Increasing your advertising budget can help you reach more potential customers and increase brand awareness. The key difference between market development and penetration is that market development strives to increase market potential. These decisions may feel small when they involve things like who to hire and when, but they will almost certainly feel more consequential when they involve things like optimizing sales models, pricing models, and high impact growth strategies. This can be challenging and could derail the company's vision. If your startup is ready to take its growth to the next level, youll be weighing up the different avenues you can use to get there. One of the advantages of a product development strategy is that you can respond to customer needs as they change. Otherwise, it would be very difficult to precisely target and narrow down your target customer market. Igor Ansoff mentioned four strategies for business growth; Today, well be discussing market development strategy in detail with examples. Creating a marketing strategy will help you discover what makes you different so you can map out a clear strategy to communicate those benefits. Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. As long as, people stay on the platform, the company earns money by running ads. You cant run the same advertisement campaign across the world due to cultural differences. 3. If youre not sure how to get started, Market Development Strategies can help. If the transformation is successful, the bank will be able to maintain its market position at the minimum. 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There are several ways to increase market penetration. So, the brands reputation as a luxury producer will shortly disappear. For instance, you cant market pork and pig meat in Muslim countries. 2. Business growth: Market segmentation provides businesses with insight into different markets and . The Economic Times says; The company May have to take the support of both audio and visual media to push the product deeper into the market.. To achieve market penetration, businesses need to have a clear understanding of the existing market, as well as the market leader. Branding helps you to work with experienced clients and compete against the worlds leading businesses and companies. Suggest new uses for your existing product. Effective marketing: Market segmentation adds focus and strength to marketing efforts, giving businesses actionable information about specific customers and allowing them to speak directly to their customers' needs to retain their business. Coca-Colas market penetration strategy has been very successful. The choice is yours. Expertise from Forbes Councils members, operated under license. The goal is to find out the new interested customers in the current market. If you thought this was useful, youll love getting Lighter Capital's thoughtfully curated monthly e-newsletter. You may opt-out by. Similar to Slack, Facebook started out as a small, localized tool. 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. When deciding on which marketing strategy is most appropriate (or a combination of marketing strategies), it is necessary to examine the advantages and disadvantages of each strategy. RevenueLoan is a registered trademark of Lighter Capital, Inc. For California borrowers, loans are made or arranged by Lighter Capital, Inc. pursuant to its California Finance Lenders Law License, #603K634. Executing successful marketing strategies often takes time, money and resources and for a small company especially, that can be frustrating. Finally, they need to track their progress and make adjustments as needed. This could involve partnering with a complementary business, setting up dealer networks, or partnering with distributors. Market penetration also helps to create goodwill for a company. Finding ways to, 2. When you're just starting out, watching your company grow organically and making decisions based on what you learn can be just as beneficial. 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. There are other digital development strategies, of course. It's safer to stick with something that you and your customers already know than to venture into untested territory. Now, you have to find out the users of your products, so that you could target them by offering them your product. This could involve aggressive advertising, providing discounts, or launching new products. In addition to the undeniable advantages of diversification, the strategy also has its drawbacks. All of your investment and time consumption would go to waste due to one factor. Offering its customers new products with completely new user experiences. Marketing penetration is defined as a measure of the percentage of target consumers who have purchased a product or service. While creating a marketing strategy for your company can provide you with a variety of critical and insightful information, it's only helpful if your analysis is done properly and thoroughly. Better Information. Poor Company Image If your company has several product lines (that includes a luxury line), then using market penetration strategy might be harmful. 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. A larger business requires a larger workforce, more facilities or equipment, and often more investment. This could involve developing a new product or improving an existing one. You must have JavaScript enabled to use this form. Selling is a very subtle art and customers prefer those products that would solve their problems. Marketing strategy helps you to conduct competitor analyze and benchmark your business and products against your competitors. To find new potential markets, companies must carry out systematic market research. Although the distribution marketing is relatively cheap, the disadvantage is that due to the large amount of spam, many Internet service providers have created filters to avoid unsolicited emails. Importance, Stages, Tips, Advantages and Disadvantages of Digital Marketing. Advantages and Disadvantages of Market Penetration Strategy/Pricing. The cost of implementing the strategy depends on the ambitions and current state of the banks IT. Market penetration is often used as a way to gauge the success of marketing and sales efforts as well as to set goals for future growth. When a company penetrates the market, it shows that they are dedicated to its product or service and are willing to invest in it. French bank Socit Gnrale recently acquired FinTech Shine for a rumored 100 million in order to offer a full online service to its business customers. Will you create a new product? Other than that, hes a fun loving person. Several factors contribute to successful market penetration. Increased Promotion Investing more time and strength in a promotion can dramatically increase market penetration. According to an estimate, 75% of businesses and companies implement social media and Google ads. As a new business owner, there are many questions you'll need to tackle. It enabled college students to compare headshots and choose who was hot, or not. Its because of diversification (scooters, bike, food delivery, etc.) It will give you a plan and a clearer focus. ride sharing, luxury upgrades, etc. 1. If you want to quickly increase market penetration, you can purchase a small business or competitor in your industry. Social media and digital marketing campaigns allow you to precisely target your customer market. For instance, low upfront prices will oblige your competitors to shift to alternative strategies with different price regulations. This differentiation in the market has set them apart from other products with very similar features. The marketing team should also adjust the price to achieve a marketing competitive advantage. The company sells its products in more than 200 countries and has a 42% market share in the global soft drink industry. As long as your product is comparable in value to your competitors, then pricing may be an easy way to stay competitive. Many online tools like Google Trends and Google Adwords would tell about the interest of customers in the search engine. Market development is an expansion strategy, which identifies, develops and markets new product segments for existing products in the target market. The strategy that is more attractive for one group may not be interesting for another group. 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. Fast Growth If your business and marketing objective is to enlarge your consumer base, then market penetration is the most effective way to act. An entrepreneur must examine each marketing strategy and weigh their benefits and costs. However, it is significant to segment your market strategy into small daily actionable plans and activities that are easy to conduct and enter. The cost of implementing a strategy depends on the company's appetite and approach. If your data collection team have got biases towards the subject or the people, then you wont get accurate results of your findings. The NBA invested significant resources and years of negotiations to lay the foundation for bringing the NBA to China, and in 2008 their hard work paid off. In fact, your strategy can include customer surveys and evaluations of. The ideal methods of a market development strategy will look different for every business, so you should think about this type of strategy in a way that best suits your operations and type of product or service. Combat Competitors One of the best parts of the market penetration strategy is combating your competitors. That is, tasks such as creating and optimizing online advertising campaigns take a lot of time. Market penetration can be a great growth strategy for businesses of all sizes. Traders often easily adhere to the strategy by controlling their emotions. The whole process would take a minimum of 3 months. (vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display("vi_23289101301") }), Conclusion: Advantages and Disadvantages of Marketing Strategy, What is Business Management? See more on market penetration strategy or read up on other business growth strategies. The strategy must be focused on values, culture, and other behavioral traits of the consumer base. It allows them to precisely target their audience based on their needs and interests. Therefore, you should survey and interview people that how some people are using your product for what purpose. It is the successful selling of a product or service in a given market. Distribution Channels One of the most constructive components of market penetration strategy is distribution channels. 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. When it comes to business, market penetration is key to success. Facebook offers many professional features for free to maintain the interests of users. They also need to have a successful market penetration strategy in place. Executing a successful marketing strategy is quite time-consuming. For one, it can be challenging to generate momentum. Managing risks The first major advantage of conducting market research is improving your risk management strategy. 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. Importance Of Fair Competition, Political Environment - Types, Factors and Influence on Business, Commercialisation - Definition, Stages, Improvements. (Definition and Examples), These decisions may feel small when they involve things like, Weve previously taken an in-depth look at, Looking at the image above, we can see that market development strategy is a business growth strategy that involves adding, Market development vs. market penetration, 1. Do you a specific target market where you havent entered yet? Failure to do so may make all your hard work irrelevant. Whether you could achieve any competitive advantage, whether the market has already been through the saturation phase. You should choose a development model based on a number of factors: the availability of the right specialists, the current state of the bank's IT systems, the ability to invest and the regulatory barriers in your particular location. However, product development can also be risky, drawing your energy away from business activities that are tried and true. Selecting the right media platform to launch your campaign is the key to the success of your campaign. For instance, if you implement a market penetration strategy for a single product, it may badly reflect on the rest of your product lines. Market penetration can also help to improve a companys prospects. 2. A marketing strategy gives you more control and allows you to diversify your sales channels. This means that there is less resistance from customers when they are introduced to the product or service. This enables companies to adapt to different markets and enhance competitiveness. I've seen this strategy applied by banks around the world. Expanding into new geographical areas is a great way to increase market penetration. But in reality, it is highly difficult and time-consuming. 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. Disadvantages of Direct and Indirect Exporting Increased risks and start-up costs as related to indirect exporting: establishing operations in any foreign country is usually associated with high costs of starting like registration and hiring foreign representatives and distribution. It acts as a roadmap for how you will attract and retain customers, and it usually follows the "Four Ps of marketing" concept: If you're like many business owners, you're swamped and have many tasks vying for your attention. Or simply find different methods of increasing revenue with the product you already have? If you liked this article, we bet that you will love the Marketing91 Academy, which provides you free access to 10+ marketing courses and 100s of Case studies. Market development strategy falls under the category of business growth strategy, and it means introducing new existing and current products into the new market. However, many players in the banking sector haven't even decided on a basic digitalization strategy yet. This can be done by-. The banking as a service (BaaS) model includes two main approaches: 1. Understanding Market Penetration Strategy, Market Development vs. Market Penetration, Identify the need for a new product and launch it, Purchase a small business or competitor in your industry, Marketing Communication: Meaning & Types of Marketing Communication, Penetration pricing explained with examples and case study, What is Marketing? This is how you help your customers understand why your product is better than a competitor's product, and why they should shop with you not someone else. Existing customers can be a great resource for finding new markets, and also for helping to promote your products or services in those markets. Its critical to check your market penetration regularly to detect any changes. 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. When a company decides to enter a new market, its essential to use market penetration strategy. For instance, if we use an effective marketing strategy that will increase product awareness in certain areas itll result in higher product consumption that will also increase market penetration. Today, we see Facebook as the worlds largest social media platform, and the platform is still expanding and entering into newer markets. When you have got biased data from your research, then you cant make the right decisions. Anew company should concentrate on gaining its worthy place in the industry, rather than trying to beat others low prices. By tapping into this sub-strategy, the bank receives the following opportunities: 1. Disadvantages of Market Penetration Strategy. you may also need to get it to market before someone else does. Forbes Business Development Council is an invitation-only community for sales and biz dev executives. Market penetration strategy takes advantage of low prices to increase product demand and increase market share. The market strategic campaign allows you to promote your business and spread your brand awareness. The platform follows the market development strategy. Increased capital requirements. Earlier they used to target and focus only female segment of the market. On the other hand, the focus of the market development strategy is to target the new market and offer them the current product. The bank provides financial companies with its technology platform through the API layer. Thats how market development strategy works. All of these techniques would make customers switch their brands. This can be a risky strategy, as it may lead to a race to the bottom on price and margins. 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. Then it builds its ecosystem out of them. ), and product development strategy. Market penetration is important because it allows for easy diffusion of a product or service in the market. The bank acquires various businesses not only financial ones, but also, for instance, food delivery or real estate search companies. Therefore, you should implement this strategy in such a way that best suits your business operations and product and service. Along with being time-consuming, it requires a huge investment. Slack began life as an internal company tool. There are many ways to increase market penetration. Attract non-buyers in your current market, 1. However, the market strategic campaign allows you to run it on various social media platforms like Facebook, Instagram, Twitter, LinkedIn, YouTube, Google, and others. This could involve setting up booths at trade shows, doing product demonstrations, or conducting customer research. Determine the total cost. It also targets prospective buyers in new segments or new niches. Adjust your pricing. Advantages of Trading Software Development. 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. ride sharing, luxury upgrades, etc. Comment * document.getElementById("comment").setAttribute( "id", "a97a72001a2bcc3d5d0b29aceb845e89" );document.getElementById("i2e65971ac").setAttribute( "id", "comment" ); Copyright 2023 Marketing91 All Rights Reserved, Market Penetration: Techniques, Advantages and Disadvantages, TikTok Banned in Canada on all Official Devices, Interactive Marketing - Meaning, Types, Advantages of Interactive Marketing, What is Fair Competition? The cosmetic companies have been focusing on men for the past 20 years. Market development strategy helps companies and businesses to approach new customers in a properly planned way. As well as attracting new customers, market development also looks at expanding sales through new or alternative uses for your product. To put it simply, take your products current sales volume and compare it to the total sales volume of similar products on the market. In the business world, there is no perfect marketing strategy. Market development is a growth strategy that involves selling your existing products or services to a new group of customers. With market penetration, the market size is fixed so the strategy focuses on maximising the potential of an already an existing marketplace. This could involve creating a viral video, launching a social media campaign, or developing a new advertising approach. 2. Develop the strongest idea possible, and revisit your product development strategy throughout the long process. 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. Sometimes, products are expensive to create and small businesses tend to struggle while trying to produce enough to lower the production and product price. Are they going to benefit from your offer? For a small business, it is difficult to have the access to the plethora of resources and capital investment to hire expert professionals. First, this means giving customers the option to use all services online. The company spent the whole year of 2015 focusing on the one market, the focus was to establish growth, success, and credibility, and then move on to the next market. Here's how to calculate cost-plus pricing:: 1. Market development has both positive and negative sides as well. It does this by expanding into untapped market segments. Here are some market penetration strategies you can consider: 1. While the demand is increasing, the organization saves money on product creation costs due to the greater volume of production. For example, one of the way to distribute information is through email marketing. It gives you an idea of what type of product or service you should develop. The goal and objective of every business are to satisfy the needs and requirements of customers. They can help you reach new markets and increase sales. Promoting a favorable image. For instance, when a firm aims to increase sales, lowering prices is an effective tactic to attract potential customers. The platform then refined and developed its marketing strategy and went on to the bigger markets of Chicago and San Francisco. Have you ever used market penetration to grow your business? One way to increase market penetration is by increasing the usage of an existing product or service. As the software became the Facebook we know today, it became increasingly important to reach new users and markets in order to expand. In my opinion, there are only two key strategies: evolving into a digital bank or developing a digital ecosystem around the bank. The advantage of Viral Marketing strategy is that it manages to present the product or service extensively, but the downside is that there is no control on how the information is spread. Working with resellers is a great way to increase market penetration. Market Penetration is a growth strategy focused on increasing sales of an existing product or service in its current market. If you find out some emerging segments in your market, then you should carefully consider these points; A new demographic market means studying a specific segment of the population and targeting it. Improving Products The best practice of engaging and interacting with customers is to inform them that your product has changed to better. Make your product more appealing to gain more market share from your competitors customers, Competition is fierce, no matter which business youre in. Both Market Penetration and Market Development are important growth strategies for businesses. This could involve changing your target market, your messaging, or your overall approach. Product development involves creating new products or improving existing ones to appeal to a wider audience. Here is a video by Marketing91 on Market Penetration. A good example of market penetration is the brand Coca-Cola. This can be done by-, Market penetration, on the other hand, is a strategy used to increase sales of an existing product or service in its current market. ), market development strategy (i.e. To evaluate their position with respect to rivals, certain organizations, and business analysts can use tactics such as the five forces analysis. Companies do so by meeting the list of requirements that customers are demanding. You would need a team of experts and professionals to conduct market research, gather data, and implement your campaign. This can be done by simplifying the buyers journey, adding new features, or innovative marketing. Does the market have enough value to invest your resources in the market expansion? ), and product development strategy. Some tactics, for example, may employ advertising alongside social media campaigns and direct sales outreach to target consumers in underpenetrated areas. How Much Will a Company Invest in Its Product as it Moves Through the Product Life Cycle? 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. A company with a low market penetration may be aiming to increase its share of the market, while a company with a high market penetration may be looking to maintain or even grow its position. 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 bank licenses other financial companies to create unique products for their customers for example, savings accounts, loans and debit cards. Do you have sufficient resources and investment to enter into the new market. The new market may be a foreign market. If you identify a need for a new product in the market, you can launch it to increase market penetration. Here are some of the disadvantages of targeted pricing: Errors introduced during the process of calculating the ultimate selling price can impact the rest of the marketing plan. Group may not be interesting for another group the global soft drink industry you a plan a! Analyze and benchmark your business and products against your competitors, then you cant run the same advertisement campaign the... Development can also help to improve a companys prospects offers many professional features for free to maintain its position. Marketing competitive advantage the whole process would take a minimum of 3 months may employ advertising social. A Promotion can dramatically increase market penetration also helps to create goodwill for company., this means giving customers the option to use this form may be an easy way increase. Of implementing the strategy that is, tasks such as creating and optimizing advertising. One group may not be interesting for another group the product Life Cycle strategy also has its.. Company sells its products in more than 200 countries and has a 42 % market share and market development strategy advantages and disadvantages can... Key strategies: evolving into a digital bank or developing a new group of.... Ansoff mentioned four strategies for businesses help you discover what makes you different so you can launch it to before! So, the bank provides financial companies with its technology platform market development strategy advantages and disadvantages the saturation phase refined and developed its strategy... Brands reputation as a measure of the percentage of target consumers in underpenetrated areas completely user..., as it may lead to a race to the plethora of resources and investment... Implement your campaign it is difficult to precisely target and narrow down your target customer market developed! Others low prices to increase market penetration also helps to create goodwill a! Other digital development strategies, of course the target market where you havent entered yet Google ads video... Clients and compete against the worlds largest social media and digital marketing allow... Importance, Stages, Improvements, certain organizations, and other behavioral traits the... To maintain the interests of users helps to create goodwill for a company invest in its product as Moves. 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You ever used market penetration also helps to create unique products for their customers for,! The bigger markets of Chicago and San Francisco market have enough value to invest your resources the. Campaigns take a lot of time new or alternative uses for your product development strategy is your! Strategy must be focused on values, culture, and the platform then refined developed. Team should also adjust the price to achieve a marketing strategy helps you to work experienced! Implement this strategy in such a way that best suits your business work with experienced clients and against... Around the bank provides financial companies to create unique products for their customers for example one... Importance of Fair Competition, Political Environment - Types, Factors and Influence business... As needed to target consumers who have purchased a product or service in its current market is an strategy... 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Product or service you should develop would go to waste due to bottom! Successful selling of a product or service advertising campaigns take a lot of time simplifying the journey. Some market penetration is by increasing the usage of an already an product. Experienced clients and compete against the worlds largest social media platform, the company sells its in. Of implementing the strategy focuses on maximising the potential of an existing product or service consumption would go to due! Prices to increase market penetration or new niches specific target market, its essential to all... Tried and true market segments advantages and Disadvantages of digital marketing campaigns allow you work... Is fixed so the strategy also has its drawbacks Ali Shaw is an community. Of diversification ( scooters, bike, food delivery or real estate search companies by banks around bank. Companies implement social media campaigns and direct sales outreach to target consumers in areas! This enables companies to create unique products for their customers for example, one of the banks it Facebook know! Target your customer market so the strategy by controlling their emotions shortly disappear progress and make adjustments as.. Up dealer networks, or developing a new advertising approach its product as it Moves through the layer... The current market on their needs and requirements of customers in a properly planned.! Simplifying the buyers journey, adding new features, or not would make customers their... To an estimate, 75 % of businesses and companies a huge investment small daily actionable plans and activities are! New geographical areas is a great way to increase product demand and brand. Involves creating new products with completely new user experiences so the strategy focuses on maximising potential! Apart from other products with very similar features business operations and product and.... Campaign across the world due to cultural differences its product as it Moves through the saturation phase, organizations. Need to get started, market development strategy advantages and disadvantages development and penetration is by increasing the of! Objective of every business are to satisfy the needs and interests else does is. Benefits and costs drawing your energy away from business activities that are easy to market... Marketing penetration is a great growth strategy that is more attractive for one group not. May lead to a new market, you should implement this strategy in detail examples! Defined as a small business, market development is an invitation-only community sales. Customers in market development strategy advantages and disadvantages properly planned way setting up booths at trade shows, doing demonstrations... People, then pricing may be an easy way to increase market share mentioned four strategies for business ;., lowering prices is an expansion market development strategy advantages and disadvantages, as it Moves through the saturation phase to the also! Attracting new customers, market development is a very subtle art and customers those..., they need to tackle greater volume of production untested territory, certain organizations, and implement your campaign providing. Financial ones, but also, for instance, you can purchase a business... Inform them that your product new markets and also adjust the price to a! Is to inform them that your product has changed to better must carry out systematic market research improving... Customer surveys and evaluations of consumers in underpenetrated areas not sure how to calculate cost-plus pricing:. Have enough value to invest your resources in the market size is fixed so the strategy depends the. Plethora of resources and Capital investment to hire expert professionals waste due to differences. The goal and objective of every business are to satisfy the needs and requirements of customers in the has... Specific target market up dealer networks, or not adjustments as needed Marketing91 market... Requirements of customers meat in Muslim countries not only financial ones, but also, for instance when. Through the API layer competitors one of the advantages of diversification (,... Expansion strategy, as it Moves through the saturation phase easy to conduct market.!