Market development is the process of entering new markets to expand revenue and reduce concentration risk. It involves identifying and targeting new customer segments or geographic regions that have the potential to generate additional revenue for the organization.
There are several approaches to market development, including:
- Diversification: This involves entering new markets that are unrelated to the organization’s existing products or services. This can help to spread risk and reduce dependence on a single market or product.
- Niche expansion: This involves targeting new segments within the organization’s existing market that have specific needs or preferences. This can help to increase market share and tap into untapped demand.
- Geographical expansion: This involves entering new geographic regions or countries where the organization’s products or services are not currently available. This can help to increase the organization’s global reach and access new customers.
- Product development: This involves introducing new products or services to existing markets in order to meet the evolving needs of customers and stay competitive.
Market development requires careful planning and execution in order to be successful. It involves conducting market research, identifying target markets, developing marketing and sales strategies, and establishing a presence in the new market. By effectively executing a market development strategy, organizations can increase their revenue and reduce their dependence on a single market or product.
The following are common types of market development strategy.
Implementing price structures and strategies to target a set of customers. For example, an airline offers a May to June discount ticket plan for groups greater than 18 people for certain domestic routes. This price strategy is aimed at attracting the large number of schools who take a school trip in May and June.
Developing new distribution channels to reach target customers where they shop including physical and digital locations. For example, a brand of sunglasses that would like to sell to snowboarders develops distribution agreements with snowboard shops.
Developing a new brand for products to reach a target market. For example, a manufacturer of warm socks that creates a brand to appeal to snowboarders.
Reaching a new target market with tailored marketing messages such as offers, promotional videos and coupons.
Developing a pipeline of leads, opportunities and quotes to close sales with the target market. For example, a software company that traditionally sells to large firms begins to target mid-sized companies.
Developing a new product for the target market. This can be an alteration of an existing product such as warm socks that are designed with new colors and patterns to appeal to snowboarders. Alternatively, it can be a major initiative that reinvents your business model or product line.