First, businesses need to identify their existing customers and understand their needs and wants. Increase Usage Market penetration can be increased through product consumption. Required fields are marked *. ), market development strategy (i.e. You realize various new uses of your products and then promote them among the customers of your existing market. Youll be able to assess the effectiveness of your campaign(s) this way. It gives you an idea of what type of product or service you should develop. Whether you could achieve any competitive advantage, whether the market has already been through the saturation phase. According to an estimate, 75% of businesses and companies implement social media and Google ads. Have you ever used market penetration to grow your business? Bedford Street Here are two examples to consider: Discovering new uses for your product enables you to promote to new customers and expand into new markets. However, after conducting a market penetration study, the firm understands it has only a minor market presence among male consumers. 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! Finally, they need to track their progress and make adjustments as needed. 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. Integrated marketing is an approach that uses multiple channels to reach customers. 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. Forming partnerships with other businesses can help increase market penetration. 2. Would your product be successful in the new market? 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 resellers is a great way to increase market penetration. An example of . Along with being time-consuming, market strategy is highly expensive. Market penetration is one avenue you can take to achieve this goal. Market development involves expanding into new markets with existing products. Finding ways to, 2. When a company decides to enter a new market, its essential to use market penetration strategy. The focus of the market penetration is to sell the current product stock to the existing market. 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. The company has made significant growth for the last 10 years. The aim of market penetration is to effectively use your product, enter the market as quick as possible and seize a large market share. There are multiple advantages of exporting for businesses of all sizes. Under these circumstances, it would be wiser for small companies to focus on product packaging, marketing campaign, and public image because it has the potential to be as effective as low prices. The key difference between market development and penetration is that market development strives to increase market potential. Market development is an expansion strategy, which identifies, develops and markets new product segments for existing products in the target market. three days. The population of the US accounts for approximately 4.25% of the world's total population.. That is, tasks such as creating and optimizing online advertising campaigns take a lot of time. This can be challenging and could derail the company's vision. If you thought this was useful, youll love getting Lighter Capital's thoughtfully curated monthly e-newsletter. Managing risks The first major advantage of conducting market research is improving your risk management strategy. This enables companies to adapt to different markets and enhance competitiveness. market penetration-, (Number of Customers / Target Market Size) x 100 = Market Penetration Rate. Existing customers can be a great resource for finding new markets, and also for helping to promote your products or services in those markets. They also need to research the competition and find ways to differentiate their products or services. The cost of implementing a strategy depends on the company's appetite and approach. 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. It's an easy way for the bank to refresh its product and technology with integration of fintechs into the existing structure. The goal is to increase market penetration by targeting this relatively untapped group. This could involve partnering with a complementary business, setting up dealer networks, or partnering with distributors. Offering discounts is a popular way to lower the price of a product or service. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. Market Development is best used when a business wants to expand into new markets. Price Adjustment One of the most frequently used market penetration strategy is price adjustment. A market development strategy aims at reaching non-consuming users in currently profitable segments. This is a BETA experience. Judging by the results of the IPO of those banks, the main business of which is BaaS, the cost of implementing the model may be tens of millions of dollars. Market penetration can be a great growth strategy for businesses of all sizes. Today well review what market development strategy is, identifying a clear definition and looking at some useful examples. It can also lead to faulty marketing decisions if data isn't analyzed properly, and creates unrealistic financial projections if the information isn't interpreted correctly. Poached entered the New York market in 2014. ), and product development strategy. 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. An organization can even begin to develop a product that is seen as valuable, but have it become worthless before they can bring it to market. 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. 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. Market penetration can also help to improve a companys prospects. It does this by expanding into untapped market segments. Definition. While the . Thus, the development efforts of the organization are focused on characteristics that are most widely demanded. An entrepreneur must examine each marketing strategy and weigh their benefits and costs. 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. Your email address will not be published. Some of the companys key marketing initiatives have included- Investing in advertising, Developing new products, and Expanding its distribution network. This is usually accomplished through recommendations and by social media networks such as Facebook and Twitter. To evaluate their position with respect to rivals, certain organizations, and business analysts can use tactics such as the five forces analysis. 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 thats instantly searchable and available wherever you go.. Make your product more appealing to gain more market share from your competitors customers, Competition is fierce, no matter which business youre in. I am a Digital Marketer and an Entrepreneur with 12 Years of experience in Business and Marketing. 2. Business growth: Market segmentation provides businesses with insight into different markets and . Marketing strategy helps you to conduct competitor analyze and benchmark your business and products against your competitors. As well as attracting new customers, market development also looks at expanding sales through new or alternative uses for your product. What Is Market Development Strategy? ride sharing, luxury upgrades, etc. Simply put, a market development strategy can be an excellent choice for business growth. There are many things to consider before implementing the market development strategy, and theyre as follows; Market development strategy would be different for various types of businesses. Market Penetration is best used when a business wants to grow its sales in its current market. For example, a marketing strategy for a particular product may include advertising in television programs that have high ratings, but a disadvantage could be sponsoring the program that some may find offensive or in bad taste, which would result in disinterest of product or service. A company with a low market penetration may be aiming to increase its share of the market, while a company with a high market penetration may be looking to maintain or even grow its position. 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. Transformation can end in a fiasco if the bank team doesnt have sufficient competence and experience and a hunger for innovation. In both cases, dont overdo it because it may seem suspicious (lowering prices too much may indicate to low quality and high prices might seem as a company that has only one objective-gain profit) and might make customers doubt your quality, fairness, and trustworthiness. By tapping into this sub-strategy, the bank receives the following opportunities: 1. However, in the future, traditional banks will probably try to catch up with BaaS companies by integrating directly with fintechs without intermediaries. A business should analyze various segments of the market, and then you should finalize the segment that you want to target. Here are the advantages of conducting market research: 1. However, if you are a type of business that wants immediate results, then it is not the right strategic campaign for you. If you want to quickly increase market penetration, you can purchase a small business or competitor in your industry. Let us know in the comments below. (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. Slack began life as an internal company tool. Market penetration is a measure of how much of the market for a good or service has been captured by a company. Devra Gartenstein founded her first food business in 1987. Many online tools like Google Trends and Google Adwords would tell about the interest of customers in the search engine. It helps companies in the growing period to identify new opportunities and sell their current products in the new unexplored market. Here are some market penetration strategies you can consider: 1. It becomes more complex when competing with large firms. RevenueLoan is a registered trademark of Lighter Capital, Inc. For California borrowers, loans are made or arranged by Lighter Capital, Inc. pursuant to its California Finance Lenders Law License, #603K634. Part of Slacks market development strategy includes, This differentiation in the market has set them apart from other products with very similar features. Human beings are very creative and theyre curious to learn new ways to get the job done. Competition. For instance, if we use an effective marketing strategy that will increase product awareness in certain areas itll result in higher product consumption that will also increase market penetration. Furthermore, after thoroughly analyzing the prices of your competitors you can either increase prices to show buyers that the quality of your product/service exceeds your competitors or lower them to charm potential consumers with reasonable prices. 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