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. 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. Whether you choose to develop a marketing strategy or not, go into the decision with your eyes open. Would your product be successful in the new market? For instance, you can specify and target men or women. 1. Hence deciding right strategy for the target group is considered one of the most important aspect in a marketing strategy. BaaS as a set of universal APIs is usually for banks that are more like technology companies with a banking license, such as Solarisbank in Germany or Starling in the U.K. So, the results can be severe because competitors might end up selling their products at an extremely low price and generate almost no profit. Market penetration can lead to fast growth for a company. Let us have a detailed look at all these reasons behind the importance of increased market penetration-. Do I qualify? Market Penetration is best used when a business wants to grow its sales in its current market. 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. By tapping into this sub-strategy, the bank receives the following opportunities: 1. Finding ways to differentiate yourself from other companies in your space such as offering better support, more competitive pricing, or extra features that are in demand and not offered by your competitors, can entice customers to switch over to your product. A market development strategy really is a mini strategic plan because Coca-Colas market penetration strategy has been very successful. For instance, low upfront prices will oblige your competitors to shift to alternative strategies with different price regulations. You can update your choices at any time in your settings. Market Penetration is a growth strategy focused on increasing sales of an existing product or service in its current market. In many cases, if the marketing strategy has more advantages than disadvantages, this strategy could be implemented. For example, advertising is one of the most effective ways to increase brand awareness. I agree that it can be difficult to create a strong go-to-market strategy for the business owners but not for the professionals. 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. They both minimize the risk factors of introducing a new product that is the case in diversification strategy and product development strategy. One of the advantages of a product development strategy is that you can respond to customer needs as they change. Market penetration also helps to create goodwill for a company. The choice is yours. Today well review what market development strategy is, identifying a clear definition and looking at some useful examples. Image: Marketing Strategy Advantages & Disadvantages. An example of . A marketing strategy gives you more control and allows you to diversify your sales channels. 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 a BETA experience. 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. There are many ways to increase market penetration. For example, if your organizations primary source of income is selling through retail outlets, it can open other channels like email marketing, telemarketing, etc. Poor Company Image If your company has several product lines (that includes a luxury line), then using market penetration strategy might be harmful. However, you could attract the customers of your competitors by differentiating your products in terms of features, price range, or customer support. During this process, the cost is usually the main factor that determines the pros and cons of a strategy. It allows for easy diffusion of products or services, creates goodwill, and can lead to fast growth. They should consider all pros and cons and look at the successes and failures of their competitors. 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. 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 whole process would take a minimum of 3 months. 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. 3. When a particular market is going through a saturation phase, then market penetration is a preferred strategy. You may need to borrow money to buy new premises or equipment to expand. Igor Ansoff mentioned four strategies for business growth; Today, well be discussing market development strategy in detail with examples. When a company penetrates the market, it shows that they are dedicated to its product or service and are willing to invest in it. Increased capital requirements. Market Development is best used when a business wants to expand into new markets. Also, this way you can increase product sales, distribution channels, gain extra space on the market and overall profitability. The strategy revolves around geography, customer base, and the products. The key is to understand when to use each one. The market development strategy helped Poached Jobs to stabilize its growth and focus on the current market one at a time. The absence of a clear vision of and plan for integrating a fintech into a legacy structure may not bring the desired effect. To put it simply, take your products current sales volume and compare it to the total sales volume of similar products on the market. Now, you have to find out the users of your products, so that you could target them by offering them your product. 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. three days. An example of this approach is Russias Sberbank (an Andersen client). You could attract the non-buyers of your current market by offering new prices, speeding up the marketing and promotions, and providing free-trials. 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. In 2013 she transformed her most recent venture, a farmers market concession and catering company, into a worker-owned cooperative. Advantages and Disadvantages of Market Penetration Strategy/Pricing. 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. Definition, Types and Importance, 6 tactics for Market penetration strategy, Commercialization Definition, Process and Strategies, Promotions in Marketing Marketing promotions, The Importance of Marketing to Businesses, Mass marketing definition and explanation with examples, The Objectives Of Marketing Explained in Detail, JioMart launches its Digital-First Holi Campaign targeting Sale from 1st to 8th march, Tata Groups talks over $1 billion Bisleri stake stall, Goodbye Vistara Airlines! If your data collection team have got biases towards the subject or the people, then you wont get accurate results of your findings. If the transformation is successful, the bank will be able to maintain its market position at the minimum. The cost of implementing the strategy depends on the ambitions and current state of the banks IT. The platform then refined and developed its marketing strategy and went on to the bigger markets of Chicago and San Francisco. My colleagues create a market entry strategy based only on solid and verified data. 2. This can be done through traditional methods such as television and print ads, or through digital methods such as online banner ads and social media campaigns. Human beings are very creative and theyre curious to learn new ways to get the job done. Working with resellers is a great way to increase market penetration. Surveying and interviewing your customers and your team can reveal innovative ways that people are using your product to solve their problems. Market penetration can also help to improve a companys prospects. You must have JavaScript enabled to use this form. This button displays the currently selected search type. However, many players in the banking sector haven't even decided on a basic digitalization strategy yet. Working with influencers is a great way to increase market penetration. Another example of market penetration is the online retailer Amazon. If you think that customers are using the product, then you could be wrong. The recruitment company started its journey from Seattle and Portland. 2. Slack began life as an internal company tool. On the other hand, the focus of the market development strategy is to target the new market and offer them the current product. Part of Slacks market development strategy includes obsessing over user behavior to increase its usage and grow revenue from its existing product. nibusinessinfo.co.uk As well as attracting new customers, market development also looks at expanding sales through new or alternative uses for your product. This can be done by simplifying the buying process, providing free shipping, or offering financing options. This enables companies to adapt to different markets and enhance competitiveness. Extending to a global scale. 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. It becomes more complex when competing with large firms. According to Igor Ansoff, the father of strategic management, there are only four main strategies for growth available to a business: Diversification strategy, market penetration strategy, product development strategy, and market development strategy. Though you may have an innovative idea and a capable team to execute, there's no guarantee of success. Market penetration is often more economical than other marketing strategies. The banking as a service (BaaS) model includes two main approaches: 1. What Is Market Development Strategy? The population of the US accounts for approximately 4.25% of the world's total population.. Or, companies target different segments for their products. Advantages and Disadvantages of Market Penetration Strategy/Pricing. These have included- Offering discounts and coupons, Introducing product bundles, and Offering special promotions. Developing an online and offline marketing strategy will help integrate your business. The primary disadvantage of product development is that changing consumer preferences can cause a valuable product to actually be seen as worthless. From a technical perspective, creating such a service is often easier and faster than the examples above. Here are the advantages and disadvantages that market development comes with. This strategy is usually implemented to achieve the following goals: This strategy helps a business to survive in a dynamic, competitive environment, and to develop and achieve more ambitious goals in a relatively comfortable way. If you have a brick and mortar store, consider selling products online. (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. Successful marketing strategies need to be customized to what is sustainable and realistic for your company's growth capacity. First, businesses need to identify their existing customers and understand their needs and wants. While the . The acquisition involves acquiring another company that already has a strong presence in the desired market. This can be done through discounts, coupons, and special promotions. Which method you choose will depend on your product, your messaging, or your overall approach. The strategy that is more attractive for one group may not be interesting for another group. You may opt-out by. Loss of control. 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. It now also integrates with many other popular SaaS products such as Dropbox, Zendesk, and Zapier to ensure ongoing growth and user adoption. This could involve partnering with a complementary business, setting up dealer networks, or partnering with distributors. Market penetration can be a great growth strategy for businesses of all sizes. SEO and content marketing would allow you to approach customers and rank up in the searches. The platform follows the market development strategy. 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 are the advantages of conducting market research: 1. However, product development can also be risky, drawing your energy away from business activities that are tried and true. When you're just starting out, watching your company grow organically and making decisions based on what you learn can be just as beneficial. 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. Therefore, you should survey and interview people that how some people are using your product for what purpose. In the business world, there is no perfect marketing strategy. Product Life Cycle Analysis & Price Strategies, Disadvantage of Entering a Mature Market Economy, The Effects of a Change in Business Environment on Strategic Planning, Advantages and Disadvantages of a Marketing Strategy, Brandon Gaille: 8 Pros and Cons of Product Development, This Matter: Research and Development: Advantages and Disadvantages, On Strategy: How to Choose a Market Development Strategy, Australia Unlimited: Market Entry Strategies. Social media and digital marketing campaigns allow you to precisely target your customer market. Have you ever used market penetration to grow your business? Market Share can be increased through initiatives such as price cuts, promotions, and marketing campaigns. Market development is a strategy employed to seek out new markets for a product or service. Coca-Cola has also employed several pricing strategies to attract new customers and maintain its market share. It also targets prospective buyers in new segments or new niches. For more information on how we use your data, read ourprivacy policy. Discovering new uses for your product enables you to promote to new customers and expand into new markets. When you offer better prices than your competitors, luring out their customers becomes easier that previously expected. For one, it can be challenging to generate momentum. Executing a successful marketing strategy is quite time-consuming. Market penetration strategy takes advantage of low prices to increase product demand and increase market share. The basic expenses usually go toward the replacement of core systems. When you have got biased data from your research, then you cant make the right decisions. The aim of market penetration is to effectively use your product, enter the market as quick as possible and seize a large market share. This could involve giving them more leads to contact, providing training on how to sell your product, or setting quotas for them to reach. Slack began life as an internal company tool. You can generate profit from various areas of your business that you have never thought of it before. Leverage the resources available to you, such as marketing information and demographic data. They can help you reach new markets and increase sales. 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. Every marketing strategy has its own advantages and disadvantages. So, considering that youre willing to stay as the market leader, the only choice you have is to outplay them. This could involve setting up new offices, opening new stores, or expanding your distribution network. Development of a Marketing Strategy To develop a marketing strategy, one should analyze the advantages and disadvantages of each aspect. Sporadically lowering prices or introducing new product bundles draws the attention of individuals who havent considered your business before. Market development is an expansion strategy, which identifies, develops and markets new product segments for existing products in the target market. 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