Business Development Strategy Example – Your business is growing well – but the questions still remain: Can you sell more? Is there an opportunity to increase market share? Is there any way you can advance your product differentiation efforts? Companies hoping to increase revenue can do so in a number of ways – such as increasing their advertising budget, expanding their sales teams, and investing heavily in product development. However, one of the often overlooked ways to boost your gross sales is an objective, well-researched and expertly executed market development strategy. In this article we will explain what market development is and how you can use it to increase sales and grow your business. Then we look at some examples of market development strategies that work for today’s top companies. What is the market development? Market development is about expanding your total addressable market (TAM) and how much market share you can expect to gain. The Ansoff matrix (or product/market expansion grid) illustrates how a company can expand its TAM in four categories: market penetration, market development, product development, and differentiation. Each category relies on two axes – one for market and one for risk. A company can expand its efforts into new or existing markets and each has more or less business risks. Market Penetration If businesses want to expand within their existing markets with low risk, they can try a market penetration strategy. In this scenario, TAM increases because by offering a new product or service, a business can effectively increase the maximum amount of revenue that can be generated from the existing base of customers. Product launch is an effective way to implement this strategy. Product Launches – A company may release new iterations of a product that they have already successfully sold in the market. The purpose of launching a new product is to create excitement and buzz around the brand to increase sales. Product Development A riskier way to expand within an existing market is product development, but make no mistake – this market development strategy can be rewarding. Developing new products is a delicate process. Businesses must be well aware of their market because market interest is a factor in product development. If the audience is not receptive due to a lack of education around the product, a bad marketing campaign to promote the product, or even a bad time to launch the product, this strategy can be difficult to implement. However, companies that fail to develop new products often have deep learning that can be applied to their next market development strategy. Product development comes in many forms, here are a few: Rebranding – If a business has been in hot water for a long time or has been in hot water recently, it is possible that the market has become disconnected from the brand. This can happen due to a lack of advertising around the brand itself, outdated positioning of a product compared to the competition, or a lack of confidence in the market. Companies can rebrand themselves to reconnect with their existing market, while positioning themselves as a viable option among the competition. Adapting a product’s packaging, offering a new size, flavor or color, or even changing the product or brand name can help a company remarket a product to better position within the current to acquire market. Pricing – Another way to gain a foothold within an existing market is to make a business’s products more accessible or desirable to that market by pricing them. Repricing does not mean lowering prices, although it is one way to implement a product development strategy. This may mean moving the brand within the market to demonstrate value or luxury, thereby justifying higher prices to attract consumers. Market development It is possible to take a less risky approach when expanding into new markets. To develop a market, a business can offload certain risks. In this example, TAM increases because a business adds more people to its target market – thereby serving new customers without investing in a new product line. Here are some ways a business can create a new market: Geographic Expansion – Research can reveal markets that are suitable for a business to expand into based on where the business currently operates. Geographic expansion can be used for brick-and-mortar as well as online businesses. Franchising – Giving individual business owners the right to use the brand and trademarks associated with a company is another way to expand into a new market without risk. In franchise agreements, the franchisee usually pays an upfront fee to the franchisor to obtain the rights to operate the business. Diversification Sometimes a business may step outside of its normal operations and market to create a product for an entirely different industry and market. For this reason, diversification can be a big risk for the business, but can be very rewarding if done effectively. Similar Product Variation – A company may realize that the raw materials or by-products of the products it sells can be reused in an entirely new product that can be sold to a different audience than the one that currently buys its products. Unique Product Differentiation – Instead of using existing products, a company can use a completely unique approach to enter a new market by offering a product or service that is different from anything its industry can offer. How to Create a Market Development Strategy Research your development opportunities. Set your growth goals. Create your marketing plan. Go to the market. Analyze your results. Deciding when and how to develop your current market should be a strategic process. Just because your business has been struck by lightning once does not mean that your new expansion plan is a guaranteed success. Because of that fact, follow these steps and use these resources to find out if you need to improve your market, how to improve it, and whether or not the initiative is successful. Step 1: Research your development opportunities. It’s always tempting to follow the hottest trends – whether that means adding more areas of focus to your consulting business or adding more items to your restaurant menu. However, before you spend time, money or resources developing your market based on trends, take these steps to determine if expansion is worth it. Revise Your Buyer Personas Featured Tool: HubSpot Buyer Personas Templates Download These Templates As your market expands, you’ll face the potential need for net new or revised buyer personas, which are semi-fictional representations of your ideal customer based on market research and real data about your existing customers. Consider the motivations, demographics and background of your new target market to help you decide whether or not a growth initiative makes sense. Research Your Market Preference Tool: HubSpot Market Research Kit Download this kit Understanding your hypothetical positioning in a market is key before attempting to enter it. To that end, conduct market research exercises such as Porter’s Five Forces Analysis or a SWOT analysis to determine your strengths, weaknesses, buyer power, threat of substitutes or other characteristics compared to competitors in this new market. Additionally, you’ll want to calculate market penetration before proceeding with any plans to expand. Survey Your Customers Tool of Choice: Customer Satisfaction Survey Templates Download These Templates If you’re hoping to expand your product line today to generate more revenue from existing customers, make sure your intended expansion is warmly received. Asking yourself why this development makes sense to come from your organization is a good first step. However, talking to and researching your customers to find out if your proposed extension is useful in their lives (and, more importantly, whether or not they will buy from you) is an essential test point before you consider your offers as expand a business. Step 2: Set your growth goals. A successful market development comes with increased sales, profits, employees, customers, products, users, locations or a combination of these criteria. Because there is so much at stake, set goals for which areas of your business you want to improve, in addition to what your growth goals are for each scale. For example, by adding one more location, you can set the following growth goals: Increase customers by 90%. Increase income by 100% Double annual income after recovering the initial investment. Increase the number of employees by 20 people. During this stage, you should also consider the requirements needed to help you achieve your development goals, such as initial funding, tools and software to help you make the initiative a success. Finally, the most important metric to measure before trying to expand or improve your market is ROI. In this step of the process, compare the cost of developing your market as intended with the projected revenue figures of a successful expansion. If the ROI is not motivating enough to continue, you may need to go back to the drawing board and figure out a new growth strategy and