This can be done through discounts, coupons, and special promotions. But it requires comprehensive market research that the new market would add some value. Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. 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. In many cases, if the marketing strategy has more advantages than disadvantages, this strategy could be implemented. 0800 181 4422. Your product development strategy is a path forward in an evolving marketplace, keeping your business relevant and interesting to both customers and employees. You need to adjust your campaign for different cultures, and it is not easy sometimes. The recruitment company started its journey from Seattle and Portland. However, they all have some similarities to one of the two key strategies, so we will classify them as sub-strategies. It's a clear signal to investors that the bank is developing its digital services. Market Share can be increased through initiatives such as price cuts, promotions, and marketing campaigns. Also, this way you can increase product sales, distribution channels, gain extra space on the market and overall profitability. Your email address will not be published. Existing customers can be a great resource for finding new markets, and also for helping to promote your products or services in those markets. 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. While creating a marketing strategy for your company can provide you with a variety of critical and insightful information, it's only helpful if your analysis is done properly and thoroughly. Find out how to segment your customers. In the business world, there is no perfect marketing strategy. Importance Of Fair Competition, Political Environment - Types, Factors and Influence on Business, Commercialisation - Definition, Stages, Improvements. Promoting a favorable image. disadvantages of market developmentgarberiel battery charger manual 26th February 2023 . Image: Marketing Strategy Advantages & Disadvantages. 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. The primary disadvantage of product development is that changing consumer preferences can cause a valuable product to actually be seen as worthless. (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. One of the advantages of a product development strategy is that you can respond to customer needs as they change. Let's take a closer look. Note, that the campaign must be well-planned and analyzed because if your ad looks like XX% off on Y Product for a limited time can be easily countered by competitors with their own promotional campaigns and also retrieve their lost market share. To put it simply, take your products current sales volume and compare it to the total sales volume of similar products on the market. In articles about the banking industry over the past year or two, authors often talk about the necessity of implementing big data, AI and quantum technologies. Today, well discuss the advantages and disadvantages of marketing strategy. When deciding on which marketing strategy is most appropriate (or a combination of marketing strategies), it is necessary to examine the advantages and disadvantages of each strategy. Poached entered the New York market in 2014. For instance, low upfront prices will oblige your competitors to shift to alternative strategies with different price regulations. This means that there is less resistance from customers when they are introduced to the product or service. However, many players in the banking sector haven't even decided on a basic digitalization strategy yet. But in reality, it is highly difficult and time-consuming. It would give you new ideas to market and promote your product. Market penetration can lead to fast growth for a company. The absence of a clear vision of and plan for integrating a fintech into a legacy structure may not bring the desired effect. You may need to borrow money to buy new premises or equipment to expand. Keep your entire team involved so you can hear feedback from many levels. They also need to be prepared to make adjustments along the way. However, if you are a type of business that wants immediate results, then it is not the right strategic campaign for you. The platform keeps on growing with its existing product. 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. Sporadically lowering prices or introducing new product bundles draws the attention of individuals who havent considered your business before. Disadvantages of business diversification. The goal and objective of every business are to satisfy the needs and requirements of customers. Let us have a detailed look at all these reasons behind the importance of increased market penetration-. WD-40 is a classic example of a versatile product. 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. Transformation can end in a fiasco if the bank team doesnt have sufficient competence and experience and a hunger for innovation. Creating a marketing strategy will help you discover what makes you different so you can map out a clear strategy to communicate those benefits. Consumers mostly fall for the trick because the interest and curiosity that the improved product drives are irresistible. 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. Companies do so by meeting the list of requirements that customers are demanding. August 10, 2019 By Hitesh Bhasin Filed Under: Marketing. 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 and Disadvantages of Market Penetration Strategy/Pricing. Doing research helps you understand patterns of consumer behavior so you can calculate the likelihood of your products and services succeeding with your target market. By keeping as many people in the app as long as possible, they can drive more revenue through advertising to these users. The advantage of Viral Marketing strategy is that it manages to present the product or service extensively, but the downside is that there is no control on how the information is spread. 2. By implementing a market development strategy, the NBA brought televised games to China, where just a decade later its become the most popular sports league in the country and worth more than $4 billion. Or it is another region within a country. 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. Today well review what market development strategy is, identifying a clear definition and looking at some useful examples. The most important thing to remember about market penetration is that it takes time and effort to be successful. 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. So, the results can be severe because competitors might end up selling their products at an extremely low price and generate almost no profit. For example, before implementing a market development strategy, you might want to: Competition is fierce, no matter which business youre in. The company sells its products in more than 200 countries and has a 42% market share in the global soft drink industry. Is it worth investing in the new market and approaching new customers? Bedford Square The key difference between market development and penetration is that market development strives to increase market potential. Slack began life as an internal company tool. Its because of diversification (scooters, bike, food delivery, etc.) 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. 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. First, businesses need to identify their existing customers and understand their needs and wants. Bedford Street This button displays the currently selected search type. 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 Development is best used when a business wants to expand into new markets. Have you ever used market penetration to grow your business? Market development involves expanding into new markets with existing products. Part of Slacks market development strategy includes, This differentiation in the market has set them apart from other products with very similar features. food delivery, bikes, scooters, etc. One of the most common ways to increase market penetration is by lowering the price of a product or service. 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. The platform follows the market development strategy. Digital market entry is the sweet spot of our firm. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. Every marketing strategy has its own advantages and disadvantages. Finally, they need to track their progress and make adjustments as needed. When it comes to business, market penetration is key to success. Marketing strategies often require market research and that research can help you to gain a better understanding of the market, how it works and who your customers really are. Lack of Results Market penetration strategy isnt always effective, especially when a company enters an industry where prices are already set low. Along with being time-consuming, market strategy is highly expensive. In turn, this can give you fresh ideas about how to market, and who to market to. Creating A Digital Ecosystem Around The Bank. Developed in 2009, and initially introduced to a small San Francisco market in 2010, Ubers aggressive market development strategy has landed them in over, The NBA has always dominated the relatively large and lucrative market for professional basketball here in the United States, but the league also had the foresight to recognize how much more lucrative business could be if they could successfully bring their product to international markets. This could involve partnering with a complementary business, setting up dealer networks, or partnering with distributors. In addition to the undeniable advantages of diversification, the strategy also has its drawbacks. Use tab to navigate through the menu items. If competitors sell similar products and one of them decides to lower prices, its natural that others will try to match them to create a balance and avoid consumer shifting. Creation Of A Service Based On The BaaS Model. Based on the above information, it seems that a market penetration strategy is a good way to have a good market penetration rate, increase sales and grow a business. Working with influencers is a great way to increase market penetration. 1. Market situations change, so it makes sense to change up your product mix as well. For example, advertising is one of the most effective ways to increase brand awareness. Market development has both positive and negative sides as well. Hence deciding right strategy for the target group is considered one of the most important aspect in a marketing strategy. As long as your product is comparable in value to your competitors, then pricing may be an easy way to stay competitive. Advantages of a Marketing Strategy Maintain Focus When you have a bunch of tasks fighting for your attention, it's easy to lose focus. Development of a Marketing Strategy To develop a marketing strategy, one should analyze the advantages and disadvantages of each aspect. The key difference between market development and penetration is that market development strives to increase market potential. 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. Improving Products The best practice of engaging and interacting with customers is to inform them that your product has changed to better. Hence, the marketing strategy has been under fire for using controversial celebrities. A market development strategy aims at reaching non-consuming users in currently profitable segments. 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. The principles of the bank's operation may not change or may change slightly. Other than that, hes a fun loving person. Along with being time-consuming, it requires a huge investment. businesses need to be patient and continually track their progress. Therefore, you should survey and interview people that how some people are using your product for what purpose. I've seen this strategy applied by banks around the world. Additionally, it is often more economical than other marketing strategies. Social media and digital marketing campaigns allow you to precisely target your customer market. Competition. For one, it can be challenging to generate momentum. The most important element of a market strategic campaign is to recognize the needs and wants of target customers. food delivery, bikes, scooters, etc. How Would the Marketing Mix Change at Different Stages of the Product Life Cycle. Disadvantages of Market Penetration Strategy. The strategy revolves around geography, customer base, and the products. It also targets prospective buyers in new segments or new niches. 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. Devra Gartenstein founded her first food business in 1987. There are many ways to increase market penetration. A good example of market penetration is the brand Coca-Cola. Setting an artificially low target price can limit the flexibility of development and manufacturing departments, forcing them to meet unrealistic production demands. 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. Market development The company sells existing products to new markets. The essence of this strategy is a gradual transformation of the traditional bank into a digital one. All of your investment and time consumption would go to waste due to one factor. Simply put, a market development strategy can be an excellent choice for business growth. 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. Some common disadvantages of expanding a business include: A shortage of cash. The banking as a service (BaaS) model includes two main approaches: 1. Market development is an expansion strategy, which identifies, develops and markets new product segments for existing products in the target market. I agree that it can be difficult to create a strong go-to-market strategy for the business owners but not for the professionals. Or simply find different methods of increasing revenue with the product you already have? It helps companies in the growing period to identify new opportunities and sell their current products in the new unexplored market. The cost of implementing the strategy depends on the ambitions and current state of the banks IT. 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