Market development
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Market development is a growth strategy that identifies and develops new market segments for current products. A market development strategy targets non-buying customers in currently targeted segments. It also targets new customers in new segments.
A market development strategy entails expanding the potential market through new users or new uses. New users can be defined as: new geographic segments, new demographic segments, new institutional segments or new psychographic segments. Another way is to expand sales through new uses for the product.
A marketing manager has to think about the following questions before implementing a market development strategy: Is it profitable? Will it require the introduction of new or modified products? Is the customer and channel well enough researched and understood?
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.
Product development
Market development can also be identified when a company enters a new product segment from its existing core products. This could be a new product category all together or an extension of its current product offering. To successfully launch new products, companies must first research their target consumer, pricing, channels of distribution and determine if it is a profitable investment. A successful example of this is companies such as GE, who has successfully entered new product segments other than their original product offering of lighting and consumer electronics https://www.ge.com/about-us/history#/ (i.e. renewable energy, healthcare, and aviation). Recently, GE yet again has announced they are investing into a new product segment of high-end refrigerators (https://www.businesswire.com/news/home/20200707005718/en/GE-Appliances-Invests-62-Million-Build-High-End) which is outside of their existing product offering.
However, not all companies are successful when expanding into a new product segment. In 2014 Jeff Bezos, CEO of Amazon attempted to enter the smart phone space and launched the Fire phone. This might have seemed like an easy transition from recently coming off the success of the Kindle. However, consumers did not take to the new Fire phone as expected and although the company invested in R&D, entering this space was a flop for Amazon.
https://time.com/3536969/amazon-fire-phone-bust/
Global Expansion
Expanding into new countries is a form of market development. When thinking about expanding into new markets it is recommended that you have a well-established business in your current country. However, before expanding into new markets, you must do the due diligence of researching the new market. You will need to consider the following:
- Language: there may be a language barrier if the language spoken is not English
- Know Regulations: This can include, import duties & taxes, packaging, and HR regulations
- Broaden Team: You will need a team to manage sales, customer service, logistics and/or warehousing
As you expand into a new market, you will also need to keep in mind that the process of selling goods or services in another country maybe different. Meaning, the company will need to be flexible and adjust based on the needs of the consumer in that specific market.
A few notable companies that have succeed in global expansion are Coca Cola, McDonalds, Dunkin’, Dominos, Nike and Toyota. McDonalds is a great example of a company that adjusted based on its consumers needs by location. For instance, in India they offer a potato-based burger called McAloo Tikka, in Middle East a flat bread called McArabia and in Europe ketchup is sold as a menu item. This is an indication that companies will need to be flexible when expanding into new markets or countries.
However, with everything there is always risk associated when expanding into new countries. A few of the risk that companies may face are:
- operational Efficiency
- Politics
- Legalities
https://www.resolver.com/blog/assessing-risks-associated-international-expansion/
See also
The Ansoff Matrix is a good visual tool to use when considering to develop a company’s market. This tool allows teams to exam the existing product, proposed new products and the market development.