Market development – definition and example
Market development is a marketing strategy in which a company tries to sell an existing product to a new group of consumers. The seller may do this by promoting the product in a new geographical area. It may also try to present it in different media. For example, if the product currently sells to young people, it may try placing adverts in publications that older consumers read.
In other words, it is a strategic step a company takes to exploit an existing market further. It takes this step rather than trying to look for a new market.
In an effort to boost sales, the company pitches its product to a new segment of consumers.
Market development also includes trying to get current customers to spend more.
BusinessDictionary.com has the following definition of the term:
“The expansion of the total market for a product or company by (1) entering new segments of the market, (2) converting non-users into users, or (3) increasing usage per user.
Market development – new users or uses
A market development strategy involves exploiting the market further. Companies can do this by getting new users.
However, they can also boost sales by getting consumers to use their products in new ways, i.e., new uses.
We can define ‘new users’ as:
– New demographic segments. In other words, selling to different types of consumers. For example, if the company has targeted women, it may now try to target men.
Demography is the study of human populations as well as the factors that make them change.
Companies that sell cosmetics and skin products have been targeting men for the past two decades. In the past, they would only target female consumers.
– New geographic segments. This means promoting the product in different parts of the country, or even other countries.
– New psychographic segments. Psychographic segmentation involves dividing a market into different segments based on consumers’ personality traits, values, or interests. It may also involve dividing the market into segments based on people’s lifestyles.
Marketing development – what to consider
Before you implement a market development strategy, you will need to answer the following questions:
– Is the strategy profitable? If so, what is the likely return on investment?
– Will you need to introduce modified products?
– Will you need to introduce new products?
– Have you researched your target consumers extensively enough?
Regarding high tech products, Wikipedia makes the following comment:
“In high tech, where discontinuous innovation is the norm, a successful market development strategy requires crossing the chasm between the early market and the mainstream.”
A two-step process
According to an Economic Times article, market development is a two-step process.
Segmentation analysis – research
The company begins by doing a segmentation analysis. It then shortlists market segments that are worth targeting. In this case, it is trying to get new customers interested in an existing product.
The aim is to boost sales by tapping into a new segment or a market the company has not yet exploited.
As soon as it has chosen a segment, the company then creates a promotional strategy. In other words, it finds ways of attracting those consumers.
To attract that segment, Economic Times says that the company:
“May have to take the support of both audio and visual media to push the product deeper into the market.”
The marketing team will also have to price the product competitively, especially if rivals have similar strategies.
Video – market development overview
In this immixGroup video, Chris Wilkinson describes how his company aligned its suppliers and solution providers’ technologies. They did this with government funding. The government had certain requirements. Wilkinson is Senior Director of Market Development at immixGroup.