Market development is a strategic growth strategy that involves identifying and targeting new markets or segments for a company's existing products or services. It focuses on expanding the customer base and increasing sales by tapping into new markets or finding new applications for existing offerings.
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Market development is one of the four generic strategies outlined in the Ansoff Matrix, a framework for identifying growth opportunities.
It allows companies to leverage their existing resources and capabilities to reach new customers and generate additional revenue.
Successful market development strategies often involve identifying underserved or emerging markets, adapting products or services to meet the needs of new customers, and developing effective marketing and distribution channels.
Market development can be a lower-risk growth strategy compared to product development or diversification, as it builds on the company's existing strengths.
However, it may also require significant investment in market research, product adaptation, and marketing to effectively reach and serve new customer segments.
Review Questions
Explain how market development relates to the strategic objective of growth.
Market development is a key strategic objective for companies seeking to grow their business. By identifying and targeting new markets or customer segments for their existing products or services, companies can expand their customer base and increase sales, which directly contributes to their overall growth strategy. This growth can be achieved without the need to develop entirely new products, making market development a potentially lower-risk and more efficient way to drive business expansion.
Describe how market development differs from other levels of strategy, such as corporate-level or business-level strategies.
Market development is typically considered a business-level strategy, as it focuses on how a company competes within a specific market or industry. In contrast, corporate-level strategies involve decisions about the overall scope and direction of the company, such as diversification or vertical integration. Business-level strategies, like market development, are more operational and focus on how to effectively compete in a particular market. While corporate-level strategies set the high-level goals, business-level strategies, such as market development, outline the specific actions and approaches a company will take to achieve those goals.
Evaluate the potential risks and challenges associated with a market development strategy, and how a company might mitigate those risks.
Some key risks and challenges of a market development strategy include the potential for increased competition in the new markets, the need to adapt products or services to meet the unique needs of new customer segments, and the significant investment required in market research, marketing, and distribution to effectively reach and serve the new markets. To mitigate these risks, companies should carefully analyze the target markets, assess their own capabilities and resources, and develop a comprehensive plan for adapting their offerings and marketing approach. They may also consider partnering with local players or acquiring businesses already established in the new markets to leverage their existing knowledge and infrastructure. Ongoing market monitoring and flexibility to adjust the strategy as needed are also crucial for successful market development.