Everyone loves a new product.
Think Nutella. When it first arrived on market shelves in 1964, many consumers weren’t even aware of the existence of chocolate spread. Now it’s one of the world’s most popular spreads. It has expanded beyond market shelves to become a common sight in everyone’s pantry.
Or think of Apple’s new iPhones that come out frequently. Apple is already a well-established brand. But they still promote their newest iPhone versions so well that every diehard Apple user can’t wait to get their hands on the bigger and better phone.
How did both of those brands– and so many more– manage to get their products out there and succeed? How did they gain such a competitive advantage? Both of these brands are the only ones their target market thinks of when they want to buy a sweet spread or new smartphone?
The cherry on top of their forward-thinking sundae? It’s a market development strategy.
What is a Market Development Strategy?
Are you a business owner or marketer trying to introduce your latest and greatest product to your marketplace? If you are, that market development strategy sounds like solid gold.
It is, indeed. But what is it?
A market development strategy is a business growth strategy. You need it for your organization when you need to introduce your target market to your product or solution.
Do you have an audience you have not reached yet? Take advantage of a market development strategy.
What about an audience you have not worked with before? The answer is the same.
Think of it as a product development strategy. You may already have a market product grid, but this takes your market development process to the next level.
Your strategy must be client-centric, but it is different than other customer-centric approaches to the market. While similar to a customer relationship management system, it focuses on market needs rather than individual customers.
It guides you through market research and planning. It also organizes market-focused programs that facilitate market penetration. Overall, though, it helps you reach your personal business goals.
What Do You Need to Consider When Creating a New Market Development Strategy?
Say that you have a new product or an existing one that you need to introduce to a different target audience.
You have many unfamiliar moving parts within your business. You want to increase revenue for your product, but you’re unsure of this market development strategy. You do not know if it’s worth your time and company cash.
It’s good to ask these questions. You want to ensure that every step you take (from market penetration strategy to day-to-day operations) aligns with your overarching goals.
That’s why we compiled the following list of questions to consider when you create your new market development strategy:
- Do you need to break the ice and promote a brand-new product?
- Or do you have to tweak your existing product?
- Have you already identified your particular target market?
- Is this a new audience that you have not targeted before?
- What do you know about this market?
- How will they benefit from your product apart from that of your competition?
- Did you crunch some numbers yet? Is there room in your budget to carry this out?
- Take time for analysis. Is it worth the investment?
- Is your market development strategy measurable?
- Consider your team and tech stack. Do you have enough manpower or the right tools to measure strategy success?
What is the Difference Between Market Development vs Market Penetration?
We briefly mentioned market penetration. But it is important for you to note that market development and market penetration are not one and the same.
Market penetration is when you sell your existing products to an existing market.
Market development, however, is when you target a new market for your new or current products.
They do have some similarities, though. Both of them are a low-risk strategy. They each decrease risk when you promote a new product within your market.
But market development strategy and penetration strategy have one more key difference.
When your market is going through saturation in your product life cycle, you should use a market penetration strategy. When you need to take more risks, however, you should rely on market development.
Steps to Create a Market Development Strategy
You need a market development strategy at some point or another for your business growth.
But if you need to use one now, there are five steps to take for you to succeed in product expansion.
Follow through with and complete these steps. Then, you will know:
- If now is the time to develop your market
- How you should develop it if the time is right
- Whether you have a successful initiative
Research to Find the Right Market Development Opportunities
Market trends are constantly on the move. They do not stay the same for very long, and new ones pop up all the time.
So you might see an exciting new trend.
Take the restaurant industry, for example. There may be a spike in consumer desire for a trendy sauce. You could add the sauce to a few of your dishes and spice it up. You’re even thinking about expanding your menu just to accommodate this new trend.
Or you could be a part of the tech industry. A new app just hit the market, and you want to develop your own app that competes with this new one.
You have to research your market to understand if any of this is worth your investment and market growth.
First, take a look at your buyer personas. You might even need new ones to address your new target market. What motivates them? What are their backgrounds and demographics? Is your development strategy appropriate for them?
Next, dive into your market in general. Where do you stand in your market right now? Conduct analyses like SWOT or Porter’s Five Forces. You want to understand:
- Your strengths and weaknesses
- Buyer power
- Threats from competitors
Also figure out market penetration here.
Finally, conduct surveys with your customers. You want to determine if your expansion is something your customers even want. Take them and their feedback into consideration.
Set Business Goals for Growth
You need specific goals to align your development strategy with. That’s whether they are marketing goals, overall growth strategy goals, or a mix of multiple ones. They could include:
- Boosted sales
- Employee and customer success
- More users
- Higher profits
- Expanded locations
When you set your goals, specify what part of your business you want to grow and what those individual goals are for each part. Include a deadline, too.
What do you need to help you reach those goals? What resources or tool kits do you need?
Make sure you also have an achievable ROI goal.
Draft Your Marketing Plan
Your marketing goals come into play again here. You cannot effectively expand your reach without a proper marketing plan and tactics.
You may already have a great marketing plan. Revisit it and make the necessary changes for your market development. It must reflect what it takes to get your market share to the highest levels possible.
You can use any of the following tactics and more:
- Email marketing
- Content of many varieties
- Local marketing
- Social media
Go to Market
At this point, you finished all of the planning processes. You have to put your market development strategy into action.
You might have a new brick-and-mortar location or you could be ready to launch your product on your website.
Now, it’s time to align your internal team with your strategy.
First, plan your campaign. Reference your marketing plan and make sure everything is up to snuff. Then, collaborate with your sales department and come up with an A-plus sales plan. Lastly, provide updates on the project for your team via email.
Measure Your Results
This is the part where you realize how important a measurable strategy is.
Look at customer and internal top talent satisfaction. How does your product measure up here? Are you on track to meet those goals you set?
If you are not on track to meet them, you need to reconsider your approach. Make sure you are honest when you report your findings.
A Few Examples of Market Development Strategies
We know that it can be confusing when you’re trying out a new strategy. If that’s the case for you, it’s always a good idea to look at the pros.
You can draw inspiration from their strategies and figure out where they succeeded and where they fell behind.
Pricing Example – Pepsi
Pepsi is a pretty intense example of a market development strategy.
Since they have already established themselves in their industry, they now focus on cost-effective expansion.
They expand their supply chain to help their distribution network grow.
Pepsi fully commits to their market development strategy. That’s how they are able to minimize the costs of their investments while they expand to new market segments.
Distribution Example – Estée Lauder Companies
Estée Lauder has been in the beauty game for a while now. That’s because they know how to keep up with industry growth by growing their brand. And their key to success? A thorough market development strategy.
One of their main goals with their 2016 program launch was to optimize their distribution channels.
They managed to reduce their long-term and recurring expenses by $200 to $300 million. They honed their supply-chain management and got rid of bleeding revenue by cutting ties with lacking businesses.
Promotion Example – Netflix
We have all at least heard of Netflix. Most of us subscribe to their streaming services, too. If you are a long-time subscriber, you remember when they made the switch from mail-in DVD rentals to an entirely online platform.
They have been so successful as a business, largely because of their marketing and promotion tactics.
First, they use email marketing to sell their services. Then, they segment their customers into specific groups. They provide updates to their segmented users and offer customized recommendations, too.
Netflix takes risks, but they weigh them against the benefits as they compile their strategy.
Sales Example – Nivea Men
Nivea has also been a household name for decades upon decades. They sell skincare solutions, creams and lotions, among other products.
At the advent of their brand, they expanded their territory with many umbrella brands. This includes Nivea Men.
They followed all of the steps we outlined above. And they did so to the fullest extent. Since they developed their brand so thoroughly when they expanded their market, they continue to excel in sales.
Nivea measures their cost against their projected sales. They price their products so that they align with production value.
They research their target audience so that they know all there is to know about them. No detail is too menial. Their prices reflect their market’s needs and income levels. Now, they have a massive following and countless loyal customers. Sales come as a natural result.
There are a lot of different ways to go about creating your own market development strategy. You know the basics of what it is and the clear steps you have to take to get there. You also have the details on four industry leaders and how they follow through with their strategies.
But you are not them, and we know that. You are unique, your business is unique and everything you did to make it that way is, too.
You can find a lot more of our tried-and-true tips on how to lead your business to success on our blog. But if you want a personalized approach that lands you right at the front door of success, we can also help you there.
The ball is in your court. So take a look at your agenda and see when you have time to level up your business with Wizard of Sales. We’re ready to help you elevate as soon as you are ready to book a call with us.