A market development strategy uses an existing product offering to expand into new markets and reach new customers. It is a business growth strategy that can help companies increase their revenue, market share and brand awareness. In this blog post, we will explain a market development strategy, why it is important, and how to create one for your business.
What is a market development strategy?
A market development strategy is a way of growing your business by selling your existing products or services to new markets. This can include:
- Entering new geographic regions or countries
- Targeting new customer segments or demographics – Reaching new distribution channels or platforms
- Creating new use cases or applications for your products
For example, a company that sells coffee machines in the UK may decide to enter the US market with the same product offering. Alternatively, they may target a new customer segment with their existing coffee machines, such as offices or hotels. Or they may sell their coffee machines online or through partnerships with other retailers.
A market development strategy differs from a product development strategy, which involves creating new products or modifying existing ones for your current market. For example, a company that sells coffee machines may decide to launch a new model with more features or a different design for its existing customers.
Why is a market development strategy important?
A market development strategy can help you grow your business in several ways, such as:
- Increasing your customer base and revenue potential
- Diversifying your income sources and reducing your dependence on one market
- Enhancing your competitive advantage and differentiation
- Building your brand recognition and reputation
- Leveraging your existing resources and capabilities
However, a market development strategy also involves some challenges and risks, such as:
- Facing new competitors and regulations
- Adapting to different customer needs and preferences
- Investing in marketing and distribution costs – Managing cultural and logistical barriers
Therefore, conducting thorough market research and analysis is important before entering a new market. You should also have a clear value proposition and positioning for your product offering in the new market.
How to create a market development strategy?
To create an effective market development strategy, you can follow these steps:
- Identify your current market and product offering. Analyse your current customer segments, value proposition, distribution channels and competitive advantage. This will help you understand your strengths and weaknesses in your existing market.
- Identify potential new markets. Research and evaluate different markets you can enter with your existing product offering. Consider factors such as market size, growth rate, demand, competition, regulations and barriers. You can use tools such as PESTEL analysis or Porter’s Five Forces analysis to assess the attractiveness of each market.
- Select the most promising market. Based on your research and evaluation, choose the market that offers the best opportunity for growth and profitability. You should also consider your strategic objectives, resources and capabilities.
- Develop your market entry strategy. Define how you will enter the new market and reach your target customers. You may need to adapt your product offering, pricing, promotion and distribution strategies to suit the new market conditions. You should also set clear goals and metrics to measure your performance and progress.
- Implement and monitor your market development strategy. Execute your action plan and track your results. You should also collect feedback from customers and stakeholders and make adjustments as needed. You should also evaluate the risks and challenges you may encounter in the new market and have contingency plans.
A market development strategy is a way of growing your business by selling your existing products or services to new markets. It can help you increase your revenue, market share and brand awareness. However, it also involves some challenges and risks you must consider carefully. To create an effective market development strategy, you need to identify potential new markets, select the most promising one, develop your market entry strategy, implement it and monitor it. You should also conduct thorough market research and analysis before entering a new market.