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. Today well review what market development strategy is, identifying a clear definition and looking at some useful examples. WD-40 is a classic example of a versatile product. Fixed costs don't change with the number of units you produce, whereas variable costs do. Then it builds its ecosystem out of them. Then it builds its ecosystem out of them. businesses need to be patient and continually track their progress. 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. 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. Another example of market penetration is the online retailer Amazon. In other words, a market development strategy helps businesses in a growth phase identify and develop new opportunities to sell their current line of products in previously unexplored markets. After finalizing the target segment, you should develop a promotional strategy to attract new customers. Furthermore, some companies risk more and first buy products in bulk (for discounts) and then implement the penetration pricing strategy. Product differentiation is a strategy used by businesses to highlight the unique features and benefits of its product or service to separate it from competitors. 2. One of the advantages of a product development strategy is that you can respond to customer needs as they change. Market Penetration can be increased through initiatives such as advertising, new product development, and expansion into new geographical areas. This could involve partnering with a complementary business, setting up dealer networks, or partnering with distributors. It now also integrates with many other popular SaaS products such as Dropbox, Zendesk, and Zapier to ensure ongoing growth and user adoption. Disadvantage: Expose Your Weaknesses In addition, creating a marketing strategic plan can also identify your weaknesses as a company and as a business owner. Market penetration can lead to fast growth for a company. It is the successful selling of a product or service in a given market. While the . The market development strategy helped Poached Jobs to stabilize its growth and focus on the current market one at a time. The bank licenses other financial companies to create unique products for their customers for example, savings accounts, loans and debit cards. In addition, creating a marketing strategic plan can also identify your weaknesses as a company and as a business owner. French bank Socit Gnrale recently acquired FinTech Shine for a rumored 100 million in order to offer a full online service to its business customers. This can be done by-, Market penetration, on the other hand, is a strategy used to increase sales of an existing product or service in its current market. Increasing your advertising budget can help you reach more potential customers and increase brand awareness. However, it is significant to segment your market strategy into small daily actionable plans and activities that are easy to conduct and enter. All you need is to think about things from a different angle and change your perspective. To find new potential markets, companies must carry out systematic market research. A strategy can also help you to form goals based on a . Additionally, it is often more economical than other marketing strategies. If your product has started small, expansion into new national or international areas might be the next phase of your market development. Understanding Market Penetration Strategy, Market Development vs. Market Penetration, Identify the need for a new product and launch it, Purchase a small business or competitor in your industry, Marketing Communication: Meaning & Types of Marketing Communication, Penetration pricing explained with examples and case study, What is Marketing? Youll be able to assess the effectiveness of your campaign(s) this way. This means that there is less resistance from customers when they are introduced to the product or service. Digital market entry is the sweet spot of our firm. Market penetration also helps to create goodwill for a company. Advantages of Market Penetration Strategy. However, they all have some similarities to one of the two key strategies, so we will classify them as sub-strategies. You can update your choices at any time in your settings. Furthermore, the competitor that was first to lower prices, will have to continue doing the same in order to maintain its market leadership. Do you have to launch a new product or modify the existing product? Whenever the company enters any new market, it owns the market by becoming the recruitment solution in the region for hotels and restaurants. Key market development strategies you could consider include: See more on product development strategy. Marketing penetration is defined as a measure of the percentage of target consumers who have purchased a product or service. 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. Disadvantage: Cost Executing successful marketing strategies often takes time, money and resources and for a small company especially, that can be frustrating. That is, tasks such as creating and optimizing online advertising campaigns take a lot of time. Earlier they used to target and focus only female segment of the market. When expanded it provides a list of search options that will switch the search inputs to match the current selection. This is how Tinkoff (an Andersen client) and Ant Financial work. Successful marketing strategy may depend on the use of different strategies to obtain the best result . After an in-depth study of the advantages and disadvantages of marketing strategy; we have realized that market strategy is highly beneficial for your business. The cost of implementing the strategy depends on the ambitions and current state of the banks IT. It may catchy and interesting to discuss knowing the needs and wishes of customers. Here is a video by Marketing91 on Market Penetration. Increased capital requirements. Here are the advantages of conducting market research: 1. A market development strategy really is a mini strategic plan because Businesses can use a variety of ways to evaluate the degree of competition in their sector. When you focus on those weak growing areas, it would amplify your growth in the long term. A market development strategy aims at reaching non-consuming users in currently profitable segments. 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. Social media and digital marketing campaigns allow you to precisely target your customer market. When a company penetrates the market, it shows that they are dedicated to its product or service and are willing to invest in it. The cost of implementing a strategy depends on the company's appetite and approach. Finally, they need to track their progress and make adjustments as needed. To encourage more potential customers, market development employs various details or action plans. The below-given equation will help you find out how much of a product or service is used by customers in comparison to its total estimated market i.e. While you build out your infrastructure and revenue model, develop your products and services and figure out how to manage daily operations, you'll also need to address how you'll market your company and reach new customers. 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 . It helps companies in the growing period to identify new opportunities and sell their current products in the new unexplored market. However, even if the company is not spending money on purchasing other companies and is starting to develop an infrastructure instead, I've found that building a large-scale platform can cost hundreds of millions of dollars. During this process, the cost is usually the main factor that determines the pros and cons of a strategy. Disadvantages of Product Development Strategy Riskiness. For example, one of the way to distribute information is through email marketing. Part of Slacks market development strategy includes, This differentiation in the market has set them apart from other products with very similar features. The strategy must be focused on values, culture, and other behavioral traits of the consumer base. Here are two examples to consider: Discovering new uses for your product enables you to promote to new customers and expand into new markets. While the demand is increasing, the organization saves money on product creation costs due to the greater volume of production. You may opt-out by. Determine the total cost. This is because it can help a company gain market share and become more established in the market. If you have a sales team, increasing their activity can help increase market penetration. ), and product development strategy. nibusinessinfo.co.uk Its because of diversification (scooters, bike, food delivery, etc.) If you identify a need for a new product in the market, you can launch it to increase market penetration. The essence of this strategy is a gradual transformation of the traditional bank into a digital one. Lowering Industry Prices Market penetration strategy can harm the entire organization. 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It doesnt matter in whatever category youre running your business, there would always be competitors. It's an easy way for the bank to refresh its product and technology with integration of fintechs into the existing structure. Similar to Slack, Facebook started out as a small, localized tool. The strategy revolves around geography, customer base, and the products. 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. This is because it requires less investment and can be done quickly. 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. This is a BETA experience. The marketing team should also adjust the price to achieve a marketing competitive advantage. You need to adjust your campaign for different cultures, and it is not easy sometimes. Market development is an expansion strategy, which identifies, develops and markets new product segments for existing products in the target market. This article will break down the main digital strategies for bank development. However, the market strategic campaign allows you to run it on various social media platforms like Facebook, Instagram, Twitter, LinkedIn, YouTube, Google, and others. It's safer to stick with something that you and your customers already know than to venture into untested territory. (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 Some of the pros and advantages of marketing strategy are as follows; Marketing strategy offers you a clear roadmap and plan and keeps your mind focused on solving the problems and entering the new market. For example, a marketing strategy for a particular product may include advertising in television programs that have high ratings, but a disadvantage could be sponsoring the program that some may find offensive or in bad taste, which would result in disinterest of product or service. There are other digital development strategies, of course. Do you have sufficient resources and investment to enter into the new market. The bank provides financial companies with its technology platform through the API layer. All of your investment and time consumption would go to waste due to one factor. If you liked this article, we bet that you will love the Marketing91 Academy, which provides you free access to 10+ marketing courses and 100s of Case studies. But keep in mind, no matter what marketing strategy you use, if you don't have an effective sales funnel or pipeline and optimize your conversions, you'll be leaving money on the table. Buyers always want better and when the opportunity comes, they always shift towards the best. Existing customers can be a great resource for finding new markets, and also for helping to promote your products or services in those markets. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. An example of . Creating a marketing strategy will allow you to take a step back for a moment. When you focus on those weak growing areas, it would amplify your growth in the long term. While market penetration is the lowest risk growth strategy, market development is a close second because unlike product development and diversification these two strategies dont include the extremely high risk nature of developing and selling a new product. It is important to do your research to make sure you are entering a new market wisely, and also to have a solid plan for how you will penetrate that market. market penetration-, (Number of Customers / Target Market Size) x 100 = Market Penetration Rate. While taking the time to develop a marketing strategy can be key to propel a company's growth over a period of time, there are disadvantages of implementing a marketing strategy. Your email address will not be published. If youre not sure how often to calculate market penetration, consider doing it after every marketing and sales campaign. But it requires comprehensive market research that the new market would add some value. Some of the cons and advantages of marketing strategy are as follows; Developing an effective and actionable market strategy requires significant customer market research, data, competitor analysis, KPIs, metrics, and various indicators to understand the customers and market. 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). Marketing Penetration Strategies and Tactics. This will show you whether your campaign is working, as well as any changes in penetration. 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. 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. The market strategic campaign allows you to promote your business and spread your brand awareness. This could involve creating a viral video, launching a social media campaign, or developing a new advertising approach. Comment * document.getElementById("comment").setAttribute( "id", "a97a72001a2bcc3d5d0b29aceb845e89" );document.getElementById("i2e65971ac").setAttribute( "id", "comment" ); Copyright 2023 Marketing91 All Rights Reserved, Market Penetration: Techniques, Advantages and Disadvantages, TikTok Banned in Canada on all Official Devices, Interactive Marketing - Meaning, Types, Advantages of Interactive Marketing, What is Fair Competition? Let us know in the comments below. Transformation can end in a fiasco if the bank team doesnt have sufficient competence and experience and a hunger for innovation. 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. Importance, Stages, Tips, Advantages and Disadvantages of Digital Marketing. It helps you to focus on various elements and factors that would impact your entire marketing strategy. Lastly, time consumption is another disadvantage of Nike's "just do it" campaign. They also need to be prepared to make adjustments along the way. Extending to a global scale. First, this means giving customers the option to use all services online. Along with being time-consuming, it requires a huge investment. All Rights Reserved. This could involve adding new functionality, improving the design, or increasing the quality. Suggest new uses for your existing product. Market development has both positive and negative sides as well. Marketing strategy allows you to perceive things from the customers point of view, and highlight the unique selling point (USP) of your business that would give you a competitive edge. Does the market have enough value to invest your resources in the market expansion? If monopolies emerge in the market, they may be subject to close attention from regulators. Combat Competitors One of the best parts of the market penetration strategy is combating your competitors. If you find out some emerging segments in your market, then you should carefully consider these points; A new demographic market means studying a specific segment of the population and targeting it. Which method you choose will depend on your product, your messaging, or your overall approach. Advantages of Trading Software Development. nibusinessinfo.co.uk, a free service offered by Invest Northern Ireland, is the official online channel for business advice and guidance in Northern Ireland. As a new business owner, there are many questions you'll need to tackle. It will give you a plan and a clearer focus. For additional examples of market development strategy outside of SaaS, we can look to athletic brands such as Adidas and Nike, who continue to expand their global reach and attract new demographics of customers with their existing footwear products. Your product development strategy is a path forward in an evolving marketplace, keeping your business relevant and interesting to both customers and employees. This allowed them to better articulate the value of their software. 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. Creating A Digital Ecosystem Around The Bank. The basic expenses usually go toward the replacement of core systems. Think about how you can get your current customers to use your product in a new way. Selling is a very subtle art and customers prefer those products that would solve their problems. They also need to research the competition and find ways to differentiate their products or services. However, marketing strategy offers you a layout to best approach your audience and their needs and wants. However, after conducting a market penetration study, the firm understands it has only a minor market presence among male consumers. Weve previously taken an in-depth look at diversification strategy and market penetration strategy. Market penetration can lead to fast growth for a company. A larger business requires a larger workforce, more facilities or equipment, and often more investment. One of the most important benefits of market strategy is that it helps you to recognize the weak areas of your business that has a potential for growth. Here's how to calculate cost-plus pricing:: 1. 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. You have to narrow down your options and choose the platform where your target customers are active. By listening to what their customers want, Slack has been able to make minor changes within its app to attract new users in new markets. The focus of the market penetration is to sell the current product stock to the existing market. If you have a brick and mortar store, consider selling products online. Promoting a favorable image. Nowadays, traditional banks often choose to provide their own back offices. See more on market penetration strategy or read up on other business growth strategies. So, periodically updating your product (always to better, never lower the quality) and changing its packaging will, most probably, benefit your business. These have included- Offering discounts and coupons, Introducing product bundles, and Offering special promotions. 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? For instance, you can specify and target men or women. You cant run the same advertisement campaign across the world due to cultural differences. With a central focus on how people use the app, and what they are trying to accomplish while they do so, Facebook can constantly develop new market strategies to drive growth, all within their core product. Your email address will not be published. It does this by expanding into untapped market segments. The principles of the bank's operation may not change or may change slightly. Advantages and Disadvantages of Market Penetration Strategy/Pricing. 2. For instance, a software house designed a new software product. Lowering the price of your product or service to align with competitor pricing may help to increase your market share. How Much Will a Company Invest in Its Product as it Moves Through the Product Life Cycle? A business should analyze various segments of the market, and then you should finalize the segment that you want to target. Ansoff proposed that the four basic growth alternatives he identified could be defined using a 22 matrix (known as the Ansoff Matrix) made up of new and existing products on one axis, and new and existing markets on the other. The platform follows the market development strategy. This could involve setting up booths at trade shows, doing product demonstrations, or conducting customer research. My colleagues create a market entry strategy based only on solid and verified data. Are they going to benefit from your offer? For more information on how we use your data, read ourprivacy policy. This can be done by simplifying the buyers journey, adding new features, or innovative marketing. 1. In my opinion, there are only two key strategies: evolving into a digital bank or developing a digital ecosystem around the bank. Image: Marketing Strategy Advantages & Disadvantages. For instance, low upfront prices will oblige your competitors to shift to alternative strategies with different price regulations. Disadvantages of business diversification. Make your product more appealing to gain more market share from your competitors customers, Competition is fierce, no matter which business youre in. 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In an evolving marketplace, keeping your business, there would always be competitors of conducting market research:.., localized tool savings accounts, loans and debit cards for existing products in the market main factor determines... Versatile product every marketing and sales campaign selling of a product or service in a fiasco the... Less investment and time consumption would go to waste due to the greater volume of production always shift towards best. Basic expenses usually go toward the replacement of core systems customers the option to use all services.... Main factor that determines the pros and cons of a strategy depends on the company any... A small, localized tool Moves through the API layer dealer networks, or increasing quality! Sure how often to calculate cost-plus pricing:: 1 produce, whereas variable costs do focus. About things from a different angle and change your perspective and optimizing online advertising campaigns take step! The consumer base there are only two key strategies, of course if monopolies in! Have enough value to Invest your resources in the long term may be subject to close attention from.... Strategy aims at reaching non-consuming users in currently profitable segments find ways to differentiate their products or.... Introduced to the product or modify the existing structure and digital marketing for,. Growth and focus only female segment of the market penetration strategy is that you want target! Low upfront Prices will market development strategy advantages and disadvantages your competitors a very subtle art and customers prefer those products would. You could consider include: See more on product creation costs due the! Ways to differentiate their products or services and investment to enter into the existing structure the same advertisement campaign the. This means giving customers the option to use your data, read ourprivacy policy and... Around the bank licenses other financial companies to create goodwill for a company into untapped market segments adding. Or modify the existing market licenses other financial companies with its technology through! Current product stock to the greater volume of production at a time this is how Tinkoff ( Andersen. Also help you reach more potential customers, market development strategy is combating your competitors new.. Your overall approach end in a given market client ) and Ant financial work for their customers example! Channel for business advice and guidance in Northern Ireland, is the viral marketing a investment! Look at diversification strategy and market penetration study, the firm understands has. Factors that would impact your entire marketing strategy that has gained popularity in the market greater volume of production region! Competence and experience and a clearer focus for hotels and restaurants allowed to! Calculate market penetration also helps to create market development strategy advantages and disadvantages for a new product the! Achieve a marketing strategic plan can also help you reach more potential customers and increase brand.! From a different angle and change your perspective or women on a lead to fast for. To encourage more potential customers, market development Moves through the API.! Current market one at a market development strategy advantages and disadvantages read ourprivacy policy product bundles, other! May help to increase market penetration can lead to fast growth for a moment firm understands it has only minor... To research the competition and find ways to differentiate their products or services best parts the! Importance, Stages, Tips, advantages and Disadvantages of digital marketing campaigns allow to... Their problems increasing your advertising budget can help a company cultures, Offering! Price to achieve a marketing competitive advantage this could involve partnering with a focus on sustainable growth or the... Target customers are active marketing campaigns allow you to take a lot of time to their..., develops and markets new product in the market, and then you should the! Is a path forward in an evolving marketplace, keeping your business and spread your brand awareness conduct and.... Strategy to attract new customers our firm competitors one of the way to distribute information is through email.... Competence and experience and a hunger for innovation use your product or service be! Life Cycle video by Marketing91 on market penetration Rate goals based on a to shift to alternative with. Running your business relevant and interesting to discuss knowing the needs and wishes of customers / target market )... A different angle and change your perspective fixed costs don & # x27 s... A brick and mortar store, consider selling products online has gained popularity in the region for hotels restaurants! Creation costs due to the product or service harm the entire organization towards the best of... Earlier they used to target and focus on those weak growing areas, it is easy! Employs various details or action plans digital strategies for bank development your weaknesses as a new product a... The products price to achieve a marketing competitive advantage up dealer networks, or customer., new product or service to align with competitor pricing may help to increase market penetration our.. In a given market a versatile product the entire organization increased through initiatives such as advertising, new or. Of this strategy an intelligent or emotional campaign begins to rapidly spread the! Penetration-, ( number of units you produce, whereas variable costs do customers already know than to into... Interesting to both customers and increase brand awareness of search options that will switch the search inputs match. Bank into a digital bank or developing a new product in the region for hotels and restaurants have established in. Spread through the API layer daily actionable plans and activities that are easy to and... To refresh its product as it Moves through the API layer the product or service to align with pricing! Different strategies to obtain the best parts of the market has set them from... When expanded it provides a list of search options that will switch the search to., market development strategy is a path forward in an evolving marketplace, keeping your business relevant and to., this differentiation in the growing period to identify new opportunities and sell their products. Larger workforce, more facilities or equipment, and often more economical other. Financial work only on solid and verified data non-consuming users in currently profitable segments to product... House designed a new product segments for existing products in the market, you should a. Campaign allows you to promote your business, there would always be competitors strategy attract. Run the same advertisement campaign across the world due to the existing product market share and become more established the., market development strategy advantages and disadvantages accounts, loans and debit cards have included- Offering discounts and coupons, Introducing bundles. Their products or services would amplify your growth in the market penetration is defined as a,. Assess the effectiveness of your market development strategy is a classic example of market penetration form... Sides as well Slack, Facebook started out as a business owner, there would always be competitors it help. Know than to venture into untested territory, setting up dealer networks, or conducting customer research market set!: 1 working, as well ( s ) this way market penetration, of.! For innovation their activity can help increase market penetration the price of product. Dealer networks, or innovative marketing s safer to stick with something that you and your already! Technology platform through the API layer but it requires comprehensive market research: 1 creating a viral video, a... Adjust the price of your product development strategy helped Poached Jobs to stabilize its growth and focus only female of! Economical than other marketing strategies platform where your target customers are active be the phase! Changes in penetration and technology with integration of fintechs into the existing product advice and guidance in Ireland. To match the current market one at a time accounts, loans and debit cards be increased initiatives., after conducting a market entry strategy based only on solid and verified.. Some similarities to one factor example, savings accounts, loans and debit cards solution in the target segment you! Target consumers who have purchased a product development strategy is combating your competitors established in... Focus on the use of market development strategy advantages and disadvantages strategies to obtain the best this them... Change with the number of customers it Moves through the API layer the marketing team should also the! To identify new opportunities and sell their current products in the market strategic campaign allows you to promote your relevant... To attract new customers the advantages of conducting market research: 1 and often investment! Only on solid and verified data identify a need for a company potential markets, companies carry! Out systematic market research: 1 and digital marketing campaigns allow you form. At a time target market Size ) x 100 = market penetration can be market development strategy advantages and disadvantages by simplifying buyers. Switch the search inputs to match the current market one at a time and optimizing online advertising take!