Market development strategy - how to prepare?

A company that wants to be spectacularly successful in the market must constantly evolve. It cannot stick to one solution. It should look for new ways to increase profits and reach new customers. One of these is to expand the market. Entering a new market is a major undertaking and it is worth preparing for it. Thoughtful steps need to be taken to make the process successful. The key to success is a carefully developed market development strategy.

What will you learn from the article?

Market development is one of the most important challenges faced by companies seeking to increase their presence and market share. However, it is not an easy task - it requires careful planning, analysis and implementation of appropriate strategies. In today's post, we will look at various aspects of market development strategy, including the application of the Ansoff matrix, strategy preparation, the process of building a new market entry strategy, competitive analysis, macro-environment and assessing the potential of the venture.

We invite you to go deeper to help your company build an effective business development strategy. You will learn how to go step-by-step through the process of building a development strategyWhat analytical tools can be useful and how to implement your strategy effectively. Whether you are a small entrepreneur or managing a large company, this blog post will provide you with valuable tips and practical advice.

Ready for a journey through the complexities market development strategy? We start with the basics so that you can successfully implement the your company's development strategy and achieve the desired goals.

Examples of market development strategies

In today's dynamic business environment, an effective market development plan is key to the success of any company. Company development strategy There can be many, but the most important thing is to choose the ones that best suit the specifics of a particular business. Examples market development strategy include expansion into new geographical markets, the introduction of new products or services, and the diversification of offerings. Building a strategy for the business requires in-depth market analysis, an understanding of customer needs and effective resource management. It is also crucial to monitor and adapt the strategy in response to changing market conditions to ensure effective development strategy.

Market development strategy, otherwise known as a market extension strategy, is a marketing activity that can be divided into three types.

What are some effective development strategies?

The most frequently used method is to enter a new market with existing products, i.e. introducing the product to the foreign market, national or regional. This is a good way to build greater visibility and therefore generate higher profits. This form of development may require increasing production. In many cases, it may be advisable to expand the machine park or plant. Some companies also decide to increase employment - not only in production, but also in the commercial and legal departments.

The second type of market expansion is entering additional markets by assigning manufactured products to other applications and appropriate modification of these products. The modification may consist in adding new features to the manufactured article - e.g. changing the size, form. It is important that this modification is visible to the buyer.

By market development, we also mean gaining new markets through a radical change in sales and promotion methods, adapted to the expectations of potential customers. Development takes place here with the use of an appropriate composition of the marketing mix, which facilitates these processes.

Each form of market development has its pros and cons. Each has its followers. However, we will focus on the first of them - that is, entering new markets with existing products.

Application of the Ansoff matrix in market development strategy

Haryy Igor Ansoff, an American mathematician and economist, considered the father of the term "corporate strategy", distinguished four basic business development strategiesin relation to the product and market, i.e:

• market development strategy,
• market penetration strategy,
• product development strategy,
• diversification strategy.

Market development strategy according to Ansoff, envisages entering new markets with an existing product. This is a good solution for those companies that do not have the opportunity to strengthen sales in markets where they already operate. Market expansion can be carried out in two ways:

1. through the geographic expansion of the market - introducing products to the international market; for the project to be successful, it is necessary to adjust the product range to the specifics of the new market, e.g. by rebranding,
2. by entering new segments - taking appropriate promotional activities and repositioning the brand to reach new target groups.

Ansoff points out that the strategy is most likely to be successful if the company offers a unique product technology that it can use in a new market, the new market is radically no different from the current one, buyers in the new market are profitable.

The Ansoff strategy model (known as the Ansoff matrix), published in 1957, thanks to slight modifications, is still valid today.

How to prepare a market development strategy?

Proper preparation is needed to successfully enter a new market. The entrepreneur should prepare a decent market development strategywhich will guide him or her and facilitate important business decisions. As a first step, the entrepreneur should prepare strategic project assumptions. These assumptions will influence the subsequent stages of the process. 

Creating a strategy should be preceded by a thorough analysis of the company's potential, competitors' activities, the environment and the changes taking place in it. It is also important to study the preferences and aspirations of buyers - the behavior and shopping habits of new customers may differ from the behavior and habits of existing customers.

What does the process of building a strategy for entering a new market look like?

The strategic assumptions for entering a new market concern several areas. We include among them:

• location - the geographical area to which the entrepreneur wants to enter with his offer,
• offer - product characteristics (what needs it satisfies), list of competitors,
• knowledge - the level of knowledge of the new market,
• goal - the entrepreneur's goal in a new market,
• general assumptions - whether the entrepreneur intends to enter a new market with the entire offer, to what extent can he change marketing mix 7pwhether it focuses on rapid expansion or calm development, or whether it intends to open a new headquarters in a given area.

Strategic assumptions will define the next stages of work and business decisions. 

What should a market development strategy contain?

Any effective market development strategy must clearly define the company's direction. A precise answer to the question is fundamental: What is market development about? In practice, this includes an analysis of the company's position, competition and customer needs. A well-prepared strategy also takes this into account, what are the phases of market development. At an early stage it is important to build brand awareness and at a mature stage to develop innovative products or services. An effective strategy should identify measurable objectives, available resources and methods to monitor the effects of activities. In this way market development strategy becomes a practical tool for achieving a company's business aspirations.

What are the company's market development activities?

Companies that implement market development strategy, undertake various activities tailored to the specific characteristics of the industry. An important role is played by market segmentation, which makes it possible to effectively reach different customer groups. The next step is to analyse consumer preferences, helping to better adapt the offer to their expectations. To understand, what is market development and examples such activities, it is worth looking at companies that offer complementary products or additional services, which increases customer value. Implementing a well-thought-out market development strategy It also requires constant monitoring of opportunities and threats and a rapid response by changing the marketing - mix concept accordingly.

Does every company need a market development strategy?

The answer is clear - every company should have its own market development strategyregardless of size or sector. A lack of a clear strategy can lead to stagnation or loss of competitive position. Understanding it, what is the market development strategy, enables entrepreneurs to consciously manage their business and use resources effectively. Because market development is a dynamic process, the strategy enables a rapid response to change and allows opportunities to be seized. Well prepared and implemented market development strategy helps the company achieve a stable market position and long-term success.

Competition analysis

We mentioned that the key to preparing a decent strategy and successfully entering a new market is a thorough analysis. At the beginning, you should take a closer look at the competitive environment. The competitive environment is created by entities with which the company has business ties - it will compete with them for clients.

As part of the competition analysis, you should develop a detailed profile of each market rival - check the offer, pricing policy, distribution channels, supply, visual identification, reputation and opinions about the brand, business partners.

Using the collected data, the entrepreneur should conduct a SWOT analysis, which will determine the company's strengths and weaknesses in relation to the competition, as well as opportunities and threats resulting from the competitive environment. SWOT analysis will facilitate the preparation of a good portfolio and effective marketing communication. In addition, it will provide an insight into the real strength of competition and will also enable understanding the barriers to market entry.

Competitive companies interact with each other. The actions of the competition must be constantly monitored, analyzed and drawn. It is worth knowing your own position against the background of market rivals, being aware of your strengths and using them appropriately. Such action gives a chance to build a competitive advantage.

Macro-environment analysis

The next step should be an analysis of the macro-environment. Perfect knowledge of the market will allow the entrepreneur to make the right decisions, and thus achieve spectacular success. The new market should be checked in terms of its current condition, pace of development, trends, distribution channels and sales potential.

The entrepreneur should also look at the target audience in the new market. This will make it easier for him to choose the right one communication strategy. An entrepreneur who wants to achieve the set business goals and generate high profits must perfectly know and understand his customers. 

Project potential analysis

Complementing the analysis needed to prepare a good market development strategyis a holistic assessment of its own business. Issues such as:

• efficient functioning of the company,
• quality and quantity of resources,
• company results in comparison with market results - assessment of the sales potential,
• key determinants of success.

The information collected in the analysis process will facilitate the preparation of an appropriate strategy that will enable the company to successfully enter a new market and achieve the set goals in this market. The key to success is making informed, well-thought-out decisions. The entrepreneur should not act impulsively. Implementation of the plans step by step will undoubtedly bring the expected results.

Market development strategy - how to build customer loyalty?

Expanding into new markets is not only an opportunity to increase profits, but also a challenge to build customer loyalty. A key element of success is properly planned market development strategywhich takes account of specific local needs and expectations. It is worth taking care of market development strategieswhich include activities related to local marketing and cooperation with regional partners. Well-planned marketing strategy can help communicate brand values, which translates into loyalty in the long term.

Market development - importance of segmentation

When implementing activities related to market developmentsegmentation plays a key role in the successful implementation of business objectives. It makes it possible to tailor offers to the specific needs of different customer groups. As part of market development strategy, analysing demographic, psychographic and behavioural data helps to determine precisely which products and services will best meet the audience's expectations. Thoughtful market development strategies They also take into account the choice of the most effective distribution and communication channels, which increases the chances of expansion success.