Market Development: Unlocking Growth Through New Market Opportunities

In a competitive business landscape, growth is essential, but the path forward isn’t always straightforward. For companies looking to expand without creating new products, **Market Development** offers a promising strategy. This approach involves taking your existing products or services and introducing them to new markets—whether geographically, demographically, or through new distribution channels.

Following on from the previous article on Market Penetration, in this article we’ll delve into what market development entails, explore various approaches, and showcase real-world examples of businesses that have successfully leveraged this strategy to achieve significant growth.

 

 

What is Market Development?

Market development is one of the four growth strategies in the Ansoff Growth Matrix. Unlike market penetration, which focuses on selling more of the same product in the same market, market development is about finding new markets for existing products. This could mean expanding into new geographical regions, reaching out to different customer segments, or adopting new distribution methods.

The goal is to capitalize on your existing products’ strengths by finding new customers who would benefit from them. While it involves some risk—since you’re venturing into less familiar territory—it’s generally less risky than creating entirely new products.

 

Key Approaches to Market Development

1. Geographic Expansion

Expanding into new geographical markets is a common market development strategy. This could mean entering a new city, country, or even continent. Success in one region can often be replicated in another, provided you understand the local culture, regulations, and customer preferences.

Example: Starbucks initially grew by dominating the U.S. market, then expanded its footprint internationally, entering countries like China and India. By adapting its product offerings to local tastes—such as offering matcha-flavoured drinks in Japan—it successfully penetrated new geographical markets.

 

2. Targeting New Customer Segments

Another approach is to identify and target new customer segments within your existing market. This could involve catering to different age groups, income brackets, or professional demographics that haven’t been a focus before.

Example: Airbnb, originally popular among budget-conscious travellers, expanded its reach by targeting business travellers. By introducing “Airbnb for Work” and partnering with corporate travel managers, it opened up a new customer segment that had previously relied on hotels.

 

3. Exploring New Distribution Channels

Expanding through new distribution channels can help reach customers who were previously inaccessible. This might involve selling through new retail partners, entering online marketplaces, or creating a direct-to-consumer e-commerce presence.

Example: Nike expanded its reach by partnering with Amazon to sell directly on its platform, tapping into Amazon’s vast customer base. This move complemented Nike’s existing distribution network, allowing it to capture a broader audience without needing new products.

 

4. Product Repositioning

Sometimes, the key to market development lies in repositioning your existing product for a new market. This could mean changing the marketing message, altering the product packaging, or even adjusting the product itself to appeal to a different demographic.

Example: Old Spice, a brand traditionally associated with older men, successfully repositioned itself to appeal to younger consumers through a humorous and edgy marketing campaign. By doing so, it revitalized its brand and captured a new, younger market.

 

Benefits of Market Development

1. Leverage Existing Products

Market development allows you to maximize the value of your existing products. You don’t have to invest in R&D to create something new; instead, you focus on reaching more people with what you already have.

 

2. Diversify Revenue Streams

Expanding into new markets can help diversify your revenue streams. This reduces dependence on a single market, making your business more resilient to changes and fluctuations in specific regions or customer groups.

 

3. Prolong Product Lifecycle

Entering new markets can extend the lifecycle of your products. If a product is reaching maturity or saturation in one market, introducing it to a new audience can revitalize its sales and profitability.

 

4. Risk Mitigation

While market development involves some risk, it’s generally less risky than launching entirely new products. By focusing on new markets with proven products, you balance the risk between familiarity and exploration.

 

Challenges of Market Development

1. Understanding New Markets

Entering a new market means navigating unfamiliar terrain. This requires thorough research to understand cultural differences, regulatory environments, and customer preferences. Missteps here can lead to failed entry attempts and wasted resources.

 

2. Adapting to Local Preferences

What works in one market may not work in another. Companies need to be willing to adapt their products or marketing strategies to suit local tastes and needs.

 

3. Increased Competition

Expanding into a new market often means facing established competitors who understand the local landscape better. Overcoming brand loyalty and market familiarity can be challenging.

 

4. Resource Allocation

Expanding into new markets requires significant resources—financial, human, and time. Businesses must ensure they have the necessary capacity to support these efforts without neglecting their core markets.

 

 

Strategies for Successful Market Development

1. Conduct Thorough Market Research

Before entering a new market, invest in comprehensive research to understand the local dynamics, competitive landscape, and customer needs. This will help you tailor your approach and reduce the risk of misalignment.

 

2. Leverage Local Partnerships

Partnering with local businesses or influencers can provide valuable insights and credibility. Whether it’s a joint venture, distribution agreement, or local sponsorship, these partnerships can facilitate smoother market entry.

 

3. Tailor Your Marketing and Sales Approach

Adapt your marketing messages and sales tactics to resonate with the new audience. This might involve localizing your website, creating region-specific advertising campaigns, or adjusting your product’s packaging to suit local tastes.

 

4. Start Small, Then Scale

Test the waters by entering a new market on a smaller scale—perhaps in a single city or region—before committing significant resources. This allows you to learn and adapt your strategy based on real-world feedback.

 

Final Thoughts

Market development offers a strategic pathway to growth by leveraging existing products in new ways. Whether through geographic expansion, targeting new customer segments, or exploring new distribution channels, this approach can unlock significant opportunities.

While it requires careful planning and execution, the rewards of successful market development—diversified revenue streams, extended product lifecycles, and increased market presence—can be transformative for any business.

 

Need some advice on Market Development?

Are you considering market development as part of your growth strategy but not sure where to start? Get in touch, call us on 0800 975 0380, email [email protected] or book a free consultation