- Market penetration (existing markets, existing products): Market penetration occurs when a company enters/penetrates a market with current products. The best way to achieve this is by gaining competitors’ customers (part of their market share). Other ways include attracting non-users of your product or convincing current clients to use more of your product/service, with advertising or other promotions. Market penetration is the least risky way for a company to grow.
- Product development (existing markets, new products): A firm with a market for its current products might embark on a strategy of developing other products catering to the same market (although these new products need not be new to the market; the point is that the product is new to the company). For example, McDonald’s is always within the fast-food industry, but frequently markets new burgers. Frequently, when a firm creates new products, it can gain new customers for these products. Hence, new product development can be a crucial business development strategy for firms to stay competitive.
- Market development (new markets, existing products): An established product in the marketplace can be tweaked or targeted to a different customer segment, as a strategy to earn more revenue for the firm. For example, Lucozade was first marketed for sick children and then rebranded to target athletes. This is a good example of developing a new market for an existing product. Again, the market need not be new in itself, the point is that the market is new to the company.
- Diversification (new markets, new products): Virgin Cola, Virgin Megastores, Virgin Airlines, Virgin Telecommunications are examples of new products created by the Virgin Group of UK, to leverage the Virgin brand. This resulted in the company entering new markets where it had no presence before.
Market Penetration
Depth of sales of a particular product in a given market. The deeper the penetration, the higher the volume of product sales. In order to expand the sales of current products in markets where their products are already being sold, marketers utilize market penetration strategies such as cutting prices, increasing advertising, obtaining better store or shelf positions for their products, or innovative distribution tactics.
Product Development
Product development is the process by which a company does one of two things: 1) creates an entirely new product that either adds to an existing product line or occupies an entirely new niche; 2) modifies or updates an existing product. Successful product development is essential for any business if it hopes to exist for any length of time.
Market Development
Manufacturer’s attempt to identify and develop new markets for marketing current products. There are three general strategies applied in market development: (1) working within the demographic market to see if any particular demographic group can be encouraged to buy more of the product or if any new group within the demographics can be encouraged to purchase the product; (2) looking at the institutional market to see if these buyers can be increased; (3) attempting to develop markets in new geographical areas. To effect these strategies, marketers will attempt new distribution methods, change the design of promotional efforts, and attempt to discover and promote innovative uses for an existing product.
Diversification
Corporate growth strategy whereby a business builds its total sales by acquiring or establishing other businesses that are not directly related to the company’s present product or market. There are three major diversification strategies: concentric diversification, where the new business produces products that are technically similar to the company’s current product but that appeal to a new consumer group; horizontal diversification, where the new business produces products that are totally unrelated to the company’s current product but that appeal to the same consumer group; conglomerate diversification, where the new business produces products that are totally unrelated to the company’s current product and that appeal to an entirely new consumer group.
