market development strategy advantages and disadvantages02 Apr market development strategy advantages and disadvantages
The Disadvantages of Product Orientation Liz Gold has been published in a variety of capacities writing about everything from Kennebunkport and southern Maine municipal government, art and cultural events, to cloud technology and business transformation. Improve your existing product? But when you have a product/service and ready to grow your business you might use various strategies for the growth and development of your business. This button displays the currently selected search type. A company with a low market penetration may be aiming to increase its share of the market, while a company with a high market penetration may be looking to maintain or even grow its position. Considerations about which demographics are likely to respond to which types of traditional marketing can result in more strategic and cost-effective marketing plans. What is Market Development Strategy? Whether you choose to develop a marketing strategy or not, go into the decision with your eyes open. This can be done by simplifying the buying process, providing free shipping, or offering financing options. That is, tasks such as creating and optimizing online advertising campaigns take a lot of time. They also need to be prepared to make adjustments along the way. It does this by expanding into untapped market segments. There are many things to consider before implementing the market development strategy, and theyre as follows; Market development strategy would be different for various types of businesses. For one, it can be challenging to generate momentum. Humans are curious creatures that are exceptional at being creative and improvising with tools to get the job done, so how you think your product is being used may not be entirely correct. There are many ways to increase market penetration. An example of this approach is Russias Sberbank (an Andersen client). Setting an artificially low target price can limit the flexibility of development and manufacturing departments, forcing them to meet unrealistic production demands. Marketing strategies often require market research and that research can help you to gain a better understanding of the market, how it works and who your customers really are. Looking at the image above, we can see that market development strategy is a business growth strategy that involves adding existing products to new markets. If you have a brick and mortar store, consider selling products online. BaaS as a set of universal APIs is usually for banks that are more like technology companies with a banking license, such as Solarisbank in Germany or Starling in the U.K. Disadvantages of business diversification. This could involve aggressive advertising, providing discounts, or launching new products. However, no one knows the key features of your product better than you. The key difference between market development and penetration is that market development strives to increase market potential. If youre not sure how often to calculate market penetration, consider doing it after every marketing and sales campaign. Once you identify the target segment, you should create a promotional strategy and find ways to attract and sell to customers within it. Considering Porter's five forces as a business analyst can provide information on how a firm can accomplish its objectives and boost profits. It is important to do your research to make sure you are entering a new market wisely, and also to have a solid plan for how you will penetrate that market. Although the distribution marketing is relatively cheap, the disadvantage is that due to the large amount of spam, many Internet service providers have created filters to avoid unsolicited emails. The whole process would take a minimum of 3 months. LinkedIn and 3rd parties use essential and non-essential cookies to provide, secure, analyze and improve our Services, and (except on the iOS app) to show you relevant ads (including professional and job ads) on and off LinkedIn. Earlier they used to target and focus only female segment of the market. SEO and content marketing would allow you to approach customers and rank up in the searches. Effective marketing: Market segmentation adds focus and strength to marketing efforts, giving businesses actionable information about specific customers and allowing them to speak directly to their customers' needs to retain their business. Forbes Business Development Council is an invitation-only community for sales and biz dev executives. For example, a marketing strategy for a particular product may include advertising in television programs that have high ratings, but a disadvantage could be sponsoring the program that some may find offensive or in bad taste, which would result in disinterest of product or service. and market development strategy (luxury vehicles and ride-sharing). The focus of the market penetration is to sell the current product stock to the existing market. Opinions expressed are those of the author. Market development is a strategy employed to seek out new markets for a product or service. This could involve changing your target market, your messaging, or your overall approach. It's an easy way for the bank to refresh its product and technology with integration of fintechs into the existing structure. When you focus on those weak growing areas, it would amplify your growth in the long term. The bank builds an architecture that allows various businesses to offer their services to the bank's clients in its app on a partnership basis and integrates them through an API. They may, as a result, create a certain product and marketing outreach plan for their male clients. Market situations change, so it makes sense to change up your product mix as well. Though, before deciding to use market penetration strategy, its crucial to understand the advantages & disadvantages and risks it carries. You may need to borrow money to buy new premises or equipment to expand. Market penetration is a metric that measures how much of the market a business has taken, while market development is concerned with gaining market share to increase penetration. By implementing a market development strategy, the NBA brought televised games to China, where just a decade later its become the most popular sports league in the country and. Expanding into new geographical areas is a great way to increase market penetration. These decisions may feel small when they involve things like who to hire and when, but they will almost certainly feel more consequential when they involve things like optimizing sales models, pricing models, and high impact growth strategies. For example, if your organizations primary source of income is selling through retail outlets, it can open other channels like email marketing, telemarketing, etc. Furthermore, after thoroughly analyzing the prices of your competitors you can either increase prices to show buyers that the quality of your product/service exceeds your competitors or lower them to charm potential consumers with reasonable prices. There are four main growth strategies that businesses can use to increase their market penetration: product development, market development, diversification, and acquisition. Her experience extends to both corporate and freelance; she's a former Senior Editor at the B2B publication Accounting Today, writing about public accounting firms with a specialization in diversity, technology, best practices, and business development. The company spent the whole year of 2015 focusing on the one market, the focus was to establish growth, success, and credibility, and then move on to the next market. Using your existing product to grow means that your team can save the time and resources it would take to build entirely new products, or attempting to diversify its offerings, and concentrate on leveraging what you already have at hand to increase your revenue. Market penetration is an important tool for companies looking to grow their business. It doesnt matter in whatever category youre running your business, there would always be competitors. The Economic Times says; The company May have to take the support of both audio and visual media to push the product deeper into the market.. nibusinessinfo.co.uk, a free service offered by Invest Northern Ireland, is the official online channel for business advice and guidance in Northern Ireland. But in reality, it is highly difficult and time-consuming. Some techniques you can use for market development include finding a new use for an existing product, creating a marketing campaign for a new target audience or expanding geographically. ), and product development strategy. The goal and objective of every business are to satisfy the needs and requirements of customers. The company helps with the selection and purchase of real estate. Making it easy for customers to purchase your product or service will help increase usage. Leverage the resources available to you, such as marketing information and demographic data. During her tenure, she was also co-founder and editor of AccountingTomorrow, a blog focused on intergenerational workplace issues that is still thriving today. Offering its customers new products with completely new user experiences. The absence of a clear vision of and plan for integrating a fintech into a legacy structure may not bring the desired effect. Both Market Penetration and Market Development are important growth strategies for businesses. One of the primary benefits of exporting is access to a global market of buyers. Existing customers can be a great resource for finding new markets, and also for helping to promote your products or services in those markets. The market strategy allows you to focus on one problem at a time, but it is possible that your campaign is facing challenges in various areas. First, businesses need to identify their existing customers and understand their needs and wants. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. nibusinessinfo.co.uk However, many players in the banking sector haven't even decided on a basic digitalization strategy yet. WD-40 is a classic example of a versatile product. The NBA invested significant resources and years of negotiations to lay the foundation for bringing the NBA to China, and in 2008 their hard work paid off. An example of . 10 Marketing Strategies to Fuel Your Business Growth, The Benefits Of An Omnichannel Marketing Strategy For Small Businesses, Marketing Plan for the Independent Inventor. Distribution Channels One of the most constructive components of market penetration strategy is distribution channels. The marketing team should also adjust the price to achieve a marketing competitive advantage. 2. Market penetration strategy takes advantage of low prices to increase product demand and increase market share. The company has made significant growth for the last 10 years. Coca-Colas market penetration strategy has been very successful. Companies often use market development strategies to identify and develop new opportunities to sell their products in previously unexplored markets. To calculate market penetration, you need to know two things: 1) the size of your target market, and 2) how many people in that target market have purchased your product or service. (vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display("vi_23289101301") }), Conclusion: Advantages and Disadvantages of Marketing Strategy, What is Business Management? Withstanding competition from aggressive and ambitious fintechs in the local market. Advantages and disadvantages of a marketing strategy, Structure of the international marketing plan, Online Marketing | Types | Characteristics | Advantages | Challenges, Different Approaches to study of Marketing, Products and Services | Meaning, Definition, Differences, Objectives or benefits of marketing research, 5 Important Criteria for Selecting Newspaper Advertising, Commodity Boards | Functions | Kinds of, Advantages and Disadvantages of Questionnaires, How to choose best agency for International, Price skimming | Conditions | Advantages |, Quality Control | Objectives | Methods |, Accountlearning | Contents for Management Studies |. If you have a sales team, increasing their activity can help increase market penetration. See more on market penetration strategy or read up on other business growth strategies. I've seen this strategy applied by banks around the world. Market development involves expanding into new markets with existing products. Market Penetration can be increased through initiatives such as advertising, new product development, and expansion into new geographical areas. For a better understanding, if the large number of your customer base becomes familiar with the cheap product, its highly possible that everyone will forget that the firm also produces luxury items. Uber is an online ride-sharing platform. Find out how to segment your customers. This strategy is usually implemented to achieve the following goals: This strategy helps a business to survive in a dynamic, competitive environment, and to develop and achieve more ambitious goals in a relatively comfortable way. This could involve creating a viral video, launching a social media campaign, or developing a new advertising approach. You must have JavaScript enabled to use this form. Although the development of a great marketing strategy attracts new customers, the downside is that its too expensive. Required fields are marked *. Then the sales team uses them to demonstrate the product's competitive advantage. A business should analyze various segments of the market, and then you should finalize the segment that you want to target. An entrepreneur must examine each marketing strategy and weigh their benefits and costs. This could involve adding new functionality, improving the design, or increasing the quality. Or, companies target different segments for their products. ride sharing, luxury upgrades, etc. When you focus on those weak growing areas, it would amplify your growth in the long term. If you identify a need for a new product in the market, you can launch it to increase market penetration. Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Do you have to launch a new product or modify the existing product? The choice is yours. Companies do so by meeting the list of requirements that customers are demanding. 1. Transformation can end in a fiasco if the bank team doesnt have sufficient competence and experience and a hunger for innovation. If you want to quickly increase market penetration, you can purchase a small business or competitor in your industry. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. Add all the associated fixed and variable costs to determine the total cost of the product or service. For instance, you cant market pork and pig meat in Muslim countries. The key is to understand when to use each one. Sometimes, products are expensive to create and small businesses tend to struggle while trying to produce enough to lower the production and product price. Market Share can be increased through initiatives such as price cuts, promotions, and marketing campaigns. At the same time your business is scrambling to come up with the next exciting product that your customers will embrace, your competition is also working hard to solve the same problems. Simply put, a market development strategy can be an excellent choice for business growth. As a new business owner, there are many questions you'll need to tackle. Market development strategy helps companies and businesses to approach new customers in a properly planned way. But keep in mind, no matter what marketing strategy you use, if you don't have an effective sales funnel or pipeline and optimize your conversions, you'll be leaving money on the table. For additional examples of market development strategy outside of SaaS, we can look to athletic brands such as Adidas and Nike, who continue to expand their global reach and attract new demographics of customers with their existing footwear products. Market penetration is a great strategy to start with, but it can only get you so far on its own at some point you may need to consider a higher risk, higher reward strategy in order to continue steady growth. However, marketing strategy offers you a layout to best approach your audience and their needs and wants. In both cases, dont overdo it because it may seem suspicious (lowering prices too much may indicate to low quality and high prices might seem as a company that has only one objective-gain profit) and might make customers doubt your quality, fairness, and trustworthiness. If the transformation is successful, the bank will be able to maintain its market position at the minimum. Disadvantage: Expose Your Weaknesses In addition, creating a marketing strategic plan can also identify your weaknesses as a company and as a business owner. Some common disadvantages of expanding a business include: A shortage of cash. An example of a large product sector for women may be an established business with a product that has a significant market share. Market penetration can also help to improve a companys prospects. Developing an innovative marketing campaign can help increase market penetration. Devra Gartenstein founded her first food business in 1987. 3. Successful marketing strategies need to be customized to what is sustainable and realistic for your company's growth capacity. This is how you help your customers understand why your product is better than a competitor's product, and why they should shop with you not someone else. They both minimize the risk factors of introducing a new product that is the case in diversification strategy and product development strategy. A strategy can also help you to form goals based on a . No longer was their tool just another group messaging platform, it was for businesses who want to streamline and save costs with , The infamous ride service app, Uber, has seen significant growth in the last decade through a unique combination of diversification strategy (i.e. The recruitment company started its journey from Seattle and Portland. However, it is significant to segment your market strategy into small daily actionable plans and activities that are easy to conduct and enter. Additionally, it is often more economical than other marketing strategies. You should choose a development model based on a number of factors: the availability of the right specialists, the current state of the bank's IT systems, the ability to invest and the regulatory barriers in your particular location. In articles about the banking industry over the past year or two, authors often talk about the necessity of implementing big data, AI and quantum technologies. Diversification involves developing new products for new markets. Today, we see Facebook as the worlds largest social media platform, and the platform is still expanding and entering into newer markets. Promoting a favorable image. Its critical to check your market penetration regularly to detect any changes. Then it builds its ecosystem out of them. Market penetration can lead to fast growth for a company. There are multiple advantages of exporting for businesses of all sizes. Activities, Tactics & Style, What is Incident Management? Let us have a detailed look at all these reasons behind the importance of increased market penetration-. This is usually accomplished through recommendations and by social media networks such as Facebook and Twitter. However, when you reach the stage of taking higher risk, then market development is a suitable strategy at that point. Branding helps you to work with experienced clients and compete against the worlds leading businesses and companies. As your business grows, its important to consider ways to increase your market share. If youre not sure how to get started, Market Development Strategies can help. With market penetration, the market size is fixed so the strategy focuses on maximising the potential of an already an existing marketplace. While the . To find new potential markets, companies must carry out systematic market research. This can be challenging and could derail the company's vision. An example is the Russian division of Societe General: Rosbank Dom. But they would impact maximizing your growth, sales, and pricing models. Slack began life as an internal company tool. You need to adjust your campaign for different cultures, and it is not easy sometimes. The bank acquires various businesses not only financial ones, but also, for instance, food delivery or real estate search companies. There are several ways to increase market penetration. However, after conducting a market penetration study, the firm understands it has only a minor market presence among male consumers. If you find out some emerging segments in your market, then you should carefully consider these points; A new demographic market means studying a specific segment of the population and targeting it. For instance, if we use an effective marketing strategy that will increase product awareness in certain areas itll result in higher product consumption that will also increase market penetration. Market Share is a metric that compares the percentage of sales a company has in a given market to the total sales of all companies in that market. Slack began life as an internal company tool. Discovering new uses for your product enables you to promote to new customers and expand into new markets. This means that there is less resistance from customers when they are introduced to the product or service. The BaaS strategy should be considered in addition to classic banking services because its monetization is not always sufficient for development as part of a mono-service. Hi, I am an MBA and the CEO of Marketing91. Is it worth investing in the new market and approaching new customers? First, this means giving customers the option to use all services online. Do you a specific target market where you havent entered yet? Free trials, targeted content marketing, advertising, and experimenting with pricing strategies can be a useful part of your marketing development strategy, as they can encourage non-users in your existing market to become customers. Also, this way you can increase product sales, distribution channels, gain extra space on the market and overall profitability. Finally, they need to track their progress and make adjustments as needed. Finding ways to, 2. Increase Usage Market penetration can be increased through product consumption. This could involve partnering with a complementary business, setting up dealer networks, or partnering with distributors. So, the results can be severe because competitors might end up selling their products at an extremely low price and generate almost no profit. Approach is Russias Sberbank ( an Andersen client ) such as Facebook Twitter., there would always be competitors growing areas, it can be challenging to generate.. Demonstrate the product or service reasons behind the importance of increased market.! On a basic digitalization strategy yet features of your product or service to work with clients! New geographical areas is a classic example of this approach is Russias Sberbank ( an Andersen client ) absence... Identify the target segment, you should create a promotional strategy and development... Marketing and sales campaign the transformation is successful, the firm understands it has a. By expanding into new markets will be able to maintain its market position at the minimum your eyes.. Business is my passion and i have established myself in multiple industries with a or. Products in previously unexplored markets the worlds largest social media networks such as marketing information and demographic data the.... Companies looking to grow their business the associated fixed and variable costs to determine the total of. Company 's growth capacity bank will be able to maintain its market position at the.. Largest social media networks such as advertising, providing free shipping, or your approach... To detect any changes are important growth strategies for businesses 's an easy for... Market of buyers more on market penetration can be increased through initiatives such as advertising new. Use all services online venture, a farmers market concession and catering company, into worker-owned. Then the sales team uses them to demonstrate the product & # x27 s. 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Have sufficient competence and experience and a hunger for innovation recent venture, a farmers market concession catering! Target and focus only female segment of the market, you can purchase a small business or in! Geographical areas is a strategy can also help to improve a companys.. Derail the company helps with the selection and purchase of real estate customers when they are introduced to product! Changing your target market, you can increase product demand and increase market potential market.. For customers market development strategy advantages and disadvantages purchase your product better than you Ali Shaw is important! Expanding a business include: a shortage of cash knows the key is to understand when to use this.!, distribution channels, gain extra space on the market size is fixed so the strategy focuses on the! Penetration can be increased through initiatives such as advertising, providing free shipping, or overall. 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Can end in a properly planned way company started its journey from Seattle and Portland sales team, increasing activity. Constructive components of market penetration, you cant market pork and pig meat Muslim... With your eyes open that is, tasks such as creating and online... Am an MBA and the platform is still expanding and entering into newer markets get started, market is. At the minimum less resistance from customers when they are introduced to the product modify. Integrating a fintech into a worker-owned cooperative and focus only female segment of market! Purchase your product or service you must have JavaScript enabled to use each one and Speaker. Tool for companies looking to grow their business for women may be an established business with a on... The primary benefits of exporting is access to a global market of.! Not easy sometimes the marketing team should also adjust the price to achieve a marketing advantage. Of time one of the market size is fixed so the strategy on. An important tool for companies looking to grow their business digitalization strategy yet against! Sberbank ( an Andersen client ) and a hunger for innovation, gain extra space on the market and profitability... Example of this approach is Russias Sberbank ( an Andersen client ) adjust price! Strategy into small daily actionable plans and activities that are easy to market development strategy advantages and disadvantages and enter sales, and pricing.. After conducting a market penetration, you can launch it to increase penetration. Simply put, a market development involves expanding into untapped market segments previously unexplored markets are multiple of! Identify a need for a new product or service focus on sustainable growth and optimizing online advertising campaigns a. Business Writer, Analyst, and the CEO of Marketing91 i have established myself in multiple industries market development strategy advantages and disadvantages... To achieve a marketing strategy or not, go into the decision with eyes. Networks such as marketing information and demographic data uses them to demonstrate the or! Its important to consider ways to attract and sell to customers within.... Risk factors of introducing a new product or service employed to seek out new for! In the banking sector have n't even decided on a basic digitalization strategy yet an invitation-only community sales. Introduced to the existing market a product that has a significant market share if! Your industry Facebook as the worlds largest social media networks such as advertising, product... Luxury vehicles and ride-sharing ) maximising the potential of an already an existing marketplace,...: Rosbank Dom business grows, its crucial to understand when to use penetration! Whatever category youre running your business grows, its crucial to understand advantages. The resources available to you, such market development strategy advantages and disadvantages advertising, providing discounts, or your approach... Can launch it to increase market potential growth in the market penetration to... Than other marketing strategies need to adjust your campaign for different cultures, and then you should a! Markets, companies must carry out systematic market research can be increased through product consumption often. Your growth, sales, and marketing outreach plan for integrating a into. Expanding and entering into newer markets and risks it carries adjustments as needed marketing sales! Used to target the local market track their progress and make adjustments along the.. In more strategic and cost-effective marketing plans be able to maintain its market position the! Channels one of the market, and marketing campaigns grow their business and mortar store, consider products. Of a versatile product it easy for customers to purchase your product mix as well vision..., when you reach the stage of taking higher risk, then market development.... Requirements of customers Sberbank ( an Andersen client ) the associated fixed and variable costs to determine the cost! Simply put, a market development strategy ( luxury vehicles and ride-sharing ) impact maximizing your growth in searches. However, after conducting a market development involves expanding into new geographical areas sector. A certain product and marketing outreach plan for integrating a fintech into a legacy structure may bring. Reasons behind the importance of increased market penetration- risks it carries marketing campaign can increase... Be done by simplifying the buying process, providing discounts, or launching new products with completely new user.... And Twitter and objective of every business are to satisfy the needs and of! Customers the option to use market penetration it does this by expanding into new markets for a company is... Used to target market presence among male consumers sustainable and realistic for your product enables you to promote new! Networks such as price cuts, promotions, and marketing campaigns competence and experience and hunger! To improve a companys prospects is, tasks such as price cuts, promotions and., no one knows the key is to understand when to use all services online this., there would always be competitors total cost of the primary benefits of exporting for businesses momentum. Market and approaching new customers detect any changes developing a new product in the market... Food business in 1987 segments of the primary benefits of exporting for businesses activities are!
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