Assess your options for business growth
Market development strategy
Market development is a growth strategy that involves selling your existing products or services to a new group of customers. It begins with market research where you:
- carry out a segmentation analysis of your existing market
- shortlist those market segments which you feel you should pursue
A segment is simply a smaller sub-group of a larger population. To identify a target market segment, you should look at factors like:
- new geographical areas
- new demographic segments
- new customer needs
- customer preferences, interests and lifestyle
You may want to look at customers typically served by your competitors, or customers currently not served by anyone. Find out how to segment your customers.
Once you identify the target segment, you should create a promotional strategy and find ways to attract and sell to customers within it.
Common market development strategies
Key market development strategies you could consider include:
- pricing - you could implement competitive price structures with offers and discounts or, to command a higher price, provide a product with more value than the competitor's
- distribution - you could develop new channels to reach target customers, eg sell online if you currently only have a brick and mortar shop
- branding - you could create a new brand for products aiming to reach a target market or a specific customer segment
- promotion - you could consider tailoring promotional messages to entice customers with offers, vouchers, loyalty schemes, etc
- sales - you could target a different demographic segment or type of customer to create new leads and opportunities
- product development - you could alter an existing product or develop a new one for the untapped market
See more on product development strategy.
As well as attracting new customers, market development also looks at expanding sales through new or alternative uses for your product. Think about how you can get your current customers to use your product in a new way. WD-40 is a classic example of a versatile product.
Market development vs market penetration
The key difference between market development and penetration is that market development strives to increase market potential. It does this by expanding into untapped market segments. With market penetration, the market size is fixed so the strategy focuses on maximising the potential of an already an existing marketplace.