Looking for growth opportunities is an integral part of running a successful business. Even if things are going well right now, it’s essential to consider how you could expand your reach and make more sales in the future if you don’t want to risk plateauing or facing stagnation.
And that’s where a market development strategy can be so beneficial.
It provides a proven and consistent process for evaluating, executing, and refining growth strategies that can help you reach new markets, expand offerings to current audiences, and get people on the fence about buying to take action.
But what is a market development strategy? Why does it matter? And how can you implement it in your business?
Let’s explore these questions below.
What is a Market Development Strategy?
A market development strategy is a process for reaching customers that the company isn’t marketing or selling to yet. It’s an essential strategy that helps ensure that the company uses all of the available avenues for growth, providing a structured framework for identifying new opportunities and increasing the total addressable market size.
It can market current or new products to new markets, new market segments, or old segments in a new market, just to name a few examples. In other words, there are many ways to apply a market development strategy depending on your company’s situation and goals.
But no matter what specific method you end up going with, the ultimate goal is to make your products appear in front of audiences that weren’t exposed to them before.
In the 56th episode of the How We Solve podcast, Catherine Arnston talks about starting a business in a brand new market, which can offer a lot of insights when you’re trying to enter a new market as well.
Market Development vs. Market Penetration
In order to better understand what market development is, it’s important to realize that it is one of two main approaches to how a business can grow. The other one is called market penetration, and together they help companies cover all bases in terms of increasing revenue and meeting growth goals.
As we discussed, market development is the process of getting your current selection of products in front of a new audience. It’s the diversification of the markets that your product is present in, which increases the number of people that you can sell to.
Meanwhile, market penetration is increasing revenue in the market that the business is currently in. Instead of looking into new markets, the company would leverage its current presence in a market by introducing new products or offering current products at different price points, which can help drive sales in the market and increase the maximum amount of revenue.
Why is Market Development Important?
There’s a reason why companies of all sizes use market development as a framework for expanding their business. But how can it help your company succeed in your market?
Let’s go over a few of the main benefits of having a market development strategy below.
There’s a limit to how much you can grow if you restrict yourself to your current audience. Whether it’s the total number of people, the way that you are positioning your products, or other factors, it’s inevitable that you will eventually start plateauing in terms of growth, reaching a point where your results will stagnate.
One of the best ways to break through the plateau is to implement a market development strategy. It provides you a way to expand the number of sales opportunities you can create, helping put your products in front of more people and serve different segments of your market.
The more people you can reach, the bigger your sales potential. But it’s not just about reaching any customers – you need to attract people who are likely to be interested in what you have to offer.
And a market development strategy offers you multiple avenues for increasing the number of people you can sell to, allowing you to map out the steps you will need to take and have more control over who you market to, and how.
Best Chance of Success
Finally, a market development strategy gives you a proven method for expanding your business. Anyone can start promoting in new markets, but without thorough preparation, the chances of successfully luring away customers or engaging an unfamiliar audience are slim.
Therefore, adopting a process that has clearly defined steps and a way to accurately predict possible outcomes is an invaluable asset when investing resources and money into a growth opportunity.
Steps to Creating a Market Development Strategy
Now that we’ve explored the definition and advantages of a market development strategy, it’s time to look at the process of implementing it into your business.
The most crucial step of a market development strategy is finding the right opportunities to focus on. If you make the wrong choice, you can end up investing a lot of resources towards entering a new market only to find that it does not align with your goals, brand, or products.
The first step of looking for expansion opportunities is figuring out what’s working right now. And that means analyzing the ideal customer profiles that you are currently focusing on, learning as much as possible about their demographics, preferences, purchasing habits, and anything else that might be relevant.
The reason why this is such a crucial step is simple. Market development is already a complicated and risky process. Therefore, if you can identify certain variables and base your decisions on them, you can replicate some of those successes in a new market, building on your current knowledge and experiences with similar audiences in a new market.
You should then carefully analyze the market that you are considering, identify similarities and differences, and how your brand could potentially fare in this new environment. Many companies opt for performing a SWOT analysis, which can help visualize the plan through the unique strengths, weaknesses, and opportunities that the plan presents.
Aim for Measurable Results
To achieve any business goal, you must clearly define what you want to achieve. And that’s especially true for expanding into new markets, as merely entering a market for its own sake isn’t a viable approach that will result in positive outcomes.
Therefore, once you identify an opportunity worth pursuing, try to add as much specificity to the plan as possible. You should think about how the market development strategy will impact your business on multiple levels and what type of growth numbers would be required to justify the effort you are going to put into the process.
Some of the goals you could consider include increasing your revenue, gaining more customers, boosting profits, or anything else that would positively impact your company. The important thing is to be specific and measure what types of outcomes are necessary for the entire plan to be worth executing.
When you account for all the risks that you are likely to encounter, the potential return on the investment you make should provide you with a bit of room for additional expenses. Otherwise, you may have to rethink your strategy.
Map Out the Process
Once you’re done with the big-picture research and considerations, it’s time to map out the specific plan and build a market development strategy you can execute step by step.
Mostly, that involves getting your products in front of new audiences and figuring out how you are going to deliver your products quickly and effectively. And the good news is that with the help of digital marketing channels, entering new markets is now easier than ever, even if you’re a relatively small company.
In the How We Solve Podcast ep. 81, Ashley Scorpio talks about how to develop an omnichannel marketing strategy and figure out which channels make the most sense in your situation.
You can use social media, paid ads, email marketing, and various local marketing techniques such as billboards or local ads to generate interest for your products and attract customers that were not previously aware of your brand.
But in addition to the channels, you should also consider what types of resources you will need to allocate to the project and whether your current team is well-suited to take on a market development strategy in a new region. If not, you may need to add new people who can help better navigate the new market, allowing you to avoid some of the likely issues you would face otherwise.
Finally, build on past successes of entering new markets, using the best practices and past experiences to maximize the chances of success.
Execute & Track Results
Once you’re ready to launch the market development strategy, you will need to start executing. Because you’ll be basing your decisions on past situations and the expertise of the people you bring in, you need to be prepared to run into unexpected challenges and know how to approach them effectively.
The good news is that as you start implementing the plan, you will begin learning more about the new market and how to maximize your chances of success. And that means that if you’re flexible, you can adjust your course as you progress.
But for any of that to happen, you need to have a reliable process for tracking results and collecting feedback. By performing tests and gradually scaling your efforts, you should have plenty of data to make informed decisions and continually refine the plan until it becomes as detailed as it needs to be.
Market development is one of the best ways to increase the total number of people you can reach. And when working in competitive markets, a market development strategy can often be the more sustainable approach for growth because there’s less risk of plateauing.
By using the steps listed above, you can identify the right opportunities, define clear goals, clearly understand what needs to be done, and make gradual improvements as you begin to enter a new market through continuous refining.