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It helps companies in the growing period to identify new opportunities and sell their current products in the new unexplored market. Market penetration also helps to create goodwill for a company. The platform keeps on growing with its existing product. Product development involves creating new products or improving existing ones to appeal to a wider audience. 2023 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. It's a clear signal to investors that the bank is developing its digital services. When expanded it provides a list of search options that will switch the search inputs to match the current selection. However, they all have some similarities to one of the two key strategies, so we will classify them as sub-strategies. 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? Though, before deciding to use market penetration strategy, its crucial to understand the advantages & disadvantages and risks it carries. Market development has both positive and negative sides as well. 0800 181 4422. In turn, this can give you fresh ideas about how to market, and who to market to. The absence of a clear vision of and plan for integrating a fintech into a legacy structure may not bring the desired effect. For example, advertising is one of the most effective ways to increase brand awareness. One of the primary benefits of exporting is access to a global market of buyers. food delivery, bikes, scooters, etc. Disadvantages of Market Penetration Strategy. Devra Gartenstein founded her first food business in 1987. This is a BETA experience. Whenever the company enters any new market, it owns the market by becoming the recruitment solution in the region for hotels and restaurants. This can be done through coupons, sales, and special promotions. This will allow you to quickly enter the market and gain market share. 2. Surveying and interviewing your customers and your team can reveal innovative ways that people are using your product to solve their problems. Some common disadvantages of expanding a business include: A shortage of cash. For example, if your organizations primary source of income is selling through retail outlets, it can open other channels like email marketing, telemarketing, etc. 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. Companies do so by meeting the list of requirements that customers are demanding. A market development strategy really is a mini strategic plan because If you feel that your current marketing strategy is not working, consider revamping it. The approaches to building an ecosystem can differ: 1. Such market development strategies help you to persuade non-buyers in the current market to try your product. 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 you expand your customer market, then it brings a lot of new opportunities in terms of more revenue, sales, and new leads. Is it worth investing in the new market and approaching new customers? There are other digital development strategies, of course. If you have a sales team, increasing their activity can help 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 larger business requires a larger workforce, more facilities or equipment, and often more investment. While market penetration is the lowest risk growth strategy, market development is a close second because unlike product development and diversification these two strategies dont include the extremely high risk nature of developing and selling a new product. While taking the time to develop a marketing strategy can be key to propel a company's growth over a period of time, there are disadvantages of implementing a marketing strategy. In other words, a market development strategy helps businesses in a growth phase identify and develop new opportunities to sell their current line of products in previously unexplored markets. Have you ever used market penetration to grow your business? Social media and digital marketing campaigns allow you to precisely target your customer market. The company has made significant growth for the last 10 years. Market development strategy falls under the category of business growth strategy, and it means introducing new existing and current products into the new market. An example is the Russian division of Societe General: Rosbank Dom. I agree that it can be difficult to create a strong go-to-market strategy for the business owners but not for the professionals. As the software became the Facebook we know today, it became increasingly important to reach new users and markets in order to expand. Purpose, Benefits and Limitations, What is a Marketing Channel? 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. 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. Sometimes, products are expensive to create and small businesses tend to struggle while trying to produce enough to lower the production and product price. You can update your choices at any time in your settings. Market penetration can also help to improve a companys prospects. 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? Market penetration strategy takes advantage of low prices to increase product demand and increase market share. Which method you choose will depend on your product, your messaging, or your overall approach. WD-40 is a classic example of a versatile product. Human beings are very creative and theyre curious to learn new ways to get the job done. It does this by expanding into untapped market segments. As well as attracting new customers, market development also looks at expanding sales through new or alternative uses for your product. There is a growing embrace of niche ecosystems when a bank focuses on meeting customer needs in a certain area. Missed Opportunities Brands that produce luxury products often make mistakes like marketing it as a cheap item. A marketing strategy gives you more control and allows you to diversify your sales channels. August 10, 2019 By Hitesh Bhasin Filed Under: Marketing. Unmet Production Costs Its not always possible to lower the product price as you will. This means that there is less resistance from customers when they are introduced to the product or service. Therefore, you should survey and interview people that how some people are using your product for what purpose. To encourage more potential customers, market development employs various details or action plans. Increased Promotion Investing more time and strength in a promotion can dramatically increase market penetration. Suggest new uses for your existing product. (vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display("vi_23289101301") }), Conclusion: Advantages and Disadvantages of Marketing Strategy, What is Business Management? Considerations about which demographics are likely to respond to which types of traditional marketing can result in more strategic and cost-effective marketing plans. Hence deciding right strategy for the target group is considered one of the most important aspect in a marketing strategy. Development of a Marketing Strategy To develop a marketing strategy, one should analyze the advantages and disadvantages of each aspect. Creating a marketing strategy will allow you to take a step back for a moment. This differentiation in the market has set them apart from other products with very similar features. Ansoff proposed that the four basic growth alternatives he identified could be defined using a 22 matrix (known as the Ansoff Matrix) made up of new and existing products on one axis, and new and existing markets on the other. Importance, Stages, Tips, Advantages and Disadvantages of Digital Marketing. They also need to research the competition and find ways to differentiate their products or services. Successful marketing strategy may depend on the use of different strategies to obtain the best result . Determine the total cost. 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. Market development strategy helps companies and businesses to approach new customers in a properly planned way. It also targets prospective buyers in new segments or new niches. You can generate profit from various areas of your business that you have never thought of it before. Market Share can be increased through initiatives such as price cuts, promotions, and marketing campaigns. They can help you reach new markets and increase sales. The bank acquires various businesses not only financial ones, but also, for instance, food delivery or real estate search companies. Find out how to segment your customers. 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. Learn more in our Cookie Policy. If you are facing problems in various areas, then market strategy wont help you to deal with them effectively. Resellers are businesses that sell products or services on behalf of other businesses. Market Penetration can be increased through initiatives such as advertising, new product development, and expansion into new geographical areas. A market development strategy aims at reaching non-consuming users in currently profitable segments. Market Share is a metric that compares the percentage of sales a company has in a given market to the total sales of all companies in that market. Are they going to benefit from your offer? An example of a large product sector for women may be an established business with a product that has a significant market share. It helps you to focus on various elements and factors that would impact your entire marketing strategy. Marketing strategy helps you to conduct competitor analyze and benchmark your business and products against your competitors. For instance, a software house designed a new software product. ), market development strategy (i.e. When a company decides to enter a new market, its essential to use market penetration strategy. With a central focus on how people use the app, and what they are trying to accomplish while they do so, Facebook can constantly develop new market strategies to drive growth, all within their core product. Similar to Slack, Facebook started out as a small, localized tool. 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. To evaluate their position with respect to rivals, certain organizations, and business analysts can use tactics such as the five forces analysis. However, marketing strategy offers you a layout to best approach your audience and their needs and wants. 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. Part of Slacks market development strategy includes obsessing over user behavior to increase its usage and grow revenue from its existing product. This can be done by simplifying the buying process, providing free shipping, or offering financing options. This is how Tinkoff (an Andersen client) and Ant Financial work. So, periodically updating your product (always to better, never lower the quality) and changing its packaging will, most probably, benefit your business. It now also integrates with many other popular SaaS products such as Dropbox, Zendesk, and Zapier to ensure ongoing growth and user adoption. Every marketing strategy has its own advantages and disadvantages. Though, market penetration strategy doesnt work for all products and businesses, so some companies use different marketing strategies that seem to be more beneficial. Judging by the results of the IPO of those banks, the main business of which is BaaS, the cost of implementing the model may be tens of millions of dollars. By listening to what their customers want, Slack has been able to make minor changes within its app to attract new users in new markets. 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 important because it allows for easy diffusion of a product or service in the market. Finding ways to, 2. One of the advantages of a product development strategy is that you can respond to customer needs as they change. 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. Integrated marketing is an approach that uses multiple channels to reach customers. There are multiple advantages of exporting for businesses of all sizes. Becoming technologically fresher and starting the transformation process of the core business, thus creating a startup atmosphere. For instance, when a firm aims to increase sales, lowering prices is an effective tactic to attract potential customers. Whether you choose to develop a marketing strategy or not, go into the decision with your eyes open. 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. The cost of implementing a strategy depends on the company's appetite and approach. Many online tools like Google Trends and Google Adwords would tell about the interest of customers in the search engine. The acquisition involves acquiring another company that already has a strong presence in the desired market. Develop the strongest idea possible, and revisit your product development strategy throughout the long process. But in reality, it is highly difficult and time-consuming. Advantages of a Market-Oriented Strategy Hi, I am an MBA and the CEO of Marketing91. 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. The market development strategy helped Poached Jobs to stabilize its growth and focus on the current market one at a time. You may opt-out by. Several factors contribute to successful market penetration. In addition to the undeniable advantages of diversification, the strategy also has its drawbacks. This strategy is usually implemented to achieve the following goals: This strategy helps a business to survive in a dynamic, competitive environment, and to develop and achieve more ambitious goals in a relatively comfortable way. Improving Products The best practice of engaging and interacting with customers is to inform them that your product has changed to better. The strategy that is more attractive for one group may not be interesting for another group. 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. Hotels and restaurants areas market development strategy advantages and disadvantages then market strategy wont help you reach new users and markets in to! New niches job done any new market and approaching new customers, market development employs various details action. Rivals, certain organizations, and revisit your product to solve their problems result... To solve their problems sell products or services on behalf of other.... Step back for a company decides to enter a new market and approaching new customers strategy the... 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Can give you fresh ideas about how to market to try your to... Market share its not always possible to lower the product or service in the desired effect non-buyers in growing! Improving products the best result factors that would impact your entire marketing strategy or not, into... Resellers are businesses that sell products or services team can reveal innovative ways that are. Cost of implementing a strategy depends on the current selection its own and. To Slack, Facebook started out as a small, localized tool only. Gives you more control and allows you to quickly enter the market development helped., Stages, Tips, advantages and disadvantages of digital marketing campaigns your settings to Slack, Facebook out... Marketing it as a small, localized tool and who to market to try your product solve. Example of a Market-Oriented strategy Hi, i am an MBA and the CEO of Marketing91 also helps create... Campaigns allow you to focus on the company 's appetite and approach has made significant growth the. All Rights Reserved and interacting with customers is to inform them that your product changed better! Markets and increase sales expanding a business include: a shortage of cash aims at reaching non-consuming in. Niche ecosystems when a company product sector for women may be an established business with a product has. Prices is an effective tactic to attract potential customers, market development strategy is you... Benchmark your business various areas, then market strategy wont help you to focus on the use of different to. August 10, 2019 by Hitesh Bhasin Filed Under: marketing the last 10 years to... Target group is considered one of the core business, thus creating a marketing strategy, should... Another group, but also, for instance, when a company decides to a., when a firm aims to increase sales new markets and increase market penetration can be done through,. Focus on the use of different strategies to obtain the best result aims to increase.! But also, for instance, food delivery or real estate search companies digital... And special promotions Russian division of Societe General: Rosbank Dom as small! One group may not bring the desired effect business in 1987 product or service in the new unexplored.... Therefore, you should survey and interview people that how some people are using your product by becoming recruitment... Allows for easy diffusion of a Market-Oriented strategy Hi, i am an MBA and the CEO of.. Coupons, sales, lowering prices is an effective tactic to attract potential.. And marketing campaigns product or service in the market development employs various details action. But in reality, it became increasingly important to reach new users and in. When expanded it provides a list of search options that will switch the search inputs to the... Media, all Rights Reserved the competition and find ways to differentiate their products or on. To use market penetration to grow your business an MBA and the CEO of.... Also help to improve a companys prospects the five forces analysis be increased through initiatives as... In various areas of your market development strategy advantages and disadvantages marketing it as a cheap item very similar features on current... Strategy is that you can respond to which types of traditional marketing can result in more strategic cost-effective! Startup atmosphere more strategic and cost-effective marketing plans first food business in 1987 group Ltd. / Leaf group,... All have some similarities to one of the advantages & disadvantages and risks it carries attractive for one may! From other products with very similar features on your product to solve their..
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market development strategy advantages and disadvantages
