You are here because you are curious about the business world. It is your dream that has brought you here. Hello there, Quitoffer greets you warmly. By now, it has become our habit to make you aware of simple but informative business content that takes you closer to your goal. We’ve discussed many blogs over the business world and today we are going to discuss a strategy, which every business needs to grow. The business that keeps the dream to shine at the top must follow this strategy. And this strategy is ‘ Market Development Strategy ‘. So, today’s topic is ‘ What is Market Development Strategy? with example ‘.
Please do not read it half-heartedly. With your full concentration, understand another important strategy of the business world.
So, let’s move on.
In the previous part, we discussed an equally important strategy of the business world ‘ What is market penetration strategy with its pros and cons ‘.
Market Penetration Strategy which is the first quadrant of Ansoff matrix implementing with the existing product in the existing market to enhance the market share.
Here, we are not going to discuss Market Penetration Strategy but Market Development Strategy.
Every business, small or big, wants to expand its operations after launch. Business is one in which there is no limit regarding time, customer base, etc. No business wants to bind itself with only limited buyers.
So, to grow, the business needs to follow some growth strategy. Market development strategy in one of them.
What is Market Development Strategy?
For a while, prevent your eyes from going further in this blog and think about what kind of meaning these words (market development strategy) generate in your mind.
If you are thinking about something development then you are right. Market development strategy is concerned with the development of a new market where a company can grow its growth with new customers by its existing product.
Market development strategy is a business expansion strategy whereby a company expands its customer base or buyers of its product by entering into a new market with the same product.
It is another strategic tool to grow business given by Igor Ansoff. This strategy follows the existing product within the new market.
The company decides to increase its revenue by entering new markets. The company moves its product to a little-known market (geographically) with the primary objective of customer base enhancement.
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Advantages of Market Development Strategy
1. Enhance the customer base: Market development strategy helps a business to add more customers to its customer base. The market development strategy introduces people of another geographical area to the company’s products and transforms them into the product’s buyers.
2. Makes you the leader of the industry: If the implementation is done keeping in mind every aspect then this strategy can make you the leader of the industry in which you are in. Market development strategy can make the company dominant in the market by reaching the product to the maximum people.
3. Growth of the company: Since this strategy helps the business to discover new customers. Once the company expands its customer base then the company can offer another product to the customers which can help the company to grow.
4. Economies of scale: Having a large customer base, the company is required to produce in large quantities. As a result, the company can reduce its costs.
5. Increase the revenue: Market development strategy gives an advantage to the company by increasing the revenue of the company. Getting more and more customers will increase the company’s sales which in turn enhances the revenue model.
Disadvantages of Market Development Strategy
1. Competition: Launching a new product is not a piece of cake, but it does require a lot of guts and efficient implementation of strategies. While launching a product into a new country or nation there are a lot of chances that a company is already doing well in the same market with the same product.
So, in this way market development can make you face the problem of competition. And in that scenario, you need to kill the competition.
2. Puts pressure on management: Developing a new market can put trouble in management’s way. To implement this strategy a business needs to increase its size, employees, production to serve better to the new as well as existing customers. Which makes the management more engage.
3. Increased risk: Establish a product in a new market requires a huge fund. Whether the product will sell or not. Whether the customer will like your product or not. Will your product win the competition or not? These kinds of questions always associated with this strategy and that makes market development strategy riskier.
4. This can collapse the established market: A business that is trying to enter a new market is always associated with the capital it has invested. If that money sink, then this has an impact on its new market as well as its existing market. And this can collapse its established market.
5. Loss of potential customer: The potential customers are those who have been associated with the company for a long time, i,e; the customers of the current market as compared to the customers of the new market.
In order to make the market development strategy, successful businesses often ignore the health of the current market and focus on the new market. As a result, the company loses its potential customers.
How to Apply Market Development Strategy?
By now, we have come to know about the market development strategy, and what are its advantages and disadvantages. Let us now know how a business can implement this strategy.
Below are some points through which a company can successfully implement this strategy.
1. Do thorough research on the customer segment of that particular market. You should be aware of the likes and dislikes of your target customers.
2. This knowledge of your ideal customers is known as Demographics. Having proper knowledge of demographics helps give you an indication of whether your product can do well in that market or not.
3. Do intensive research on the competitive environment of that particular market.
4. If the same product is already being used by your target customer, then you need to plan your strategy accordingly.
5. A business may need a price penetrations tactic to kill the competition.
6. Before entering a new market, a business should know about its economic moat and make it known to its target customer.
Example of Market Development Strategy
If you look around then you’ll find that there is no dearth of such examples who became the market leader by implementing market development strategy.
There are some other examples. These are Coca Cola, Adidas, Reebok. These companies expanded their reach in different markets by following this strategy.
In an era of cut-throat competition, it has become so difficult for a business to enter into a new market. Proper implementation of a market development strategy can be a panacea for the business that wants to expand their range.
To apply any strategy, it is very important to have complete information about it. We should know what are its strengths and weakness’ which we have mentioned above in detail.
In this blog ( What is Market Development Strategy? with Example ), we have discussed some points through which any business can enter a new market and be successful.
So, it was all about the market development strategy. We are expecting that you enjoyed the blog and learned a lot from it. If you have any query then comment below in the comment section.
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