sell an existing product in previously unexplored markets.
Before you implement a market development strategy, you will need to answer the following questions
• Is the strategy profitable?
• Have we weighed all the risks?
• Have you researched your target customers extremely enough
• Will you need to introduce new products?
There are four strategies that can achieve all these:
1. New geographical market
This involves expanding outside your current region or selling to a new country or continent.
2. New product packaging
Your company might simply want to repackage a product to reach new customers.
E.g: re packaging a 20 liter container into a smaller container.
This can pose a threat, so you will need to review the costs involved in these changes to make sure it doesn’t alter a lot of things.
3. Different pricing
You can use this strategy by selling a cheaper product under a different sub brand.
4. New users for an existing product
If your product has been made to serve a particular purpose, the product can be transformed to serve another set of people, thereby reaching out to untapped and new customers.
Market development strategy advantages and disadvantages
A good strategy will fetch you good results but at the same time there are disadvantages attached to it.
The advantages of these strategies include:
• Reaching new customers
• Exploring untapped markets
• It leads to an increase in sales and revenue
• Increase in a companys’ profitability.
• Expanding the use of products.
The major disadvantage of these strategies is alienating your current customers.