Several factors contribute to successful market penetration. Furthermore, market penetration is frequently used a measure to determine, whether your product or a service is capable of capturing a fixed percentage of the market. For example, when prices are already low, it means that consumers have already built trust towards an existing company, so entering the market and trying to beat the price of the competitor is an ineffective way to act. Market penetration is an important tool for companies looking to grow their business. However, no one knows the key features of your product better than you. A market development strategy really is a mini strategic plan because 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. The strategy must be focused on values, culture, and other behavioral traits of the consumer base. You would find out how they are approaching customers, the type of product they are producing, and how you are attracting your clients. There are various social media platforms and you cant afford to run your campaign on all media channels. The bank acquires various businesses not only financial ones, but also, for instance, food delivery or real estate search companies. Market situations change, so it makes sense to change up your product mix as well. Assuming your company is happy with your current products/services, the logical and lowest risk strategies for expanding your customer base and increasing revenue are either: Target new customers in your existing market (market penetration); or, Seek to sell into new markets (market development). Market penetration is important because it allows for easy diffusion of a product or service in the market. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. The marketing team communicates these unique qualities through their campaigns and promotions. When it comes to business, market penetration is key to success. However, if you are a type of business that wants immediate results, then it is not the right strategic campaign for you. Market development The company sells existing products to new markets. While the . Let us know in the comments below. For a small business, it is difficult to have the access to the plethora of resources and capital investment to hire expert professionals. If your product/service was small, then expanding it into the new geographic global market would be the next step of your business. Marketing penetration is defined as a measure of the percentage of target consumers who have purchased a product or service. (Definition and Examples) All Posts Funding & Finance SaaS Growth Startup Leadership Webinars Trends Events Client Spotlight Tech & Tools Equity & Ownership Bootstrapping Valuation Accounting & Taxes Startup Law Metrics Sales & Marketing Customers Product The bank provides financial companies with its technology platform through the API layer. When you're just starting out, watching your company grow organically and making decisions based on what you learn can be just as beneficial. Disadvantage: Cost Executing successful marketing strategies often takes time, money and resources and for a small company especially, that can be frustrating. Although the distribution marketing is relatively cheap, the disadvantage is that due to the large amount of spam, many Internet service providers have created filters to avoid unsolicited emails. Fixed costs include leasing or rental costs, insurance or interest payments. But when you have a product/service and ready to grow your business you might use various strategies for the growth and development of your business. The market strategy reduces your risk factor by telling you the type of product or service you should produce and the market to enter. The NBA invested significant resources and years of negotiations to lay the foundation for bringing the NBA to China, and in 2008 their hard work paid off. Forming partnerships with other businesses can help increase market penetration. Market penetration is often used as a way to gauge the success of marketing and sales efforts as well as to set goals for future growth. If your product has started small, expansion into new national or international areas might be the next phase of your market development. What tips would you add? As long as, people stay on the platform, the company earns money by running ads. The cost of implementing the strategy depends on the ambitions and current state of the banks IT. Market penetration can lead to fast growth for a company. If your market strategy involves social media marketing, then it is easy. For instance, you can specify and target men or women. Make your product more appealing to gain more market share from your competitors customers, Competition is fierce, no matter which business youre in. For example, advertising is one of the most effective ways to increase brand awareness. This will allow you to quickly enter the market and gain market share. nibusinessinfo.co.uk If monopolies emerge in the market, they may be subject to close attention from regulators. In the business world, there is no perfect marketing strategy. Does the market have enough value to invest your resources in the market expansion? The market strategic campaign allows you to promote your business and spread your brand awareness. This is how you help your customers understand why your product is better than a competitor's product, and why they should shop with you not someone else. One of the advantages of a product development strategy is that you can respond to customer needs as they change. Although market penetration strategy doesnt make any radical changes to the firms corporate marketing strategy, it has an unbelievable potential to grow profitability and revenue. The goal and objective of every business are to satisfy the needs and requirements of customers. The banking as a service (BaaS) model includes two main approaches: 1. By tapping into this sub-strategy, the bank receives the following opportunities: 1. 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. In addition, creating a marketing strategic plan can also identify your weaknesses as a company and as a business owner. 0800 181 4422. August 10, 2019 By Hitesh Bhasin Filed Under: Marketing. The acquisition involves acquiring another company that already has a strong presence in the desired market. An example is the Russian division of Societe General: Rosbank Dom. This is because penetrating the market can help a company reach new customers and grow its customer base quickly. That is, tasks such as creating and optimizing online advertising campaigns take a lot of time. As your business grows, its important to consider ways to increase your market share. Buyers always want better and when the opportunity comes, they always shift towards the best. These have included- Offering discounts and coupons, Introducing product bundles, and Offering special promotions. It does this by expanding into untapped market segments. 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. If youre not sure how often to calculate market penetration, consider doing it after every marketing and sales campaign. Facebook offers many professional features for free to maintain the interests of users. It acts as a roadmap for how you will attract and retain customers, and it usually follows the "Four Ps of marketing" concept: If you're like many business owners, you're swamped and have many tasks vying for your attention. If you identify a need for a new product in the market, you can launch it to increase market penetration. Combat Competitors One of the best parts of the market penetration strategy is combating your competitors. The whole process would take a minimum of 3 months. During this process, the cost is usually the main factor that determines the pros and cons of a strategy. For example, one of the way to distribute information is through email marketing. (vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display("vi_23289101301") }), Conclusion: Advantages and Disadvantages of Marketing Strategy, What is Business Management? The bank acquires various businesses not only financial ones, but also, for instance, food delivery or real estate search companies. Setting an artificially low target price can limit the flexibility of development and manufacturing departments, forcing them to meet unrealistic production demands. This button displays the currently selected search type. Imagine, you have numerous competitors that are trying to evolve and progress, they are stealing customers from you that results in lowering your profits and revenue. All of your investment and time consumption would go to waste due to one factor. Part of Slacks market development strategy includes, This differentiation in the market has set them apart from other products with very similar features. It is calculated by taking the companys total sales over a given period and dividing it by the total addressable market (TAM) during that same period. You can update your choices at any time in your settings. For a better understanding, if the large number of your customer base becomes familiar with the cheap product, its highly possible that everyone will forget that the firm also produces luxury items. Or it is another region within a country. Uber is an online ride-sharing platform. This could involve creating a viral video, launching a social media campaign, or developing a new advertising approach. This way, your company will attract the lost consumers and itll put competitors on defense or the edge of leaving the market. There is a growing embrace of niche ecosystems when a bank focuses on meeting customer needs in a certain area. Under these circumstances, it would be wiser for small companies to focus on product packaging, marketing campaign, and public image because it has the potential to be as effective as low prices. Do you have to launch a new product or modify the existing product? The market development strategy helped Poached Jobs to stabilize its growth and focus on the current market one at a time. Humans are curious creatures that are exceptional at being creative and improvising with tools to get the job done, so how you think your product is being used may not be entirely correct. The bank builds an architecture that allows various businesses to offer their services to the bank's clients in its app on a partnership basis and integrates them through an API. How Would the Marketing Mix Change at Different Stages of the Product Life Cycle. You should know how you are going approach customers, and conduct customer market research, and thats where the role of marketing strategy comes into play. By keeping as many people in the app as long as possible, they can drive more revenue through advertising to these users. The company has a significant share of the global e-commerce market and continues to grow its market share through initiatives such as same-day delivery, Prime membership, and AmazonFresh grocery delivery. Once you identify the target segment, you should create a promotional strategy and find ways to attract and sell to customers within it. Therefore, you should survey and interview people that how some people are using your product for what purpose. It allows for easy diffusion of products or services, creates goodwill, and can lead to fast growth. Making it easy for customers to purchase your product or service will help increase usage. So, business expansion usually requires funds, especially if the company plans to develop a new niche. (Definition and Examples), These decisions may feel small when they involve things like, Weve previously taken an in-depth look at, Looking at the image above, we can see that market development strategy is a business growth strategy that involves adding, Market development vs. market penetration, 1. Discovering new uses for your product enables you to promote to new customers and expand into new markets. It's a clear signal to investors that the bank is developing its digital services. Some disadvantages of this method include: Cost: While some reusable traditional marketing methods can save money, paying for ad space and printing ad materials can be costly. This enables companies to adapt to different markets and enhance competitiveness. Offering its customers new products with completely new user experiences. Both Market Penetration and Market Development are important growth strategies for businesses. Develop the strongest idea possible, and revisit your product development strategy throughout the long process. Attract non-buyers in your current market, 1. 2. Some techniques you can use for market development include finding a new use for an existing product, creating a marketing campaign for a new target audience or expanding geographically. You must have JavaScript enabled to use this form. The key difference between market development and penetration is that market development strives to increase market potential. However, marketing strategy offers you a layout to best approach your audience and their needs and wants. Nowadays, traditional banks often choose to provide their own back offices. Slack began life as an internal company tool. Find out how to segment your customers. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. Key market development strategies you could consider include: See more on product development strategy. For this purpose, you need to conduct interviews, case studies, focus groups, and field research. There are many ways to increase market penetration. In both cases, dont overdo it because it may seem suspicious (lowering prices too much may indicate to low quality and high prices might seem as a company that has only one objective-gain profit) and might make customers doubt your quality, fairness, and trustworthiness. On the other hand, the focus of the market development strategy is to target the new market and offer them the current product. Using your existing product to grow means that your team can save the time and resources it would take to build entirely new products, or attempting to diversify its offerings, and concentrate on leveraging what you already have at hand to increase your revenue. An example of . Influencers are individuals with a large audience who can promote your goods or service to their followers. Most recently, Liz has been writing about accountants working in the cannabis industry on CPA Trendlines and reporting on cannabis trends for Southern Oregon Good Herb magazine in Oregon. Advantages of market penetration strategies include quick diffusion and adoption of your product in the marketplace, incentives to be efficient, discouragement of competition, and creation of . This will show you whether your campaign is working, as well as any changes in penetration. Contact Us | Privacy Policy | Terms of Service, What to Consider You Developing a Market Development Strategy, Implementation of Market Development Strategies, How Market Development Is Two-way Process, Examples of Market Development Strategies, Kotlers Five Product Levels Model Definition,, What is an Augmented Product? Here is a comparison of some attributes of micromarketing: Lower marketing cost vs. high cost per acquisition More closely targeted advertising can decrease your marketing cost because it allows you to target a smaller group of people. New products come. Advantages of Market Penetration Strategy. This could involve changing your target market, your messaging, or your overall approach. It gives you an idea of what type of product or service you should develop. The key to a market development strategy is the understanding of the current baseline performance vs. what we want our future performance to be, and then coming up with the strategy to move from A to B. A marketing strategy that has gained popularity in the new media world is the viral marketing. With this strategy an intelligent or emotional campaign begins to rapidly spread through the Internet. Market development involves expanding into new markets with existing products. All you need is to think about things from a different angle and change your perspective. Lowering Industry Prices Market penetration strategy can harm the entire organization. The key is to understand when to use each one. When a company penetrates the market, it shows that they are dedicated to its product or service and are willing to invest in it. You could attract the non-buyers of your current market by offering new prices, speeding up the marketing and promotions, and providing free-trials. This is a BETA experience. The approaches to building an ecosystem can differ: 1. Becoming technologically fresher and starting the transformation process of the core business, thus creating a startup atmosphere. It's safer to stick with something that you and your customers already know than to venture into untested territory. Digital market entry is the sweet spot of our firm. An all-encompassing marketing strategy will keep you relevant in all the mediums your customers engage. Leverage the resources available to you, such as marketing information and demographic data. The choice is yours. Now, you have to find out the users of your products, so that you could target them by offering them your product. Learn more in our Cookie Policy. Moreover, companies can create either short or long-term campaigns and structure them according to their budget and needs. Disadvantages of Product Development Strategy Riskiness. Disadvantages of business diversification. Consumers mostly fall for the trick because the interest and curiosity that the improved product drives are irresistible. Her experience extends to both corporate and freelance; she's a former Senior Editor at the B2B publication Accounting Today, writing about public accounting firms with a specialization in diversity, technology, best practices, and business development. So, the results can be severe because competitors might end up selling their products at an extremely low price and generate almost no profit. So, considering that youre willing to stay as the market leader, the only choice you have is to outplay them. Transformation can end in a fiasco if the bank team doesnt have sufficient competence and experience and a hunger for innovation. Hi, I am an MBA and the CEO of Marketing91. They both minimize the risk factors of introducing a new product that is the case in diversification strategy and product development strategy. The company has made significant growth for the last 10 years. This can be done through discounts, coupons, and special promotions. Belfast BT2 7ES It begins with market research where you: A segment is simply a smaller sub-group of a larger population. Creating a marketing strategy will help you discover what makes you different so you can map out a clear strategy to communicate those benefits. Missed Opportunities Brands that produce luxury products often make mistakes like marketing it as a cheap item. Creation Of A Service Based On The BaaS Model. Air India to discontinue Vistara after merger, DS Group Partners with Lderach (Swiss Chocolate Maker), Castrols unveils a New Logo and a Refreshed Brand Identity, Increasing marketing and advertising efforts. It may catchy and interesting to discuss knowing the needs and wishes of customers. Loss of control. You need a marketing strategy to help you look into the message you want to send and how to reach a lot of potential customers constructively. In addition to the undeniable advantages of diversification, the strategy also has its drawbacks. This is how Tinkoff (an Andersen client) and Ant Financial work. The strategy that is more attractive for one group may not be interesting for another group. Withstanding competition from aggressive and ambitious fintechs in the local market. 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