Market development strategy - how to prepare?

A company that wants to be spectacularly successful in the market must constantly develop. He cannot cling to one solution. She should look for new ways to increase profits and reach new customers. One of them is market expansion. Entering a new market is a large undertaking that should be properly prepared for. You must take thoughtful steps for the process to be successful. The key to success is a carefully prepared market development strategy.

Market development strategy - examples

The market development strategy, otherwise known as the market expansion strategy, are marketing activities that can be divided into three types.

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 understand winning new markets by radically changing the methods of sales and promotion, tailored to the expectations of potential customers. The development takes place here with the use of an appropriate composition of the marketing mix, which streamlines 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.

Market development strategy according to Ansoff matrix

Haryy Igor Ansoff, an American mathematician and economist, considered the father of the term "company strategy", distinguished four basic strategies for the development of a company in relation to the product and the market, i.e .:

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

According to Ansoff, the market development strategy envisages entering new markets with the existing product. This is a good solution for those companies that do not have the ability to strengthen sales in the markets where they already operate. Market expansion can be done 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?

In order to successfully enter a new market, you need appropriate preparation. The entrepreneur should prepare a decent market development strategy that will show him the way of action and facilitate making important business decisions. The entrepreneur should first prepare the strategic assumptions of the project. These assumptions will have an impact on the next stages of the entire 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.

Entering a new market - strategic assumptions

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. 

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, a detailed profile of each market rival should be developed - check the offer, pricing policy, distribution channels, supplies, visual identification, reputation and opinions about the brand, business partners. The entrepreneur, using the collected data, should conduct a SWOT analysis, which will determine the company's strengths and weaknesses in relation to 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 give an overview of the real power of competition, and will also allow you to learn about the barriers to entering the market.

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 necessary to prepare a good market development strategy is a comprehensive assessment of your own enterprise. It is worth paying attention to such issues 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.