Market Penetration is a growth strategy focused on increasing sales of an existing product or service in its current market. However, no one knows the key features of your product better than you. For instance, low upfront prices will oblige your competitors to shift to alternative strategies with different price regulations. Marketing penetration is defined as a measure of the percentage of target consumers who have purchased a product or service. Belfast BT2 7ES Furthermore, market penetration is frequently used a measure to determine, whether your product or a service is capable of capturing a fixed percentage of the market. The company sells its products in more than 200 countries and has a 42% market share in the global soft drink industry. Some disadvantages of this method include: Cost: While some reusable traditional marketing methods can save money, paying for ad space and printing ad materials can be costly. Market penetration can be a great growth strategy for businesses of all sizes. 3. Creation Of A Service Based On The BaaS Model. If identifying and developing new market segments is your preferred strategy, careful consideration should be made around: Whether you have enough resources to expand into a new market, Whether your product will be ultimately successful in this new market, Whether the market is going to be valuable enough to put the resources, budget, and effort into expanding in this direction, Whether the potential new market is already too saturated, or whether you can gain market share and stay competitive. The benefits of using a computer to execute transactions and monitor the markets for trading opportunities are many and include the following: Reducing Emotions; Automated trading platforms keep emotions to a minimum when trading. However, in the future, traditional banks will probably try to catch up with BaaS companies by integrating directly with fintechs without intermediaries. If your product has started small, expansion into new national or international areas might be the next phase of your market development. This is how Tinkoff (an Andersen client) and Ant Financial work. There are several ways to increase market penetration. Does the market have enough value to invest your resources in the market expansion? Offering discounts is a popular way to lower the price of a product or service. What Is Market Development Strategy? 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. The platform keeps on growing with its existing product. 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. (vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display("vi_23289101301") }), Conclusion: Advantages and Disadvantages of Marketing Strategy, What is Business Management? Hence, the marketing strategy has been under fire for using controversial celebrities. There are other digital development strategies, of course. Creating A Digital Ecosystem Around The Bank. Thats how market development strategy works. For a small business, it is difficult to have the access to the plethora of resources and capital investment to hire expert professionals. This can be done by simplifying the buying process, providing free shipping, or offering financing options. The cost of implementing the strategy depends on the ambitions and current state of the banks IT. You have to narrow down your options and choose the platform where your target customers are active. Otherwise, it would be very difficult to precisely target and narrow down your target customer market. Here is a video by Marketing91 on Market Penetration. Businesses can use a variety of ways to evaluate the degree of competition in their sector. Learn more in our Cookie Policy. Understanding Market Penetration Strategy, Market Development vs. Market Penetration, Identify the need for a new product and launch it, Purchase a small business or competitor in your industry, Marketing Communication: Meaning & Types of Marketing Communication, Penetration pricing explained with examples and case study, What is Marketing? Her experience extends to both corporate and freelance; she's a former Senior Editor at the B2B publication Accounting Today, writing about public accounting firms with a specialization in diversity, technology, best practices, and business development. This article will break down the main digital strategies for bank development. It gives you an idea of what type of product or service you should develop. The bank licenses other financial companies to create unique products for their customers for example, savings accounts, loans and debit cards. Is it worth investing in the new market and approaching new customers? A good example of market penetration is the brand Coca-Cola. Market development strategy falls under the category of business growth strategy, and it means introducing new existing and current products into the new market. In my experience, the range of costs for implementing this strategy is incredibly wide from $1 million to several billion dollars. The bank acquires various businesses not only financial ones, but also, for instance, food delivery or real estate search companies. three days. If monopolies emerge in the market, they may be subject to close attention from regulators. Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. The approaches to building an ecosystem can differ: 1. Increasing your advertising budget can help you reach more potential customers and increase brand awareness. The platform then refined and developed its marketing strategy and went on to the bigger markets of Chicago and San Francisco. For additional examples of market development strategy outside of SaaS, we can look to athletic brands such as Adidas and Nike, who continue to expand their global reach and attract new demographics of customers with their existing footwear products. If your product/service was small, then expanding it into the new geographic global market would be the next step of your business. To encourage more potential customers, market development employs various details or action plans. ), market development strategy (i.e. A market development strategy aims at reaching non-consuming users in currently profitable segments. Disadvantages of business diversification. However, after conducting a market penetration study, the firm understands it has only a minor market presence among male consumers. Here is a comparison of some attributes of micromarketing: Lower marketing cost vs. high cost per acquisition More closely targeted advertising can decrease your marketing cost because it allows you to target a smaller group of people. If competitors sell similar products and one of them decides to lower prices, its natural that others will try to match them to create a balance and avoid consumer shifting. 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). Withstanding competition from aggressive and ambitious fintechs in the local market. nibusinessinfo.co.uk, a free service offered by Invest Northern Ireland, is the official online channel for business advice and guidance in Northern Ireland. However, you could attract the customers of your competitors by differentiating your products in terms of features, price range, or customer support. Activities, Tactics & Style, What is Incident Management? The goal is to find out the new interested customers in the current market. Product Life Cycle Analysis & Price Strategies, Disadvantage of Entering a Mature Market Economy, The Effects of a Change in Business Environment on Strategic Planning, Advantages and Disadvantages of a Marketing Strategy, Brandon Gaille: 8 Pros and Cons of Product Development, This Matter: Research and Development: Advantages and Disadvantages, On Strategy: How to Choose a Market Development Strategy, Australia Unlimited: Market Entry Strategies. Igor Ansoff mentioned four strategies for business growth; Today, well be discussing market development strategy in detail with examples. Marketing strategies provide you with information that you would not have access to otherwise. To find new potential markets, companies must carry out systematic market research. The infamous ride service app, Uber, has seen significant growth in the last decade through a unique combination of diversification strategy (i.e. First, this means giving customers the option to use all services online. Business is my passion and i have established myself in multiple industries with a focus on sustainable growth. They also need to be prepared to make adjustments along the way. Let us know in the comments below. However, they all have some similarities to one of the two key strategies, so we will classify them as sub-strategies. Here are the advantages of conducting market research: 1. 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. The company helps with the selection and purchase of real estate. When you have got biased data from your research, then you cant make the right decisions. The market strategic campaign allows you to promote your business and spread your brand awareness. Marketing strategy allows you to perceive things from the customers point of view, and highlight the unique selling point (USP) of your business that would give you a competitive edge. Here's how to calculate cost-plus pricing:: 1. Will you create a new product? The goal is to increase market penetration by targeting this relatively untapped group. So, periodically updating your product (always to better, never lower the quality) and changing its packaging will, most probably, benefit your business. Being an entrepreneur you to deal with many challenges and make small decisions, and those small decisive steps would determine the success of the organization. Increased capital requirements. With market penetration, the market size is fixed so the strategy focuses on maximising the potential of an already an existing marketplace. Poached entered the New York market in 2014. It does this by expanding into untapped market segments. Lowering Industry Prices Market penetration strategy can harm the entire organization. Its because of diversification (scooters, bike, food delivery, etc.) This will allow you to quickly enter the market and gain market share. Advantages of Trading Software Development. Disadvantages of Market Penetration Strategy. Creating a marketing strategy will help you discover what makes you different so you can map out a clear strategy to communicate those benefits. The market strategy allows you to focus on one problem at a time, but it is possible that your campaign is facing challenges in various areas. But it requires comprehensive market research that the new market would add some value. In both cases, dont overdo it because it may seem suspicious (lowering prices too much may indicate to low quality and high prices might seem as a company that has only one objective-gain profit) and might make customers doubt your quality, fairness, and trustworthiness. The most common is to lower prices to attract new customers. Advantages of a Marketing Strategy Maintain Focus When you have a bunch of tasks fighting for your attention, it's easy to lose focus. It's an easy way for the bank to refresh its product and technology with integration of fintechs into the existing structure. Consumers mostly fall for the trick because the interest and curiosity that the improved product drives are irresistible. The platform follows the market development strategy. Importance, Stages, Tips, Advantages and Disadvantages of Digital Marketing. My colleagues create a market entry strategy based only on solid and verified data. This is usually accomplished through recommendations and by social media networks such as Facebook and Twitter. The NBA invested significant resources and years of negotiations to lay the foundation for bringing the NBA to China, and in 2008 their hard work paid off. In the business world, there is no perfect marketing strategy. This button displays the currently selected search type. Hence deciding right strategy for the target group is considered one of the most important aspect in a marketing strategy. It's safer to stick with something that you and your customers already know than to venture into untested territory. Make your product more appealing to gain more market share from your competitors customers, Competition is fierce, no matter which business youre in. Marketing strategies often require market research and that research can help you to gain a better understanding of the market, how it works and who your customers really are. Do you a specific target market where you havent entered yet? Keep your entire team involved so you can hear feedback from many levels. However, many players in the banking sector haven't even decided on a basic digitalization strategy yet. 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? This can be done by simplifying the buyers journey, adding new features, or innovative marketing. This differentiation in the market has set them apart from other products with very similar features. Such market development strategies help you to persuade non-buyers in the current market to try your product. If you identify a need for a new product in the market, you can launch it to increase market penetration. Youll be able to assess the effectiveness of your campaign(s) this way. What tips would you add? Companies often use market development strategies to identify and develop new opportunities to sell their products in previously unexplored markets. Have you ever used market penetration to grow your business? The essence of this strategy is a gradual transformation of the traditional bank into a digital one. Attract non-buyers in your current market, 1. Do you have a bandwidth tool or a team that could measure the performance of the market development strategy? The choice is yours. It allows for easy diffusion of products or services, creates goodwill, and can lead to fast growth. When it comes to business, market penetration is key to success. Market Share can be increased through initiatives such as price cuts, promotions, and marketing campaigns. A business should analyze various segments of the market, and then you should finalize the segment that you want to target. Effective marketing: Market segmentation adds focus and strength to marketing efforts, giving businesses actionable information about specific customers and allowing them to speak directly to their customers' needs to retain their business. It will give you a plan and a clearer focus. Market penetration is an important tool for companies looking to grow their business. This can be done through discounts, coupons, and special promotions. But in reality, it is highly difficult and time-consuming. Poached Jobs is an online recruitment platform, it provides reliable talented candidates to businesses, companies, and managers. 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. Ansoff proposed that the four basic growth alternatives he identified could be defined using a 22 matrix (known as the Ansoff Matrix) made up of new and existing products on one axis, and new and existing markets on the other. This can be done through coupons, sales, and special promotions. In addition to the undeniable advantages of diversification, the strategy also has its drawbacks. Facebook started as a small platform for college students where they could share their headshot and check out who is more attractive. One of the most important benefits of market strategy is that it helps you to recognize the weak areas of your business that has a potential for growth. Market penetration can also help to improve a companys prospects by helping it gain market share and become more established in the market. However, the market strategic campaign allows you to run it on various social media platforms like Facebook, Instagram, Twitter, LinkedIn, YouTube, Google, and others. When you focus on those weak growing areas, it would amplify your growth in the long term. You need to adjust your campaign for different cultures, and it is not easy sometimes. There are many ways to increase market penetration. It enabled college students to compare headshots and choose who was hot, or not. The banking as a service (BaaS) model includes two main approaches: 1. Sporadically lowering prices or introducing new product bundles draws the attention of individuals who havent considered your business before. Your email address will not be published. In turn, this can give you fresh ideas about how to market, and who to market to. 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