With market penetration, the market size is fixed so the strategy focuses on maximising the potential of an already an existing marketplace. To develop a marketing strategy, one should analyze the advantages and disadvantages of each aspect. When a company penetrates the market, it shows that they are dedicated to its product or service and are willing to invest in it. Igor Ansoff mentioned four strategies for business growth; Today, well be discussing market development strategy in detail with examples. Your product development strategy is a path forward in an evolving marketplace, keeping your business relevant and interesting to both customers and employees. One of the primary benefits of exporting is access to a global market of buyers. The bank acquires various businesses not only financial ones, but also, for instance, food delivery or real estate search companies. A marketing strategy that has gained popularity in the new media world is the viral marketing. With this strategy an intelligent or emotional campaign begins to rapidly spread through the Internet. Is it worth investing in the new market and approaching new customers? Market development strategy falls under the category of business growth strategy, and it means introducing new existing and current products into the new market. If your market strategy involves social media marketing, then it is easy. By tapping into this sub-strategy, the bank receives the following opportunities: 1. However, if you are a type of business that wants immediate results, then it is not the right strategic campaign for you. Hence, the marketing strategy has been under fire for using controversial celebrities. Anew company should concentrate on gaining its worthy place in the industry, rather than trying to beat others low prices. 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. It enabled college students to compare headshots and choose who was hot, or not. New products come. 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. Whether you are starting your first company or you are a dedicated entrepreneur diving into a new venture, Bizfluent is here to equip you with the tactics, tools and information to establish and run your ventures. Building a brand is a crucial part of marketing. Considering Porter's five forces as a business analyst can provide information on how a firm can accomplish its objectives and boost profits. Market Penetration is a strategy employed to grow sales, while Market Share is a metric used to compare a companys sales to the total sales of all companies in a given market. Fixed costs don't change with the number of units you produce, whereas variable costs do. 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. To identify a target market segment, you should look at factors like: You may want to look at customers typically served by your competitors, or customers currently not served by anyone. Let us know in the comments below. Do you have to launch a new product or modify the existing product? They may, as a result, create a certain product and marketing outreach plan for their male clients. It doesnt matter in whatever category youre running your business, there would always be competitors. The choice is yours. Similar to Slack, Facebook started out as a small, localized tool. For example, one of the way to distribute information is through email marketing. Sporadically lowering prices or introducing new product bundles draws the attention of individuals who havent considered your business before. Let's take a closer look. This enables companies to adapt to different markets and enhance competitiveness. 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. Market Penetration is a growth strategy focused on increasing sales of an existing product or service in its current market. Micromarketing has advantages and disadvantages. Your email address will not be published. This will show you whether your campaign is working, as well as any changes in penetration. Moreover, companies can create either short or long-term campaigns and structure them according to their budget and needs. Developed in 2009, and initially introduced to a small San Francisco market in 2010, Ubers aggressive market development strategy has landed them in over, The NBA has always dominated the relatively large and lucrative market for professional basketball here in the United States, but the league also had the foresight to recognize how much more lucrative business could be if they could successfully bring their product to international markets. For a small business, it is difficult to have the access to the plethora of resources and capital investment to hire expert professionals. All you need is to think about things from a different angle and change your perspective. However, no one knows the key features of your product better than you. 2. Based on the above information, it seems that a market penetration strategy is a good way to have a good market penetration rate, increase sales and grow a business. 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. This article will break down the main digital strategies for bank development. Or it is another region within a country. ), market development strategy (i.e. Market development is an expansion strategy, which identifies, develops and markets new product segments for existing products in the target market. An example is the Russian division of Societe General: Rosbank Dom. The focus of the market penetration is to sell the current product stock to the existing market. Lowering the price of your product or service to align with competitor pricing may help to increase your market share. This could involve setting up new offices, opening new stores, or expanding your distribution network. Hence deciding right strategy for the target group is considered one of the most important aspect in a marketing strategy. Considerations about which demographics are likely to respond to which types of traditional marketing can result in more strategic and cost-effective marketing plans. Its because of diversification (scooters, bike, food delivery, etc.) Discovering new uses for your product enables you to promote to new customers and expand into new markets. Like who to hire and when to share the responsibility, they may seem small steps. Distribution Channels One of the most constructive components of market penetration strategy is distribution channels. Companies often use market development strategies to identify and develop new opportunities to sell their products in previously unexplored markets. Market development is a growth strategy that involves selling your existing products or services to a new group of customers. Setting an artificially low target price can limit the flexibility of development and manufacturing departments, forcing them to meet unrealistic production demands. It can also lead to faulty marketing decisions if data isn't analyzed properly, and creates unrealistic financial projections if the information isn't interpreted correctly. (vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display("vi_23289101301") }), Conclusion: Advantages and Disadvantages of Marketing Strategy, What is Business Management? Selecting the right media platform to launch your campaign is the key to the success of your campaign. Several factors contribute to successful market penetration. Air India to discontinue Vistara after merger, DS Group Partners with Lderach (Swiss Chocolate Maker), Castrols unveils a New Logo and a Refreshed Brand Identity, Increasing marketing and advertising efforts. Marketing strategy allows you to perceive things from the customers point of view, and highlight the unique selling point (USP) of your business that would give you a competitive edge. An organization can even begin to develop a product that is seen as valuable, but have it become worthless before they can bring it to market. As long as, people stay on the platform, the company earns money by running ads. With market penetration, the market size is fixed so the strategy focuses on maximising the potential of an already an existing marketplace. 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. A business should analyze various segments of the market, and then you should finalize the segment that you want to target. Finally, they need to track their progress and make adjustments as needed. If monopolies emerge in the market, they may be subject to close attention from regulators. Lowering Industry Prices Market penetration strategy can harm the entire organization. Successful marketing strategies need to be customized to what is sustainable and realistic for your company's growth capacity. To evaluate their position with respect to rivals, certain organizations, and business analysts can use tactics such as the five forces analysis. For example, if your organizations primary source of income is selling through retail outlets, it can open other channels like email marketing, telemarketing, etc. You can generate profit from various areas of your business that you have never thought of it before. nibusinessinfo.co.uk, a free service offered by Invest Northern Ireland, is the official online channel for business advice and guidance in Northern Ireland. After finalizing the target segment, you should develop a promotional strategy to attract new customers. Though, market penetration strategy doesnt work for all products and businesses, so some companies use different marketing strategies that seem to be more beneficial. Learn more in our Cookie Policy. 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. 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. Find out how to segment your customers. First, businesses need to identify their existing customers and understand their needs and wants. They also need to be prepared to make adjustments along the way. There are many ways to increase market penetration. Better Information. Simply put, a market development strategy can be an excellent choice for business growth. Product Life Cycle Analysis & Price Strategies, Disadvantage of Entering a Mature Market Economy, The Effects of a Change in Business Environment on Strategic Planning, Advantages and Disadvantages of a Marketing Strategy, Brandon Gaille: 8 Pros and Cons of Product Development, This Matter: Research and Development: Advantages and Disadvantages, On Strategy: How to Choose a Market Development Strategy, Australia Unlimited: Market Entry Strategies. Market development is a growth strategy for companies that focuses on finding new markets for an existing product. Add all the associated fixed and variable costs to determine the total cost of the product or service. Price Adjustment One of the most frequently used market penetration strategy is price adjustment. So, the brands reputation as a luxury producer will shortly disappear. One of the most important benefits of market strategy is that it helps you to recognize the weak areas of your business that has a potential for growth. Market Development is best used when a business wants to expand into new markets. They also need to have a successful market penetration strategy in place. Improve your existing product? When it comes to business, market penetration is key to success. Otherwise, it would be very difficult to precisely target and narrow down your target customer market. businesses need to be patient and continually track their progress. You would find out how they are approaching customers, the type of product they are producing, and how you are attracting your clients. This could involve setting up booths at trade shows, doing product demonstrations, or conducting customer research. Market Share can be increased through initiatives such as price cuts, promotions, and marketing campaigns. Definition, Types and Importance, 6 tactics for Market penetration strategy, Commercialization Definition, Process and Strategies, Promotions in Marketing Marketing promotions, The Importance of Marketing to Businesses, Mass marketing definition and explanation with examples, The Objectives Of Marketing Explained in Detail, JioMart launches its Digital-First Holi Campaign targeting Sale from 1st to 8th march, Tata Groups talks over $1 billion Bisleri stake stall, Goodbye Vistara Airlines! Loss of control. What is Market Development Strategy? However, many players in the banking sector haven't even decided on a basic digitalization strategy yet. The goal is to increase market penetration by targeting this relatively untapped group. Here are the advantages of conducting market research: 1. 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 worth more than $4 billion. There are several ways to increase market penetration. It is calculated by taking the companys total sales over a given period and dividing it by the total addressable market (TAM) during that same period. A market development strategy aims at reaching non-consuming users in currently profitable segments. You need a marketing strategy to help you look into the message you want to send and how to reach a lot of potential customers constructively. Then it builds its ecosystem out of them. Now, you have to find out the users of your products, so that you could target them by offering them your product. 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 |. Unmet Production Costs Its not always possible to lower the product price as you will. If you are developing a strategy campaign, then you should keep in mind its pros and cons. The strategy must be focused on values, culture, and other behavioral traits of the consumer base. Furthermore, the competitor that was first to lower prices, will have to continue doing the same in order to maintain its market leadership. It allows them to precisely target their audience based on their needs and interests. 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. 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. Digital market entry is the sweet spot of our firm. It's a clear signal to investors that the bank is developing its digital services. Developing an innovative marketing campaign can help increase market penetration. As a tool thats free for anyone to use, it was important for the Facebook team to maintain a keen focus on user behavior. As the software became the Facebook we know today, it became increasingly important to reach new users and markets in order to expand. As well as attracting new customers, market development also looks at expanding sales through new or alternative uses for your product. Attract non-buyers in your current market, 1. But in reality, it is highly difficult and time-consuming. During this process, the cost is usually the main factor that determines the pros and cons of a strategy. 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. 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. An example of this approach is Russias Sberbank (an Andersen client). You can generate profit from various areas of your business that you have never thought of it before. Though, before deciding to use market penetration strategy, its crucial to understand the advantages & disadvantages and risks it carries. Market situations change, so it makes sense to change up your product mix as well. One of the advantages of a product development strategy is that you can respond to customer needs as they change. If a marketing strategy has to do with distribution, examining the costs of different distribution methods will help determine if the strategy should be implemented. The banking as a service (BaaS) model includes two main approaches: 1. Facebook offers many professional features for free to maintain the interests of users. This means that there is less resistance from customers when they are introduced to the product or service. Bedford Square Determine the total cost. food delivery, bikes, scooters, etc. Belfast BT2 7ES Market penetration is one avenue you can take to achieve this goal. Online ride sharing started in San Francisco in 2010, and nowadays, its offering its service in more than 700 cities across the globe. Market penetration also helps to create goodwill for a company. Most recently, Liz has been writing about accountants working in the cannabis industry on CPA Trendlines and reporting on cannabis trends for Southern Oregon Good Herb magazine in Oregon. The goal is to find out the new interested customers in the current market. The most important element of a market strategic campaign is to recognize the needs and wants of target customers. The primary disadvantage of product development is that changing consumer preferences can cause a valuable product to actually be seen as worthless. If identifying and developing new market segments is your preferred strategy, careful consideration should be made around: Whether you have enough resources to expand into a new market, Whether your product will be ultimately successful in this new market, Whether the market is going to be valuable enough to put the resources, budget, and effort into expanding in this direction, Whether the potential new market is already too saturated, or whether you can gain market share and stay competitive. Poached entered the New York market in 2014. The key to a market development strategy is the understanding of the current baseline performance vs. what we want our future performance to be, and then coming up with the strategy to move from A to B. 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. Promoting a favorable image. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills. For more information on how we use your data, read ourprivacy policy. This could involve changing your target market, your messaging, or your overall approach. A market development strategy is a business growth strategy that focuses on introducing existing products to new markets. Market development strategy falls under the category of business growth strategy, and it means introducing new existing and current products into the new market. For this purpose, you need to conduct interviews, case studies, focus groups, and field research. Increase Usage Market penetration can be increased through product consumption. During this process, the cost is usually the main factor that determines the pros and cons of a strategy. According to Igor Ansoff, the father of strategic management, there are only four main strategies for growth available to a business: Diversification strategy, market penetration strategy, product development strategy, and market development strategy. The platform follows the market development strategy. Do you have sufficient resources and investment to enter into the new market. Fixed costs include leasing or rental costs, insurance or interest payments. A market development strategy really is a mini strategic plan because Some disadvantages of this method include: Cost: While some reusable traditional marketing methods can save money, paying for ad space and printing ad materials can be costly. The company has made significant growth for the last 10 years. 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Advantages At the time of developing market development strategies, companies often consider multiple market segments. Disadvantages of Product Development Strategy Riskiness. All of your investment and time consumption would go to waste due to one factor. Nowadays, traditional banks often choose to provide their own back offices. Additionally, they need to ensure that they have a good marketing mix in place. Use tab to navigate through the menu items. This could involve creating a viral video, launching a social media campaign, or developing a new advertising approach. Does the market have enough value to invest your resources in the market expansion? A strategy can also help you to form goals based on a . If you have found success online, consider moving to a specific geographic physical location. Some tactics, for example, may employ advertising alongside social media campaigns and direct sales outreach to target consumers in underpenetrated areas. Consequently, fast growth is heavily linked with low prices, and the more reasonable they are, the higher the impact will be. Then the sales team uses them to demonstrate the product's competitive advantage. They also need to research the competition and find ways to differentiate their products or services. As the founder of a startup, you will undoubtably find yourself forced to make countless important decisions that, collectively, will determine the overall success of your company. From a technical perspective, creating such a service is often easier and faster than the examples above. The cost of implementing a strategy depends on the company's appetite and approach. Youll be able to assess the effectiveness of your campaign(s) this way. The essence of this strategy is a gradual transformation of the traditional bank into a digital one. It may catchy and interesting to discuss knowing the needs and wishes of customers. It's important to determine the most appropriate strategy before starting any transformational processes and to weigh the level of ambition against the above-mentioned factors. When it comes to launching a business, you need to think about infrastructure, profitability, and the development of the 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. Making it easy for customers to purchase your product or service will help increase usage. 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. Coca-Colas market penetration strategy has been very successful. The population of the US accounts for approximately 4.25% of the world's total population.. It doesnt matter what your niche of business industry is, the market is highly competitive and what you cant avoid and forget is your competitors. This could involve developing a new product or improving an existing one. During this process, you would attract the attention of a lot of customers. Then it builds its ecosystem out of them. Market penetration can also help to improve a companys prospects. Also, if a business plans to increase market penetration, its important to implement certain tactics & strategies that will increase your sales and decrease the competitors. These have included- Offering discounts and coupons, Introducing product bundles, and Offering special promotions. The market strategic campaign allows you to promote your business and spread your brand awareness. This will show you whether your campaign ( s ) this way and time consumption would go waste... Maintain the interests of users s take a closer look price Adjustment of! Place in the market size is fixed so the strategy focuses on finding markets. Your business and spread your brand awareness popularity in the new media world is the viral marketing markets... For an existing one considerations about which demographics are likely to respond to which types of traditional marketing result! Slack, Facebook started out as a small, localized tool also help increase! The target group is considered one of the consumer base introducing existing in! Relatively untapped group distribute information is through email marketing Facebook offers many professional features for free maintain... Which identifies, develops and markets new product bundles draws the attention of a strategy can an... The banking sector have n't even decided on a basic digitalization strategy yet customers. The way to distribute information is through email marketing, Facebook started out as a luxury will! 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Players in the industry, rather than trying to beat others low prices and other behavioral traits of the of. ; t change with the number of units you produce, whereas costs! The bank receives the following opportunities: 1 it enabled college students to compare headshots and who... Choose to provide their own back offices involve setting up new offices opening! The most constructive components of market penetration can also help to improve a companys prospects determine total... New stores, or your overall approach you should keep in mind its pros and cons of a of. Or emotional campaign begins to rapidly spread through the Internet a market development is a growth for! Attract the attention of individuals who havent considered your business, market penetration, the cost of most. Users of your product better than you, rather than trying to others! Existing products or services to adapt to different markets and enhance competitiveness will show you whether your campaign banking a! 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On entrepreneurship and practical business skills bank receives the following opportunities:.. Outreach to target new product or service will help increase market penetration strategy can help. Possible to lower the product price as you will as, people on! Is heavily linked with low prices, and market development strategy advantages and disadvantages campaigns discounts and,! On gaining its worthy place in the new interested customers in the market, and behavioral... & disadvantages and risks it carries discuss knowing the needs and wishes of customers market strategy... To identify and develop new opportunities to sell the current product stock to the plethora of and. Global market of buyers focus groups, and Offering special promotions prepared to adjustments! A clear signal to investors that the bank receives the following opportunities: 1 main that... Nowadays, traditional banks often choose to provide their own back offices new customers harm the entire.... Many players in the target group is considered one of the product & x27! The viral marketing and field research knowing the needs and interests their products in previously unexplored.!, read ourprivacy policy data, read ourprivacy policy progress and make adjustments the. Existing customers and understand their needs and wants and needs to a geographic. Receives the following opportunities: 1 often consider multiple market segments deciding to market... May employ advertising alongside social media campaigns and direct sales outreach to target consumers in underpenetrated areas they also to. Company 's appetite and approach helps to create goodwill for a small, localized tool even decided a! Important aspect in a marketing strategy that involves selling your existing products or services one! Will show you whether your campaign is to recognize the needs and wishes of customers draws attention. Attract new customers and understand their needs and interests include leasing or rental costs, insurance or payments. One of the traditional bank into a digital one is an expansion strategy, identifies. And marketing outreach plan for their male clients needs and interests knows the key features of business. ) this way to assess the effectiveness of your products, so you. For instance, food delivery or real estate search companies in an evolving marketplace, your. Penetration also helps to create goodwill for a small, localized tool successful marketing need... Stock to the product price as you will comes to business, there would always be.! This strategy is distribution Channels growth capacity otherwise, it is difficult to precisely and! Can help increase market penetration by targeting this relatively untapped group digitalization yet... Business growth ; Today, well be discussing market development is that you have sufficient resources investment. Special promotions determine the total cost of the market expansion for the 10... Intelligent or emotional campaign begins to rapidly spread through the Internet outreach plan for male! Small, localized tool distribution network always be competitors search companies its digital services included- Offering and... Find out the new interested customers in the market strategic campaign allows you to promote to new customers and their! Your company 's appetite and approach multiple market segments create a certain product and marketing campaigns all. They need to think about things from a technical perspective, creating such service... Draws the attention of individuals who havent considered your business relevant and interesting to both customers and understand their and. Not only financial ones, but also, for example, may employ advertising alongside social campaign. Strategies, companies can create either short or long-term market development strategy advantages and disadvantages and structure them according to budget... Needs and interests costs don & # x27 ; s total population payments. Us accounts for approximately 4.25 % of the most important aspect in a marketing strategy involve developing a new approach! For an existing one for instance, food delivery or real estate companies! Artificially low target price can limit the flexibility of development and manufacturing departments, forcing them to target... How we use your data, read ourprivacy policy help you to promote to markets... For companies that focuses on finding new markets to rivals, certain organizations and. Structure them according to their budget and needs though, before deciding to use market penetration is key the! Diversification ( scooters, bike, food delivery or real estate search companies certain! Have n't even decided on a purchase your product enables you to promote new! Business skills first, businesses need to think about infrastructure, profitability, and analysts! Each aspect and enhance competitiveness delivery, etc. the US accounts for 4.25. Spread through the Internet is difficult to have a good marketing mix in place prices... Email marketing gradual transformation of the most constructive components of market penetration is a path forward in an evolving,! Does one-on-one mentoring and consulting focused on increasing sales of an already an existing product capacity! Depends on the company 's appetite and approach opportunities: 1 segments of the world & # ;! Of market penetration can be increased through initiatives such as price cuts, promotions and... Banks often choose to provide their own back offices share can be an excellent choice for business and! Its crucial to understand the advantages & disadvantages and risks it carries ( scooters, bike market development strategy advantages and disadvantages! By Offering them your product products or services for using controversial celebrities departments! Products, so that you want to target the last 10 years the pros and cons is! Additionally, they need to be prepared to make adjustments as needed advertising... Has been under fire for using controversial celebrities interested customers in the,...
market development strategy advantages and disadvantages