What Is a Market Development Strategy? (With Example)
Updated August 28, 2023
Gaining new customers and generating more revenue are essential business activities that can ensure growth and development. While you can focus on an existing market, developing a company by entering new markets can improve its market share. Understanding the definition and purpose of a development strategy can help you increase a company's chances of reaching its business development goals. In this article, we explain what a market development strategy is, explain why having one is essential, discuss creating a development strategy, show helpful tips, and present an example.
What is a market development strategy?
A market development strategy focuses on entering a new market using existing products. It can help a company introduce its products or solutions to a target audience not yet explored. For example, a company that produces phones for users in Ontario may decide to sell the same phones in Quebec to reach new customers. Like other business strategies, development strategies typically involve analyzing your industry and identifying business opportunities. If you work in sales, business development, or marketing, it can help to understand a company's product or services before creating a strategy to introduce them to new markets.
Why is having a development strategy important?
Creating a development strategy can help a company generate more leads and increase revenue margins. It can also direct a company through its expansion or development process, ensuring long-term growth. Because it typically involves researching a market, development strategies can also help business leaders learn more about their target audience. Consider the potential returns on investment a company may receive from entering new markets to guide your decision-making.
How to create a market development strategy
Preparing a development strategy typically involves working as part of a business development and marketing team. Here are the steps for creating a strategy to conduct business in a new market:
1. Research development opportunities
Before expanding into a new market, it's essential you consider potential opportunities. Doing this can help you determine which options might be more successful in helping you reach your goals. You can research development opportunities by coordinating the following processes:
Identify your target audience: Define the prospects in the new market. You can create a buyer persona to help you evaluate their demographics, backgrounds, and interests.
Analyze the market: Consider conducting a SWOT analysis to determine your strengths, weaknesses, opportunities, and threats in the new market. You can also conduct a segmentation analysis, which divides a market into groups based on their needs and behaviour.
Survey current customers: Information from customers in a current market can also offer insights into introducing existing products into a new channel.
2. Define the company's growth targets
Considering the company's goals can direct you on what expansion aspects to prioritize. For example, a business might want to increase its sales, net profit, or customer base through its expansion plans. If there are multiple growth targets, you can create a SMART goal for each one. SMART goals are specific, measurable, achievable, relevant, and time-based. For example, if a company prioritizes its sales, you can create a SMART goal to increase sales by 30% over the next year. SMART goals can help you track your progress and share it with stakeholders.
3. Allocate resources efficiently
Next, consider what resources can help you reach the development goals. While these resources may vary with industries, you can expect to plan for materials, equipment, human resources, and capital. You can create a list to help you track these resources or use project management tools to stay organized.
Consider where you can source the resources for a company's development plan. For example, you can source funds from your network, venture capitalists, or angel investors. Similarly, you may recommend a company recruits employees to lead the development plans. Having a contingency plan for resource sourcing can help ensure successful activities. For example, you may create a contingency plan to hire temporary employees from staffing agencies.
4. Create a marketing plan
Similar to a marketing strategy, a marketing plan outlines how you can reach a company's development goals. For example, suppose a company has a goal of reaching new customers in a different province. Its marketing strategy might be to appeal to seniors using compelling marketing content and sales pitches. It can have a marketing plan to develop commercials showing how seniors can use a product or service.
An effective marketing plan typically includes strategies and key performance indicators (KPIs) for a campaign. For example, you may track the number of clicks on a website or prospects turned to customers in the new market.
5. Introduce the product or service
After strategic planning, analyses, and evaluations, you can introduce the existing product. Consider providing stakeholders with a high-level sales plan or campaign information to help them understand what tasks they're responsible for and how you measure success. Regular updates about entering the new market can also help the business development and marketing departments remain organized.
6. Analyze the results
Collect relevant marketing and sales data as you enter a new market. Doing this can help you estimate whether you can meet your projections. It can also help you identify areas for campaign improvement. If required, review the development goals you created to ensure your actions still align with them.
Tips for creating development strategies
Here are the best practices that can help you create a strategy for a company to expand into a new market:
Be clear and concise
Successful development often requires you to communicate your plan and strategies clearly. Consider using simple language to share relevant details with your team and help them understand your message. You can also offer to answer any questions they might have about their responsibilities.
Document relevant information
Journaling your activities can help you show stakeholders your thought process. For example, you may present these documents to executives if they ask how you determined the most suitable market. It can also help you reference development strategies if changes are necessary. For example, you may consider changing how you allocate resources or reviewing your segmentation analysis.
While it's essential to have a detailed plan for expanding into a new market, it's also crucial you consider industry changes and consumer trends. For example, introducing an existing product may require you to be flexible about a product's price to gain a competitive advantage. Confirm whether a company can benefit from the adjustments to determine how to proceed.
Consider investing in business development software
Because entering a new market is initially a temporary endeavour, you can handle it as a project and use management tools. You can also use communication software to convey important information to your team members. Using computer applications for segmentation analysis and visualizations can also help you work efficiently.
Market development vs. market penetration
While market development and market penetration can both lead to company growth, they differ in priorities and activities. Market penetration focuses on increasing sales of existing products in a current market. For example, a company may offer lower prices after launching a product line to make more sales. Development involves introducing existing products to new prospects or channels. It also differs from product development, which focuses on introducing new products to an existing market. Depending on a company's long-term goals, it may coordinate market penetration and development individually or at the same time.
Market development strategy example
Review this example to help you gain more insights into how to create and use a development strategy:
Bridgereels University contracted a software corporation to develop an online learning platform for students to engage with professors. As the platform grew, the software corporation recognized an opportunity for students in other colleges and universities to use the product. After reviewing its contract with Bridgreels University, the corporation updated its account policies to allow any college student to register. The platform gradually gained traction because more students informed their friends in different schools. After other colleges and universities accepted it, the corporation allowed the public to register on the platform.
They researched this new customer segment and adjusted the learning platform to make it more inclusive. Then, they developed a marketing plan to help them introduce it to parents and professionals. By slowly expanding from one target audience to another, the company adjusted the learning platform to meet the needs of different customers and reached its goals. This helped it improve the product's quality, provide more value to existing customers, and attract new users.
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