Marketing Strategy Development

The concept of marketing strategy is not very vague. Everyone knows what it is, and can vaguely explain it. But in reality, the concept is rather foggy. Essentially, marketing strategy involves choosing which markets to serve and then creating a framework to target those markets with a product or service.

Chances are, you’ve heard of marketing strategy. Many people have and they probably think they know what it means. But marketing strategy is not what most people think and could use much more clarification. Marketing strategy is one of the cornerstones that have made companies as big as Facebook successful.

What is market development strategy?

Ansoff proposed that the four basic growth alternatives he identified could be defined using a 2×2 matrix (known as the Ansoff Matrix) made up of new and existing products on one axis, and new and existing markets on the other.

Looking at the image above, we can see that a market development strategy is a business growth strategy that involves adding existing products to new markets. 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.

Things to consider when creating a new market development strategy

There are several factors to consider when determining if your company is ready to develop a new market development strategy for your product:

  1. Is there a specific target audience (market) you’re not yet serving? Would this audience truly benefit from your new product offering?
  2. Do you, or your team, have the bandwidth to develop and measure the effectiveness of a market development strategy?
  3. Will your effort in reaching this new market be worth the investment from your company or organization? (What is the ROI?)

Examples of market development strategies

Here are a few popular market development strategies:

  1. Geographic expansion – One way to reach a new audience with your product is by geographic expansion. For example, If you’re currently only targeting US customers, research what it might take for your company to expand your audience on a global level. Or, if you’re currently only serving tech companies in New York City, research whether or not it would make sense to target San Francisco tech companies as well.
  2. Upselling to existing customers – If all, or some, of your current customer base, could benefit from your new product offering, consider using your relationship with them as a gateway to introducing your new solution.
  3. Attracting non-users – Along with (or separate from) upselling to current customers or clients, you can also develop a plan to target non-users of your product. This can be achieved through a variety of methods, including offering free trials, cold outreach, advertising, etc.
  4. Attracting competitors’ customers – Who else is making a product like yours? And how can you convince their customers to migrate to you? Maybe you can adjust your pricing, offer incentives or discounts, use lookalike audiences in advertising, or deliver a superior user experience.

Implementing a market penetration strategy

Because market penetration strategy has the lowest risk involved, most companies start here and try to find ways to promote growth without the inherent risk of entering into new markets. For example, before implementing a market development strategy, you might want to:

1. Make your product more appealing to gain more market share from your competitors’ customers

Competition is fierce, no matter which business you’re in. 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.

2. Attract non-buyers in your current market

Free trials, targeted content marketing, advertising, and experimenting with pricing strategies can be a useful part of your marketing development strategy, as they can encourage non-users in your existing market to become customers.

Market penetration is a great strategy to start with, but it can only get you so far on its own — at some point, you may need to consider a higher risk, higher reward strategy to continue steady growth. This is where market development comes in as a beneficial strategy.

Implementing a market development strategy

The ideal methods of a market development strategy will look different for every business, so you should think about this type of strategy in a way that best suits your operations and type of product or service. Here are two examples to consider:

1. Suggest new uses for your existing product

Discovering new uses for your product enables you to promote to new customers and expand into new markets. Humans are curious creatures that are exceptional at being creative and improvising with tools to get the job done, so how you think your product is being used may not be entirely correct. Surveying and interviewing your customers and your team can reveal innovative ways that people are using your product to solve their problems. In turn, this can give you fresh ideas about how to market, and who to market to.

2. Geographic expansion

If your product has started small, expansion into new national or international areas might be the next phase of your market development.

If identifying and developing new market segments is your preferred strategy, careful consideration should be made around:

  • Whether you have enough resources to expand into a new market
  • Whether your product will be ultimately successful in this new market
  • Whether the market is going to be valuable enough to put the resources, budget, and effort into expanding in this direction
  • Whether the potential new market is already too saturated, or whether you can gain market share and stay competitive

Identify Target Markets

Target markets are those segments of the population that the small-business owner deems to be potential customers. A variety of criteria ranging from income level to age, to geographic location can be used to determine these targets, depending on the product or services you sell.

Your marketing strategy should be designed to address these markets first and foremost. For example, Forbes suggests that if a company’s goal is to reach Millenials, digital messages should be succinct, eye-catching, and engaging.

The remainder of the market can also be addressed with a separate undifferentiated marketing strategy in an attempt to leave no stone unturned if you so desire. Your target markets should be specific to your type of business and should be discerned through market research and experience.

Set Measurable Goals

Clear-cut goals are an essential part of marketing strategy development. Your small-business goals should consist of distribution and financial mile-markers that will gauge the success or failure of your marketing strategy and will help you to know when you’ve hit on the right strategy for you.

Goals and projections should be based on customer and market research, starting with past performance, and factoring in the changes that additional marketing efforts and promotions will bring. If your marketing strategy fails to reach the goals you’ve set, alterations to the plan and additional investment may be required to right the ship.

Conduct Marketing Research

Don’t be left in the dust when it comes to digital marketing. Data mining from multiple online sources and Artificial Intelligence allows you to zero in on your customer’s likes, dislikes, and buying behavior, according to Markets Insider. Once you have this information, you can select the most effective media channels to disseminate your message.

Sometimes surveying your clients is the best way to get a firm handle on who your marketing targets should be. For example, if you notice that 80 percent of your sales are made to members of the legal profession, your number one target market should be lawyers and paralegals. Market research is also a key part of marketing strategy development, even though it deals with larger generalities than you may be used to.

For instance, you find through research that 78 percent of luxury cars sold in your area are sold to homeowners and only 22 percent to renters. If you own a luxury car dealership, you know that your marketing strategy should be directed at people who have their own homes. Research helps to eliminate wasted efforts and fine-tune your marketing so it hits the targets that will mean the most to your company’s success.

Market development strategy examples

SaaS examples

Slack

Slack began life as an internal company tool. Part of Slack’s market development strategy includes obsessing over user behavior to increase its usage and grow revenue from its existing product. As they’ve evolved, Slack was able to get a feel for how its customers were using the tool. This allowed them to better articulate the value of their software.

This differentiation in the market has set them apart from other products with very similar features. No longer was their tool just another group messaging platform, it was for businesses who want to streamline and save costs with “75% less email,” “zero effort knowledge management” and team communication that’s “instantly searchable and available wherever you go.”

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. It now also integrates with many other popular SaaS products such as Dropbox, Zendesk, and Zapier to ensure ongoing growth and user adoption.

Facebook 

Similar to Slack, Facebook started as a small, localized tool. It enabled college students to compare headshots and choose who was “hot”, or not. As the software became the Facebook we know today, it became increasingly important to reach new users and markets to expand.

As a tool that’s free for anyone to use, it was important for the Facebook team to maintain a keen focus on user behavior. By keeping as many people in the app as long as possible, they can drive more revenue through advertising to these users.

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.

Uber

The infamous ride service app, Uber, has seen significant growth in the last decade through a unique combination of diversification strategy (i.e. food delivery, bikes, scooters, etc.), market development strategy (i.e. ride-sharing, luxury upgrades, etc.), and product development strategy. Developed in 2009, and initially introduced to a small San Francisco market in 2010, Uber’s aggressive market development strategy has landed them in over 700 cities worldwide as of 2020.

Non-SaaS examples

NBA

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. The NBA invested significant resources and years of negotiations to lay the foundation for bringing the NBA to China, and in 2008 their hard work paid off. By implementing a market development strategy, the NBA brought televised games to China, where just a decade later it’s become the most popular sports league in the country and worth more than $4 billion.

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.

Simply put, a market development strategy can be an excellent choice for business growth. 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 attempt to diversify its offerings and concentrate on leveraging what you already have at hand to increase your revenue.

Conclusion

Marketing strategy development is the most important part of building your business. A well-developed marketing strategy will help you create the right marketing for your business which will lead to optimum growth.

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