Market development, at its most basic, is defined as the development of an existing market or customer base. Rather than finding and developing a new market, market development is focused on selling a product or service to an existing customer base with the goal of achieving expansion and increased income.
Market development is needed for companies to become profitable. Although catering to their own target market is still a priority for companies, selling products to an existing demographic that has not been fully tapped yet offers great risk but even greater financial opportunities.
The most successful companies have all implemented market development in their operations. Tech giants like Microsoft, Amazon, and Facebook have used their positions to venture into new territory. Microsoft originally started out as a desktop computer manufacturer, but now it is selling its own enterprise resource planning (ERP) software as well as a telecommunications application (Skype). Amazon, meanwhile, began as an online retail shop. It then tested the waters in the streaming (video and music) and tablet computer (Kindle Fire) business, which turned out to be good business decisions for the company. Facebook, the world’s most popular social media application, still retains its social media business, but it has also enhanced its messaging services (Messenger) and acquired a major photo application player (Instagram) in the process.
Large corporations are not the only ones that can use market development. But start-up companies cannot immediately use market development as they still need to increase their visibility among their target market. Companies do not necessarily need to become market leaders, but they do need to offer a competitive advantage and earn income.
Market development is usually a strategy that companies adopt, but specific programs can also be created stemming from market development. These are called market development programs. Companies create their own market development programs or hire an external institution (usually a third-party consulting agency) to create a program for the company’s use.
Here are some tips on how to create a market development program that will be helpful to your company’s plans of achieving profitability and sustainability.
Creating a market development program can be a rigorous and lengthy process, especially if you are unsure of the details you will be incorporating in the program. Listed below are some tips on creating an effective market development program that can assist you and your company in making better long-term decisions.
The purpose of market development is to explore newer markets and gain customers from these markets. So, you should carefully analyze if these markets are feasible. Market development can also become a feasibility study as you will be studying the market and how it will respond to your product or service. Feasibility studies are comprised of a number of sections that include the purpose of your study (SWOT analysis, competitor analysis, budget, etc.), recommendations or solutions (technological, legal, economic, operational, etc.) and benefits (for your company and external stakeholders), to name a few. When the results come out as favorable, you can then proceed with investing in your new market.
Market development is one of the best ways to see if your product can exist in a separate market. Long-term planning does not only involve a single product or service, although some companies may like to keep things small (number of employees, physical size of office, number of clients, supplies, raw materials, etc.). If your company wants to extend its reach in the market, market development should then be applied.
Creating a contingency plan is something that companies sometimes overlook. The problem with plan A is that it rarely succeeds without any hiccups and it usually takes a combination of elements from previously made plans and new ideas for a company to truly succeed. That is why a contingency plan is needed for companies in relation to market development. A contingency plan may become an additional cost for companies, but it also provides them with a safety net.
One suggestion that companies can use regarding a contingency market development plan is to create a study for another market. If sales are not as high as projected for the original plan, companies can always switch to the contingency. However, take note that a contingency plan should only take effect when drastic measures need to be taken (i.e. company nearing bankruptcy, high turnover of employees, unfavorable government interventions, etc.).
A market research is a more comprehensive market development study that covers a number of topics. This type of research covers a large scope as the process includes gathering and interpreting data about a potential product or service as well as the factors that revolve around it such as customer preferences, target markets, competitors, government policies, and technological advancements. Market research does not only involve customers, but it also covers the internal and external business environment.
Market research is required if a company wants to achieve long-term sustainability. Companies need to evolve and adapt to an ever-changing business environment. Technology has heavily contributed to business development as products and services become more automated and dynamic. Gadgets (smartphones, laptops, tablets, desktop computers, etc.) and home appliances (air conditioners, refrigerators, dishwashers, washing machines, etc.) are not the only things being drastically altered by technology; so are heavy equipment and advancements used in agriculture (tractors, drillers, harvesters, etc.), construction (backhoes, excavators, bulldozers, loaders, etc.), automotive (GPS or navigation systems, back-up assist, blind spot detection, keyless entry, etc.); and air and sea navigation (radar or navigation systems, jumbo jets, stealth aircraft, de-icing fluids, etc.).
Market research has also contributed to advancements in health and education. Various vaccines and medical advancements have been developed over the past few years for diseases targeted at various age groups, especially infants and senior citizens. Education has also seen drastic improvements, thanks to highly intensive market research. Reading materials previously printed on paper have now mostly moved to paperless mediums as encyclopedias, manuals, novels, and press releases can already be accessed anytime and anywhere online.
If a company does not have the internal resources to create a market development program, they can opt to hire experts to help them. These experts can be a business consulting agency, an academic institution, or a government entity.
Getting assistance from a third-party group can prove to be a very smart choice for companies. For example, businesses that tap the academe to assist them can have access to an educational institution’s vast number of resources. Educational institutions offer a wide range of published works and studies conducted by professors and professionals in various fields. Usually, professors collaborate with professionals and private companies to conduct feasibility studies on business development and public-private partnerships.
Market trends are good indicators if a product or service will create a huge impact on consumers. Future analyses are made on data from previous trends (i.e. buying patterns of customers, fluctuating product prices, supply and demand, etc.). However, analyzing market trends should not be the main basis for developing a market development program. Although market trends are very helpful in analyzing future movements of products and customers, making it your primary source of truth might cause some negative financial implications for your company as it is very difficult to predict market movements due to an ever-changing market.
Technology greatly affects how companies conduct their operations. It is a very powerful tool that can make or break any product. Using the right technology for a product can attract more customers and increase the product’s lifespan at the same time. Using the wrong technology, meanwhile, can spell disaster for your product, rendering it obsolete in a shorter span of time. So, you should highly consider technology when creating a market development program and how it will affect the program’s sustainability. You certainly do not want to create a program that you cannot even use within a few months of it being created.
Developing a market development program is not an easy task. So, we have provided this guide on how to develop one that will make it easier for you and your company to adjust to the ever-changing business world. We hope you were able to gain some useful insights that can help push your company to greater heights.