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.

Market_Development

To boost sales, the company pitches its product to a new segment of consumers.

Critical to this strategy is assessing the market’s readiness for the product, ensuring alignment with consumer needs and market trends.

Market development also includes trying to get current customers to spend more.

The Economic Times has the following definition of market development:

“Market development is a strategic step taken by a company to develop the existing market rather than looking for a new market. The company looks for new buyers to pitch the product to a different segment of consumers in an effort to increase sales.”

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. Leveraging digital platforms allows for precise targeting and analytics, enabling companies to reach and understand these new demographics more effectively.

  • 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.”

  • Pricing

The marketing team will also have to price the product competitively, especially if rivals have similar strategies.

Compound nouns

There are many compound nouns (nouns consisting of 2 or more words) containing the term “market development.” Here are seven of them, their meanings, and how we can use them in a sentence:

  • Market Development Strategy

A business plan for marketing existing products to new customer segments.
Example: “Their market development strategy focused on introducing their health drinks to a younger demographic.”

  • Market Development Funds

Financial resources allocated for activities aimed at entering new markets.
Example: “The company allocated significant market development funds for the overseas launch.”

  • Market Development Manager

A professional responsible for identifying and developing new market segments for a product.
Example: “The market development manager orchestrated a campaign to capture the untapped rural market.”

  • Market Development Plan

A detailed blueprint outlining the steps to introduce products to new markets.
Example: “They crafted a comprehensive market development plan to penetrate the European market.”

  • Market Development Team

A group within a company charged with expanding into new market areas.
Example: “Our market development team is researching potential in South American countries.”

  • Market Development Efforts

Collective initiatives taken to expand a product’s market reach.
Example: “The startup’s market development efforts paid off, resulting in a 50% increase in sales.”

  • Market Development Stages

The phases a company goes through when introducing products to new markets.
Example: “The company is currently in the early market development stages in Asia.”

Video – What is Market Development?

This video, from our sister channel on YouTube – Marketing Business Network, explains what ‘Market Development’ is using simple and easy-to-understand language and examples.