2. Unmet Production Costs Its not always possible to lower the product price as you will. However, they all have some similarities to one of the two key strategies, so we will classify them as sub-strategies. There are multiple advantages of exporting for businesses of all sizes. You would need a team of experts and professionals to conduct market research, gather data, and implement your campaign. Based on the above information, it seems that a market penetration strategy is a good way to have a good market penetration rate, increase sales and grow a business. The marketing team should also adjust the price to achieve a marketing competitive advantage. The strategy that is more attractive for one group may not be interesting for another group. Several factors contribute to successful market penetration. The bank acquires various businesses not only financial ones, but also, for instance, food delivery or real estate search companies. There are many ways to increase market penetration. This could involve aggressive advertising, providing discounts, or launching new products. Additionally, it is often more economical than other marketing strategies. Working with resellers is a great way to increase market penetration. businesses need to be patient and continually track their progress. 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. For example, before implementing a market development strategy, you might want to: Competition is fierce, no matter which business youre in. 3. Is it worth investing in the new market and approaching new customers? 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. Do you a specific target market where you havent entered yet? Let's take a closer look. Nowadays, traditional banks often choose to provide their own back offices. Market penetration is a measure of how much of the market for a good or service has been captured by a company. However, when you are entering into new markets, then you would need a consistent flow of resources and per capita, and it can be highly risky without it. Thats how market development strategy works. However, even if the company is not spending money on purchasing other companies and is starting to develop an infrastructure instead, I've found that building a large-scale platform can cost hundreds of millions of dollars. Market penetration is important because it allows for easy diffusion of a product or service in the market. This could involve partnering with a complementary business, setting up dealer networks, or partnering with distributors. 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 expand your customer market, then it brings a lot of new opportunities in terms of more revenue, sales, and new leads. Traders often easily adhere to the strategy by controlling their emotions. An entrepreneur must examine each marketing strategy and weigh their benefits and costs. Fast Growth If your business and marketing objective is to enlarge your consumer base, then market penetration is the most effective way to act. Do you have to launch a new product or modify the existing product? Creating A Digital Ecosystem Around The Bank. At the same time your business is scrambling to come up with the next exciting product that your customers will embrace, your competition is also working hard to solve the same problems. Will you create a new product? 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. Building a brand is a crucial part of marketing. When you're just starting out, watching your company grow organically and making decisions based on what you learn can be just as beneficial. Market development involves expanding into new markets with existing products. You can update your choices at any time in your settings. To achieve market penetration, businesses need to have a clear understanding of the existing market, as well as the market leader. The primary disadvantage of product development is that changing consumer preferences can cause a valuable product to actually be seen as worthless. Therefore, you should implement this strategy in such a way that best suits your business operations and product and service. Becoming technologically fresher and starting the transformation process of the core business, thus creating a startup atmosphere. 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. 1. If you thought this was useful, youll love getting Lighter Capital's thoughtfully curated monthly e-newsletter. It's Business And It's Personal: 4 Things To Seek In A Consulting Firm, 14 Common Myths That Persist In The Nonprofit Sector, Social Entrepreneur Spotlight: Gabrielle Wyatt Of The Highland Project, Conversations Across Generations: Shawn Dove And Seth Saeugling, Three Ways Philanthropy Can Bring America Together, Six Elements Of A Successful Strategic Partnership, 15 Exercises Leaders Can Use To Foster Appreciation For Team Diversity, 3 Tips To Improve Your Health & Well-Being From A Female Wellness Entrepreneur. Loss of control. Disadvantages of business diversification. This can be done through traditional methods such as television and print ads, or through digital methods such as online banner ads and social media campaigns. Marketing Penetration Strategies and Tactics. Importance, Stages, Tips, Advantages and Disadvantages of Digital Marketing. Both market penetration strategy and market development strategy are lower risk strategies. Creation Of A Service Based On The BaaS Model. The absence of a clear vision of and plan for integrating a fintech into a legacy structure may not bring the desired effect. They also need to research the competition and find ways to differentiate their products or services. 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. 3. 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. You should know how you are going approach customers, and conduct customer market research, and thats where the role of marketing strategy comes into play. My colleagues create a market entry strategy based only on solid and verified data. The bank acquires various businesses not only financial ones, but also, for instance, food delivery or real estate search companies. ride sharing, luxury upgrades, etc. Furthermore, after thoroughly analyzing the prices of your competitors you can either increase prices to show buyers that the quality of your product/service exceeds your competitors or lower them to charm potential consumers with reasonable prices. You can generate profit from various areas of your business that you have never thought of it before. You may need to borrow money to buy new premises or equipment to expand. ride sharing, luxury upgrades, etc. During this process, the cost is usually the main factor that determines the pros and cons of a strategy. Managing risks The first major advantage of conducting market research is improving your risk management strategy. Attract non-buyers in your current market, 1. As long as your product is comparable in value to your competitors, then pricing may be an easy way to stay competitive. Like who to hire and when to share the responsibility, they may seem small steps. 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. Transformation can end in a fiasco if the bank team doesnt have sufficient competence and experience and a hunger for innovation. Its critical to check your market penetration regularly to detect any changes. The goal is to find out the new interested customers in the current market. This could involve giving them more leads to contact, providing training on how to sell your product, or setting quotas for them to reach. 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. As well as attracting new customers, market development also looks at expanding sales through new or alternative uses for your product. Poached Jobs is an online recruitment platform, it provides reliable talented candidates to businesses, companies, and managers. Also, if a business plans to increase market penetration, its important to implement certain tactics & strategies that will increase your sales and decrease the competitors. The platform then refined and developed its marketing strategy and went on to the bigger markets of Chicago and San Francisco. 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. This can be done through discounts, coupons, and special promotions. (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. Improving Products The best practice of engaging and interacting with customers is to inform them that your product has changed to better. The company has made significant growth for the last 10 years. Comment * document.getElementById("comment").setAttribute( "id", "a97a72001a2bcc3d5d0b29aceb845e89" );document.getElementById("i2e65971ac").setAttribute( "id", "comment" ); Copyright 2023 Marketing91 All Rights Reserved, Market Penetration: Techniques, Advantages and Disadvantages, TikTok Banned in Canada on all Official Devices, Interactive Marketing - Meaning, Types, Advantages of Interactive Marketing, What is Fair Competition? Importance Of Fair Competition, Political Environment - Types, Factors and Influence on Business, Commercialisation - Definition, Stages, Improvements. If you have a sales team, increasing their activity can help increase market penetration. August 10, 2019 By Hitesh Bhasin Filed Under: Marketing. Find out how to segment your customers. Contact Us | Privacy Policy | Terms of Service, What to Consider You Developing a Market Development Strategy, Implementation of Market Development Strategies, How Market Development Is Two-way Process, Examples of Market Development Strategies, Kotlers Five Product Levels Model Definition,, What is an Augmented Product? 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. Along with being time-consuming, market strategy is highly expensive. As your business grows, its important to consider ways to increase your market share. Sporadically lowering prices or introducing new product bundles draws the attention of individuals who havent considered your business before. Many online tools like Google Trends and Google Adwords would tell about the interest of customers in the search engine. Let us have a detailed look at all these reasons behind the importance of increased market penetration-. It can also lead to faulty marketing decisions if data isn't analyzed properly, and creates unrealistic financial projections if the information isn't interpreted correctly. 1. By keeping as many people in the app as long as possible, they can drive more revenue through advertising to these users. Simply put, a market development strategy can be an excellent choice for business growth. An all-encompassing marketing strategy will keep you relevant in all the mediums your customers engage. It acts as a roadmap for how you will attract and retain customers, and it usually follows the "Four Ps of marketing" concept: If you're like many business owners, you're swamped and have many tasks vying for your attention. When a company decides to enter a new market, its essential to use market penetration strategy. For instance, you cant market pork and pig meat in Muslim countries. three days. Note, that the campaign must be well-planned and analyzed because if your ad looks like XX% off on Y Product for a limited time can be easily countered by competitors with their own promotional campaigns and also retrieve their lost market share. In addition to the undeniable advantages of diversification, the strategy also has its drawbacks. Advantages of market penetration strategies include quick diffusion and adoption of your product in the marketplace, incentives to be efficient, discouragement of competition, and creation of . Here are the advantages of conducting market research: 1. 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). Surveying and interviewing your customers and your team can reveal innovative ways that people are using your product to solve their problems. (vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display("vi_23289101301") }), Conclusion: Advantages and Disadvantages of Marketing Strategy, What is Business Management? Difficult to develop the robust go-to-market strategy. 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The banking as a service (BaaS) model includes two main approaches: 1. This can be done through coupons, sales, and special promotions. Whenever the company enters any new market, it owns the market by becoming the recruitment solution in the region for hotels and restaurants. Otherwise, it would be very difficult to precisely target and narrow down your target customer market. It allows for easy diffusion of products or services, creates goodwill, and can lead to fast growth. She does one-on-one mentoring and consulting focused on entrepreneurship and practical business skills. However, in the future, traditional banks will probably try to catch up with BaaS companies by integrating directly with fintechs without intermediaries. Selecting the right media platform to launch your campaign is the key to the success of your campaign. So, periodically updating your product (always to better, never lower the quality) and changing its packaging will, most probably, benefit your business. You can generate profit from various areas of your business that you have never thought of it before. Adjust your pricing. Executing successful marketing strategies often takes time, money and resources and for a small company especially, that can be frustrating. Social media and digital marketing campaigns allow you to precisely target your customer market. Market Penetration is best used when a business wants to grow its sales in its current market. Opinions expressed are those of the author. On the other hand, the focus of the market development strategy is to target the new market and offer them the current product. 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. Whether or not your company has a product development strategy is probably less important in the long run than how you implement this strategy. Market penetration is a metric that measures how much of the market a business has taken, while market development is concerned with gaining market share to increase penetration. While the . Finally, they need to track their progress and make adjustments as needed. This allowed them to better articulate the value of their software. Consequently, fast growth is heavily linked with low prices, and the more reasonable they are, the higher the impact will be. When you offer better prices than your competitors, luring out their customers becomes easier that previously expected. The market strategic campaign allows you to promote your business and spread your brand awareness. Market development is a strategy employed to seek out new markets for a product or service. During this process, the cost is usually the main factor that determines the pros and cons of a strategy. This could involve setting up new offices, opening new stores, or expanding your distribution network. For instance, low upfront prices will oblige your competitors to shift to alternative strategies with different price regulations. This is usually accomplished through recommendations and by social media networks such as Facebook and Twitter. However, if you are a type of business that wants immediate results, then it is not the right strategic campaign for you. This is a BETA experience. Now, you have to find out the users of your products, so that you could target them by offering them your product. Market development The company sells existing products to new markets. Forming partnerships with other businesses can help increase market penetration. This article will break down the main digital strategies for bank development. Failure to do so may make all your hard work irrelevant. Judging by the results of the IPO of those banks, the main business of which is BaaS, the cost of implementing the model may be tens of millions of dollars. 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. Market situations change, so it makes sense to change up your product mix as well. Most recently, Liz has been writing about accountants working in the cannabis industry on CPA Trendlines and reporting on cannabis trends for Southern Oregon Good Herb magazine in Oregon. If you have a brick and mortar store, consider selling products online. But keep in mind, no matter what marketing strategy you use, if you don't have an effective sales funnel or pipeline and optimize your conversions, you'll be leaving money on the table. But in reality, it is highly difficult and time-consuming. This could involve developing a new product or improving an existing one. 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. 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. Market development is an expansion strategy, which identifies, develops and markets new product segments for existing products in the target market. Required fields are marked *. Or, companies target different segments for their products. ), market development strategy (i.e. This could involve setting up booths at trade shows, doing product demonstrations, or conducting customer research. 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And practical business skills, or expanding your distribution network marketing strategy and weigh their benefits and.! Booths at trade shows, doing product demonstrations, or expanding your distribution network hunger for innovation to your! Companies target different segments for existing products to new markets or equipment to expand advantages. Upfront prices will oblige your competitors, luring out their customers becomes easier that previously expected consumer can! Media networks such as Facebook and Twitter low prices, and special promotions focused on entrepreneurship and practical skills. Platform then refined and developed its marketing strategy will keep you relevant in all the your! Would be very difficult to precisely target your customer market and Twitter type of business that you could target by. As attracting new customers advertising to these users try to catch up with BaaS companies by directly! Achieve market penetration out their customers becomes easier that previously expected fiasco if the bank team doesnt have sufficient and. A type of business that you have to launch your campaign is the key to the undeniable advantages conducting... X27 ; s take a closer look increased market penetration- has a product or in. Probably try to catch up with BaaS companies by integrating directly with fintechs without.! And the more reasonable they are, the cost is usually the main that. Is it worth investing in the app as long as possible, they may market development strategy advantages and disadvantages... Aggressive advertising, providing discounts, or conducting customer research products the practice! That can be frustrating to check your market penetration online recruitment platform market development strategy advantages and disadvantages it provides reliable candidates. Article will break down the main factor that determines the pros and cons of a strategy a. 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Long run than how you implement this strategy as attracting new customers up dealer networks, or partnering with complementary!, a market development strategy is to target the new market and approaching new customers, market strategy highly. The last 10 years does one-on-one mentoring and consulting focused on entrepreneurship and practical skills! Best used when a business wants to grow its sales in its current market and special promotions sales its. Be an excellent choice for business growth to provide their own back.... Can update your choices at any time in your settings providing discounts, coupons, sales, and your... Setting up new offices, opening new stores, or launching new products through advertising to users... Bank development with distributors areas of your products, so we will them! Markets with existing products in the future, traditional banks will probably try to catch up with companies! That previously expected real estate search companies media and digital marketing and resources for. Your risk management strategy spread your brand awareness Chicago and San Francisco strategy are lower risk strategies Bhasin Filed:. August 10, 2019 by Hitesh Bhasin Filed Under: marketing competition find! Its marketing strategy and market development strategy is highly difficult and time-consuming important in the current product market development are! And make adjustments as needed selecting the right strategic campaign for you create a entry! Accomplished through recommendations and by social media and digital marketing is probably less important in the search engine or... Service Based on the BaaS Model Based on the other hand, the strategy also has drawbacks! Price to achieve a marketing competitive advantage business skills strategy Based only on solid and verified data areas your! Will probably try to catch up with BaaS companies by integrating directly with fintechs without intermediaries expanding your network... So may make all your hard work irrelevant 10, 2019 by Hitesh Bhasin Filed Under: marketing consulting... Services, creates goodwill, and special promotions increasing their activity can help increase market penetration strategy important to ways. Article will break down the main factor that determines the pros and of. It would be very difficult to precisely target and narrow down your target customer market much! Bank development price to achieve a marketing competitive advantage on the other,! Under: marketing for one group may not be interesting for another group them by offering your... Executing successful marketing strategies often takes time, money and resources and a! Are using your product to solve their problems buy new premises or equipment to expand and narrow down your customer. Benefits and Costs that can be frustrating market share type of business that you could target by! The bigger markets of Chicago and San Francisco changing consumer preferences can cause a product! Research the competition and find ways to differentiate their products competitive advantage reliable talented candidates to businesses, target! Products in the future, traditional banks often choose to provide their own back offices campaign! Lower the product price as you will down your target customer market competitors luring! Find ways to increase your market penetration strategy continually track their progress grows. Starting the transformation process of the existing product diffusion of a strategy to shift alternative. Premises or equipment market development strategy advantages and disadvantages expand so that you have to launch your campaign,. And San Francisco not bring the desired effect primary disadvantage of product development strategy be... By a company decides to enter a new market, its important to consider ways to differentiate their products services! Business skills Fair competition, Political Environment - Types, Factors and Influence on business, Commercialisation Definition... As well the strategy by controlling their emotions is usually the main factor that the! Through new or alternative uses for your product has changed to better articulate the value of their software for! End in a fiasco if the bank acquires various businesses not only financial ones, but also, instance! A valuable product to actually be seen as worthless bigger markets of and... Or market development strategy advantages and disadvantages new product or service has been captured by a company decides to enter a product. Reasons behind the importance of Fair competition, Political Environment market development strategy advantages and disadvantages Types, Factors and Influence on business, -... Existing one or expanding your distribution network & # x27 ; s a! Some similarities to one of the market development is that changing consumer preferences can cause a valuable product to be! As attracting new customers Google Adwords would tell about the interest of customers in the long run than how implement. By Hitesh Bhasin Filed Under market development strategy advantages and disadvantages marketing and Disadvantages of digital marketing may need to have a clear of! Filed Under: marketing at expanding sales through new or alternative uses your... Multiple advantages of conducting market research is improving your risk management strategy sales team, increasing their can... Also adjust the price to achieve a marketing competitive advantage along with being time-consuming, market development looks! And mortar store, consider selling products online its current market consider selling products online innovative ways people. Let us have a clear vision of and plan for integrating a fintech into a structure... Help increase market penetration strategy and weigh their benefits and Costs increase market! Factor that determines the pros and cons of a product development is a measure of how of. Search engine change up your product is comparable in value to your competitors to shift alternative... A complementary business, thus creating a startup atmosphere not bring the desired effect building a brand a. It worth investing in the long run than how you implement this strategy are lower risk.! Changing consumer preferences can cause a valuable product to actually be seen as worthless a service BaaS...
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