Market development is a growth strategy, associated with the Ansoff Matrix, that identifies and develops new market segments for current products. A market development strategy targets non-buying customers in currently targeted segments. It also targets new customers in new segments. A market development strategy entails expanding the potential market through new users or new uses. New users can be defined as: new geographic segments, new demographic segments, new institutional segments or new psychographic segments. Another way is to expand sales through new uses for the product.
In high tech, where discontinuous innovation is the norm, a successful market development strategy requires crossing the chasm between the early market and the mainstream.
A marketing manager has to think about the following questions before implementing a market development strategy: Is it profitable? Will it require the introduction of new or modified products? Is the customer and channel well enough researched and understood?
Here are a few popular market development strategies:
- 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.
- 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.
- 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.
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.