For example, if your organizations primary source of income is selling through retail outlets, it can open other channels like email marketing, telemarketing, etc. You would need a team of experts and professionals to conduct market research, gather data, and implement your campaign. Anew company should concentrate on gaining its worthy place in the industry, rather than trying to beat others low prices. Both Market Penetration and Market Development are important growth strategies for businesses. 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. Hence, the marketing strategy has been under fire for using controversial celebrities. It's an easy way for the bank to refresh its product and technology with integration of fintechs into the existing structure. For example, advertising is one of the most effective ways to increase brand awareness. Earlier they used to target and focus only female segment of the market. In addition to the undeniable advantages of diversification, the strategy also has its drawbacks. The strategy must be focused on values, culture, and other behavioral traits of the consumer base. Lowering the price of your product or service to align with competitor pricing may help to increase your market share. 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. 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. The infamous ride service app, Uber, has seen significant growth in the last decade through a unique combination of diversification strategy (i.e. Then it builds its ecosystem out of them. As theyve evolved, Slack was able to get a feel for how its customers were using the tool. The primary disadvantage of product development is that changing consumer preferences can cause a valuable product to actually be seen as worthless. Let us have a detailed look at all these reasons behind the importance of increased market penetration-. food delivery, bikes, scooters, etc. Then it builds its ecosystem out of them. Therefore, you should implement this strategy in such a way that best suits your business operations and product and service. Finding ways to differentiate yourself from other companies in your space such as offering better support, more competitive pricing, or extra features that are in demand and not offered by your competitors, can entice customers to switch over to your product. You can update your choices at any time in your settings. The aim of market penetration is to effectively use your product, enter the market as quick as possible and seize a large market share. As well as attracting new customers, market development also looks at expanding sales through new or alternative uses for your product. Working with influencers is a great way to increase market penetration. To achieve market penetration, businesses need to have a clear understanding of the existing market, as well as the market leader. The population of the US accounts for approximately 4.25% of the world's total population.. Use tab to navigate through the menu items. Advantages and Disadvantages of Market Penetration Strategy/Pricing. The principles of the bank's operation may not change or may change slightly. This means that there is less resistance from customers when they are introduced to the product or service. Market development is an expansion strategy, which identifies, develops and markets new product segments for existing products in the target market. However, no one knows the key features of your product better than you. Market Share can be increased through initiatives such as price cuts, promotions, and marketing campaigns. Market development strategy falls under the category of business growth strategy, and it means introducing new existing and current products into the new market. Advantages of Trading Software Development. 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? She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills. Market Development is best used when a business wants to expand into new markets. You need to adjust your campaign for different cultures, and it is not easy sometimes. This could involve developing a new product or improving an existing one. Uber is an online ride-sharing platform. Also, this way you can increase product sales, distribution channels, gain extra space on the market and overall profitability. First, businesses need to identify their existing customers and understand their needs and wants. businesses need to be patient and continually track their progress. In fact, your strategy can include customer surveys and evaluations of. This can be challenging and could derail the company's vision. All Rights Reserved. The most important element of a market strategic campaign is to recognize the needs and wants of target customers. The goal and objective of every business are to satisfy the needs and requirements of customers. For a small business, it is difficult to have the access to the plethora of resources and capital investment to hire expert professionals. Market situations change, so it makes sense to change up your product mix as well. How Much Will a Company Invest in Its Product as it Moves Through the Product Life Cycle? As long as, people stay on the platform, the company earns money by running ads. But in reality, it is highly difficult and time-consuming. Market penetration strategy takes advantage of low prices to increase product demand and increase market share. and market development strategy (luxury vehicles and ride-sharing). Market development strategy helps companies and businesses to approach new customers in a properly planned way. There are many things to consider before implementing the market development strategy, and theyre as follows; Market development strategy would be different for various types of businesses. 2. Field marketing is a type of marketing that involves interacting with potential customers in person. The benefits of using a computer to execute transactions and monitor the markets for trading opportunities are many and include the following: Reducing Emotions; Automated trading platforms keep emotions to a minimum when trading. Youll be able to assess the effectiveness of your campaign(s) this way. Thus, the development efforts of the organization are focused on characteristics that are most widely demanded. Looking at the image above, we can see that market development strategy is a business growth strategy that involves adding existing products to new markets. 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. 0800 181 4422. Attract non-buyers in your current market, 1. I am a Digital Marketer and an Entrepreneur with 12 Years of experience in Business and Marketing. During this process, the cost is usually the main factor that determines the pros and cons of a strategy. If the transformation is successful, the bank will be able to maintain its market position at the minimum. The market development strategy helped Poached Jobs to stabilize its growth and focus on the current market one at a time. My colleagues create a market entry strategy based only on solid and verified data. (vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display("vi_23289101301") }), Conclusion: Advantages and Disadvantages of Marketing Strategy, What is Business Management? Promoting a favorable image. If identifying and developing new market segments is your preferred strategy, careful consideration should be made around: Whether you have enough resources to expand into a new market, Whether your product will be ultimately successful in this new market, Whether the market is going to be valuable enough to put the resources, budget, and effort into expanding in this direction, Whether the potential new market is already too saturated, or whether you can gain market share and stay competitive. As the software became the Facebook we know today, it became increasingly important to reach new users and markets in order to expand. Igor Ansoff mentioned four strategies for business growth; Today, well be discussing market development strategy in detail with examples. ), and product development strategy. A marketing strategy gives you more control and allows you to diversify your sales channels. Increasing your advertising budget can help you reach more potential customers and increase brand awareness. Now, you have to find out the users of your products, so that you could target them by offering them your product. This can be a risky strategy, as it may lead to a race to the bottom on price and margins. When you have got biased data from your research, then you cant make the right decisions. Market penetration is one avenue you can take to achieve this goal. One of the advantages of a product development strategy is that you can respond to customer needs as they change. Product Life Cycle Analysis & Price Strategies, Disadvantage of Entering a Mature Market Economy, The Effects of a Change in Business Environment on Strategic Planning, Advantages and Disadvantages of a Marketing Strategy, Brandon Gaille: 8 Pros and Cons of Product Development, This Matter: Research and Development: Advantages and Disadvantages, On Strategy: How to Choose a Market Development Strategy, Australia Unlimited: Market Entry Strategies. 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. Today, we see Facebook as the worlds largest social media platform, and the platform is still expanding and entering into newer markets. The marketing team communicates these unique qualities through their campaigns and promotions. Market penetration can be a great growth strategy for businesses of all sizes. Poached Jobs is an online recruitment platform, it provides reliable talented candidates to businesses, companies, and managers. Part of Slacks market development strategy includes obsessing over user behavior to increase its usage and grow revenue from its existing product. Extending to a global scale. Developing an online and offline marketing strategy will help integrate your business. Combat Competitors One of the best parts of the market penetration strategy is combating your competitors. Have you ever used market penetration to grow your business? An example of this approach is Russias Sberbank (an Andersen client). 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. All of these techniques would make customers switch their brands. The approaches to building an ecosystem can differ: 1. 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