Successful marketing strategy may depend on the use of different strategies to obtain the best result . Though, before deciding to use market penetration strategy, its crucial to understand the advantages & disadvantages and risks it carries. 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. 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. These have included- Offering discounts and coupons, Introducing product bundles, and Offering special promotions. You cant run the same advertisement campaign across the world due to cultural differences. There are other digital development strategies, of course. The most important element of a market strategic campaign is to recognize the needs and wants of target customers. Lack of Results Market penetration strategy isnt always effective, especially when a company enters an industry where prices are already set low. businesses need to be patient and continually track their progress. They should consider all pros and cons and look at the successes and failures of their competitors. This could involve changing your target market, your messaging, or your overall approach. Some tactics, for example, may employ advertising alongside social media campaigns and direct sales outreach to target consumers in underpenetrated areas. Slack began life as an internal company tool. The benefits of using a computer to execute transactions and monitor the markets for trading opportunities are many and include the following: Reducing Emotions; Automated trading platforms keep emotions to a minimum when trading. A marketing strategy that has gained popularity in the new media world is the viral marketing. With this strategy an intelligent or emotional campaign begins to rapidly spread through the Internet. One of the primary benefits of exporting is access to a global market of buyers. Market penetration can be a great growth strategy for businesses of all sizes. Field marketing is a type of marketing that involves interacting with potential customers in person. They also need to research the competition and find ways to differentiate their products or services. Increasing your advertising budget can help you reach more potential customers and increase brand awareness. It doesnt matter in whatever category youre running your business, there would always be competitors. However, in the future, traditional banks will probably try to catch up with BaaS companies by integrating directly with fintechs without intermediaries. Market development strategy falls under the category of business growth strategy, and it means introducing new existing and current products into the new market. The key to a market development strategy is the understanding of the current baseline performance vs. what we want our future performance to be, and then coming up with the strategy to move from A to B. If your market strategy involves social media marketing, then it is easy. For this purpose, you need to conduct interviews, case studies, focus groups, and field research. Hence, the marketing strategy has been under fire for using controversial celebrities. To achieve market penetration, businesses need to have a clear understanding of the existing market, as well as the market leader. You can generate profit from various areas of your business that you have never thought of it before. Weve previously taken an in-depth look at diversification strategy and market penetration strategy. Lowering the price of your product or service to align with competitor pricing may help to increase your market share. Marketing Penetration Strategies and Tactics. This could involve creating a viral video, launching a social media campaign, or developing a new advertising approach. Marketing strategy allows you to perceive things from the customers point of view, and highlight the unique selling point (USP) of your business that would give you a competitive edge. This is because penetrating the market can help a company reach new customers and grow its customer base quickly. Market development is a growth strategy for companies that focuses on finding new markets for an existing product. So, the results can be severe because competitors might end up selling their products at an extremely low price and generate almost no profit. If you think that customers are using the product, then you could be wrong. Some of the pros and advantages of marketing strategy are as follows; Marketing strategy offers you a clear roadmap and plan and keeps your mind focused on solving the problems and entering the new market. When expanded it provides a list of search options that will switch the search inputs to match the current selection. Advantages of Trading Software Development. The absence of a clear vision of and plan for integrating a fintech into a legacy structure may not bring the desired effect. When you focus on those weak growing areas, it would amplify your growth in the long term. Fixed costs don't change with the number of units you produce, whereas variable costs do. Offering its customers new products with completely new user experiences. 2023 Leaf Group Ltd. / Leaf Group Media, All Rights Reserved. Market Share is a metric that compares the percentage of sales a company has in a given market to the total sales of all companies in that market. This is because it can help a company gain market share and become more established in the market. 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. For instance, you cant market pork and pig meat in Muslim countries. Although the distribution marketing is relatively cheap, the disadvantage is that due to the large amount of spam, many Internet service providers have created filters to avoid unsolicited emails. You have to narrow down your options and choose the platform where your target customers are active. Do you have to launch a new product or modify the existing product? The market strategy allows you to focus on one problem at a time, but it is possible that your campaign is facing challenges in various areas. Your email address will not be published. The platform keeps on growing with its existing product. But they would impact maximizing your growth, sales, and pricing models. Then the sales team uses them to demonstrate the product's competitive advantage. Market penetration also helps to create goodwill for a company. Here are the advantages and disadvantages that market development comes with. Development of a Marketing Strategy To develop a marketing strategy, one should analyze the advantages and disadvantages of each aspect. All of your investment and time consumption would go to waste due to one factor. If you find out some emerging segments in your market, then you should carefully consider these points; A new demographic market means studying a specific segment of the population and targeting it. 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. This is because it requires less investment and can be done quickly. Let's take a closer look. Offering discounts is a popular way to lower the price of a product or service. When it comes to launching a business, you need to think about infrastructure, profitability, and the development of the product. Do you a specific target market where you havent entered yet? Fixed costs include leasing or rental costs, insurance or interest payments. This could involve adding new functionality, improving the design, or increasing the quality. Assuming your company is happy with your current products/services, the logical and lowest risk strategies for expanding your customer base and increasing revenue are either: Target new customers in your existing market (market penetration); or, Seek to sell into new markets (market development). Here are some of the disadvantages of targeted pricing: Errors introduced during the process of calculating the ultimate selling price can impact the rest of the marketing plan. ride sharing, luxury upgrades, etc. Here is a comparison of some attributes of micromarketing: Lower marketing cost vs. high cost per acquisition More closely targeted advertising can decrease your marketing cost because it allows you to target a smaller group of people. 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. Market penetration can lead to fast growth for a company. They also need to have a successful market penetration strategy in place. 2. This could involve using traditional methods like television and print ads, as well as digital methods like online banner ads and social media campaigns. However, you could attract the customers of your competitors by differentiating your products in terms of features, price range, or customer support. If you are developing a strategy campaign, then you should keep in mind its pros and cons. 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. As the founder of a startup, you will undoubtably find yourself forced to make countless important decisions that, collectively, will determine the overall success of your company. Market Development is best used when a business wants to expand into new markets. A business should analyze various segments of the market, and then you should finalize the segment that you want to target. What tips would you add? you may also need to get it to market before someone else does. The company spent the whole year of 2015 focusing on the one market, the focus was to establish growth, success, and credibility, and then move on to the next market. There are four main growth strategies that businesses can use to increase their market penetration: product development, market development, diversification, and acquisition. 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.. By implementing a market development strategy, the NBA brought televised games to China, where just a decade later its become the most popular sports league in the country and. Lastly, time consumption is another disadvantage of Nike's "just do it" campaign. Several factors contribute to successful market penetration. Use tab to navigate through the menu items. Developed in 2009, and initially introduced to a small San Francisco market in 2010, Ubers aggressive market development strategy has landed them in over 700 cities worldwide as of 2020. Loss of control. But when you have a product/service and ready to grow your business you might use various strategies for the growth and development of your business. Expertise from Forbes Councils members, operated under license. Some of the cons and advantages of marketing strategy are as follows; Developing an effective and actionable market strategy requires significant customer market research, data, competitor analysis, KPIs, metrics, and various indicators to understand the customers and market. It gives you an idea of what type of product or service you should develop. Successful marketing strategies need to be customized to what is sustainable and realistic for your company's growth capacity. Thus, the development efforts of the organization are focused on characteristics that are most widely demanded. All of these techniques would make customers switch their brands. Executing a successful marketing strategy is quite time-consuming. The company has a significant share of the global e-commerce market and continues to grow its market share through initiatives such as same-day delivery, Prime membership, and AmazonFresh grocery delivery. One of the most common ways to increase market penetration is by lowering the price of a product or service. When you have got biased data from your research, then you cant make the right decisions. Here is a video by Marketing91 on Market Penetration. Surveying and interviewing your customers and your team can reveal innovative ways that people are using your product to solve their problems. Selecting the right media platform to launch your campaign is the key to the success of your campaign. For one, it can be challenging to generate momentum. So, considering that youre willing to stay as the market leader, the only choice you have is to outplay them. Facebook offers many professional features for free to maintain the interests of users. An example of this approach is Russias Sberbank (an Andersen client). Market penetration is often used as a way to gauge the success of marketing and sales efforts as well as to set goals for future growth. 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. Today, we see Facebook as the worlds largest social media platform, and the platform is still expanding and entering into newer markets. For a better understanding, if the large number of your customer base becomes familiar with the cheap product, its highly possible that everyone will forget that the firm also produces luxury items. Although the development of a great marketing strategy attracts new customers, the downside is that its too expensive. Combat Competitors One of the best parts of the market penetration strategy is combating your competitors. 2023 Lighter Capital. There are several ways to increase market penetration. This could involve partnering with a complementary business, setting up dealer networks, or partnering with distributors. Attract non-buyers in your current market, 1. It's sometimes not enough to come up with something innovative . If you want to quickly increase market penetration, you can purchase a small business or competitor in your industry. How Would the Marketing Mix Change at Different Stages of the Product Life Cycle. The principles of the bank's operation may not change or may change slightly. However, the market strategic campaign allows you to run it on various social media platforms like Facebook, Instagram, Twitter, LinkedIn, YouTube, Google, and others. Market penetration can lead to fast growth for a company. Market Penetration is a strategy employed to grow sales, while Market Share is a metric used to compare a companys sales to the total sales of all companies in a given market. You could attract the non-buyers of your current market by offering new prices, speeding up the marketing and promotions, and providing free-trials. However, marketing strategy offers you a layout to best approach your audience and their needs and wants. Its because of diversification (scooters, bike, food delivery, etc.) Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. You should choose a development model based on a number of factors: the availability of the right specialists, the current state of the bank's IT systems, the ability to invest and the regulatory barriers in your particular location. The aim of market penetration is to effectively use your product, enter the market as quick as possible and seize a large market share. (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. Or it is another region within a country. It does this by expanding into untapped market segments. If your product/service was small, then expanding it into the new geographic global market would be the next step of your business. Businesses can use a variety of ways to evaluate the degree of competition in their sector. Part of Slacks market development strategy includes, This differentiation in the market has set them apart from other products with very similar features. The market development strategy helped Poached Jobs to stabilize its growth and focus on the current market one at a time. These decisions may feel small when they involve things like who to hire and when, but they will almost certainly feel more consequential when they involve things like optimizing sales models, pricing models, and high impact growth strategies. This could involve setting up booths at trade shows, doing product demonstrations, or conducting customer research. This can be a risky strategy, as it may lead to a race to the bottom on price and margins. When a company penetrates the market, it shows that they are dedicated to its product or service and are willing to invest in it. You need to adjust your campaign for different cultures, and it is not easy sometimes. They can help you reach new markets and increase sales. So, business expansion usually requires funds, especially if the company plans to develop a new niche. An example of . Devra Gartenstein founded her first food business in 1987. Suggest new uses for your existing product. Uber is an online ride-sharing platform. While creating a marketing strategy for your company can provide you with a variety of critical and insightful information, it's only helpful if your analysis is done properly and thoroughly. Executing successful marketing strategies often takes time, money and resources and for a small company especially, that can be frustrating. If you liked this article, we bet that you will love the Marketing91 Academy, which provides you free access to 10+ marketing courses and 100s of Case studies. Failure to do so may make all your hard work irrelevant. 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 in order to continue steady growth. Developed in 2009, and initially introduced to a small San Francisco market in 2010, Ubers aggressive market development strategy has landed them in over, 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. There is a growing embrace of niche ecosystems when a bank focuses on meeting customer needs in a certain area. Looking at the image above, we can see that market development strategy is a business growth strategy that involves adding existing products to new markets. 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. Creating a marketing strategy will allow you to take a step back for a moment. In my experience, the range of costs for implementing this strategy is incredibly wide from $1 million to several billion dollars. Activities, Tactics & Style, What is Incident Management? This is how you help your customers understand why your product is better than a competitor's product, and why they should shop with you not someone else. As a new business owner, there are many questions you'll need to tackle. This enables companies to adapt to different markets and enhance competitiveness. August 10, 2019 By Hitesh Bhasin Filed Under: Marketing. Adjust your pricing. Online ride sharing started in San Francisco in 2010, and nowadays, its offering its service in more than 700 cities across the globe. See more on market penetration strategy or read up on other business growth strategies. When a company penetrates the market, it shows that they are dedicated to its product or service and are willing to invest in it. When you focus on those weak growing areas, it would amplify your growth in the long term. Improve your existing product? 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. 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. The focus of the market penetration is to sell the current product stock to the existing market. Better Information. Market development is a strategy employed to seek out new markets for a product or service. Effective growth. Imagine, you have numerous competitors that are trying to evolve and progress, they are stealing customers from you that results in lowering your profits and revenue. Market situations change, so it makes sense to change up your product mix as well. For a small business, it is difficult to have the access to the plethora of resources and capital investment to hire expert professionals. In turn, this can give you fresh ideas about how to market, and who to market to. Do I qualify? Whether you choose to develop a marketing strategy or not, go into the decision with your eyes open. Thats how market development strategy works. Along with being time-consuming, it requires a huge investment. three days. Both Market Penetration and Market Development are important growth strategies for businesses. First, businesses need to identify their existing customers and understand their needs and wants. A good example of market penetration is the brand Coca-Cola. As your business grows, its important to consider ways to increase your market share. Becoming technologically fresher and starting the transformation process of the core business, thus creating a startup atmosphere. Required fields are marked *. You can update your choices at any time in your settings. The marketing team should also adjust the price to achieve a marketing competitive advantage. If you have a brick and mortar store, consider selling products online. If you are facing problems in various areas, then market strategy wont help you to deal with them effectively. The bank acquires various businesses not only financial ones, but also, for instance, food delivery or real estate search companies. For more information on how we use your data, read ourprivacy policy. It's safer to stick with something that you and your customers already know than to venture into untested territory. Here are some market penetration strategies you can consider: 1. Influencers are individuals with a large audience who can promote your goods or service to their followers. Sometimes, products are expensive to create and small businesses tend to struggle while trying to produce enough to lower the production and product price. Another example of market penetration is the online retailer Amazon. The bank builds an architecture that allows various businesses to offer their services to the bank's clients in its app on a partnership basis and integrates them through an API. Air India to discontinue Vistara after merger, DS Group Partners with Lderach (Swiss Chocolate Maker), Castrols unveils a New Logo and a Refreshed Brand Identity, Increasing marketing and advertising efforts. By keeping as many people in the app as long as possible, they can drive more revenue through advertising to these users. Importance, Stages, Tips, Advantages and Disadvantages of Digital Marketing. Understanding Market Penetration Strategy, Market Development vs. Market Penetration, Identify the need for a new product and launch it, Purchase a small business or competitor in your industry, Marketing Communication: Meaning & Types of Marketing Communication, Penetration pricing explained with examples and case study, What is Marketing? Some techniques you can use for market development include finding a new use for an existing product, creating a marketing campaign for a new target audience or expanding geographically. Earlier they used to target and focus only female segment of the market. The most important thing to remember about market penetration is that it takes time and effort to be successful. Advantages and disadvantages of a marketing strategy, Structure of the international marketing plan, Online Marketing | Types | Characteristics | Advantages | Challenges, Different Approaches to study of Marketing, Products and Services | Meaning, Definition, Differences, Objectives or benefits of marketing research, 5 Important Criteria for Selecting Newspaper Advertising, Commodity Boards | Functions | Kinds of, Advantages and Disadvantages of Questionnaires, How to choose best agency for International, Price skimming | Conditions | Advantages |, Quality Control | Objectives | Methods |, Accountlearning | Contents for Management Studies |. Keep your entire team involved so you can hear feedback from many levels. This way, your company will attract the lost consumers and itll put competitors on defense or the edge of leaving the market. French bank Socit Gnrale recently acquired FinTech Shine for a rumored 100 million in order to offer a full online service to its business customers. Building a brand is a crucial part of marketing. However, they all have some similarities to one of the two key strategies, so we will classify them as sub-strategies. 1. Coca-Colas market penetration strategy has been very successful. An example of a large product sector for women may be an established business with a product that has a significant market share.
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