What is Market Development?

Market development is a strategic step taken by companies to develop the existing market rather than looking for a new market. The company looks for new potential customers to whom they can sell their existing products. This strategy is used when the product is not completely new, but the market is. The company must find a way to increase its market share and make its product known in the market.

Market development involves a careful examination of potential segments within the market, understanding customer needs and behaviors, and aligning marketing strategies to meet these specific needs. This strategy is often used by companies that have a strong product but are not achieving the desired market share or revenue.

Understanding Market Development

Market development is a growth strategy that identifies and develops new market segments for current products. It is a strategy that businesses use when trying to expand into new markets with existing products. This can be achieved by selling products in geographically new regions, targeting new customer segments, or using new sales channels.

Market development is different from market penetration, which involves selling more of the same product to the existing market. Market development is also different from product development, where new products are developed for the existing market. It is a more risky strategy than market penetration due to the uncertainties that come with new markets.

Key Elements of Market Development

The first key element of market development is market research. This involves identifying potential new markets, understanding their needs, and determining how the product can meet these needs. Market research can be done through surveys, interviews, and focus groups among other methods.

The second key element is marketing. This involves creating awareness about the product in the new market. This can be done through advertising, public relations, and sales promotions. Marketing also involves positioning the product in a way that it meets the needs of the new market.

Benefits of Market Development

Market development can lead to increased sales and profits if the strategy is successful. It can also lead to a larger market share and increased brand recognition. Additionally, it can help diversify the company's customer base, reducing the risk of relying on a single market.

However, market development also comes with risks. These include the risk of failure in the new market, the risk of diluting the brand, and the risk of increased competition. Therefore, it is important for companies to carefully consider these risks before deciding on a market development strategy.

Market Development Strategies

There are several strategies that companies can use for market development. These include geographic expansion, targeting new customer segments, and using new sales channels. The choice of strategy depends on the company's resources, capabilities, and the nature of the product.

Geographic expansion involves selling the product in new geographic areas. This can be within the same country or in foreign countries. This strategy requires a good understanding of the new market's culture, consumer behavior, and legal environment.

Targeting New Customer Segments

Targeting new customer segments involves identifying and targeting new groups of customers within the existing market. This can be done by identifying unmet needs or by creating new uses for the product. This strategy requires a deep understanding of customer needs and behaviors.

Using new sales channels involves selling the product through different channels. This can include online sales, direct sales, or through third-party retailers. This strategy requires a good understanding of the sales channel and the ability to manage relationships with channel partners.

Challenges in Market Development

Market development comes with several challenges. The first challenge is understanding the new market. This involves understanding the market's culture, consumer behavior, and legal environment. It also involves understanding the competition in the new market.

The second challenge is creating awareness about the product in the new market. This involves marketing the product in a way that it meets the needs of the new market. It also involves positioning the product in a way that it stands out from the competition.

Market Development and the Ansoff Matrix

The Ansoff Matrix is a strategic planning tool that provides a framework to help executives, senior managers, and marketers devise strategies for future growth. It is named after Russian American Igor Ansoff, who came up with the concept.

Market development is one of the four strategies of the Ansoff Matrix. The other three are market penetration, product development, and diversification. Market development involves selling existing products in new markets, while market penetration involves selling more of the same products to the existing market. Product development involves developing new products for the existing market, while diversification involves selling new products in new markets.

Applying the Ansoff Matrix

When applying the Ansoff Matrix, companies need to consider the risks associated with each strategy. Market penetration is the least risky strategy as it involves selling more of the same products to the existing market. Product development is more risky as it involves developing new products. Market development is even more risky as it involves selling existing products in new markets. Diversification is the most risky strategy as it involves selling new products in new markets.

Companies also need to consider their resources and capabilities when choosing a strategy. For example, market penetration may require significant marketing resources to increase market share. Product development may require significant research and development resources. Market development may require significant resources to understand and enter the new market. Diversification may require significant resources to develop new products and enter new markets.

Conclusion

Market development is a growth strategy that involves selling existing products in new markets. It requires a good understanding of the new market and the ability to create awareness about the product in the new market. It comes with risks, but it can also lead to increased sales, profits, and market share.

Companies need to carefully consider their resources and capabilities before deciding on a market development strategy. They also need to consider the risks associated with each strategy. Despite the challenges, market development can be a powerful strategy for growth if executed properly.