Ready to grow your business? Crafting the right market development strategy could be your key to success.
Nineties kids and cartoon fans of any age probably remember the infamous duo Pinky and the Brain. (True fans are singing the theme song in their head as they read this). The pair of lab mice were determined to take over the world, but their plans flopped before sunrise each night, dooming them to repeat the process over.
With just a little more research and preparations, perhaps they could have been successful.
In your path to market domination, don’t make the same mistakes as Pinky and the Brain. In this post on how to create a market development strategy, you’ll learn what steps to take and how to incorporate research along the way to ensure successful expansion.
What is a market development strategy?
Market development strategy guides companies through expanding their total addressable market and market share. In other words, how can you appeal to and reach more customers?
Market development strategies can include:
- Launching new products or features. If you’ve spent any time in Texas, you’ve probably heard of Topo Chico. The sparkling water has a cult-like following in the Lone Star state. Thanks to the increase in popularity of hard seltzer, you can now buy Topo Chico branded hard seltzer. This expansion into a new beverage category expands the total addressable market for the brand.
- Adopting new pricing models. Adding cheaper or premium options can help you reach new customers. Let’s look at airlines for an example of how the same product can reach multiple markets through different pricing strategies. Airlines are selling one thing: tickets from point A to point B, but many airlines offer different types of tickets. Premium customers pay for the luxury of first-class tickets. Coach tickets often get divided into several different classes, from basic fares where you can’t pick your seat to upgraded seats with extra legroom. Changing pricing structures allows the airlines to reach budget-conscious consumers as well as lucrative business and first-class customers.
- Geographic expansion. Local or regional brands can expand their markets by entering new territories. In-N-Out Burger, the popular Southern California fast food joint, started expanding into Utah, Colorado, Arizona, and Texas in the last few years. While In-N-Out doesn’t use this model, franchising is another popular strategy for geographic market expansion.
Steps to Create a Market Development Strategy
When it’s time to plan your path to market growth, follow these steps to craft a winning market development strategy.
Step 1: Do your research
All good business plans start with research. You should never guess what your customers want, especially when gathering data has never been easier. The growth of mobile surveys makes getting a snapshot of consumer insights fast and affordable.
When you’re trying to determine which market expansion strategy works best for your company, you need to understand:
- What do your current and prospective buyers think of your brand?
- What do people like and dislike about your brand and product?
- What competition do you face in your new target markets?
- What’s the perception of your competition?
- What would it cost to build a new product or feature or expand into a new geographic market?
Combining consumer research with some solid business planning and budgeting will give you a basis for making the best call on how to expand your market.
Step 2: Set your goals and objectives
Use your research to decide what you’re going to do and how you’ll know if you were successful. Set a measurable target such as increasing new customers by 40 percent or doubling sales in two years. Once you’ve selected a goal, you can work backward to determine what objectives you’ll need to implement to achieve your goal.
Step 3: Create a marketing plan
As a part of your research and goal-setting process, you’ll identify any product development needs. In addition to planning for those improvements, you’ll need to focus your efforts on successfully marketing your expansion. This is another crucial area where agile research comes into play. Poor decisions around marketing and product launches and changes cost companies more than 3 percent of their profits, according to Gartner.
Test your marketing campaign concepts, messaging and creatives through short consumer surveys. Use the time while the product is in development to fine-tune your marketing strategies. Getting your marketing right is the key to a successful launch. Of the more than 30,000 products that launch each year, 95% fail. Take the time to do the research to make sure yours is not one of them.
Step 4: Launch and Analyze
Once you have your business and marketing plans in place, it’s time to launch. You don’t always have to launch with a finished product. Your launch could be for concept testing. For example, Tesla launched the Model 3 before the car was even through the design phase. People could reserve a Model 3 with a $1,000 deposit. About 400,000 people put down deposits providing the confidence and cash for a successful launch.
Market development strategies are not a one-and-done project. You’ll want to monitor your progress toward your goals continuously. As needed, conduct additional research to see how you can tweak your marketing to drive growth better.
DIY Research for Market Development Strategy
At this point, it should be evident that research plays a key role in your market development strategy. For best practices and tips on implementing a DIY approach to research, download our DIY Research ebook.