Your business is getting by just fine – but still, the questions remain: Could you be selling more? Is there an opportunity to increase market share? Is there any way you could further your product diversification efforts?
Companies hoping to increase revenue can do so in many ways — such as increasing advertising budgets, expanding sales teams, and investing in product development. However, one often overlooked way to strengthen your gross sales is a purposeful and expertly executed market development strategy.
In this article, we’ll explain what market development is and how you can employ it to grow your business. Then, we’ll take a look at some examples of market development strategies that work for top businesses today.
Each category rests upon two axes — one for market and one for risk. A company can expand its efforts into new or existing markets. Each poses more or less risk to the business.
When businesses want to expand within their existing markets with low risk, they might attempt 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 it can attain from its existing customer base. A product launch is an effective way to execute this strategy.
A company may release new iterations of a product they already sell successfully within the market. These iterations could include an improvement to the product that makes it a better fit for customers’ needs, an improvement to the performance of the product, or any other changes you can reasonably market as added value.
The purpose of launching a new product is to generate excitement and buzz around the brand to increase sales.
A more high-risk way to expand within an existing market is through product development. Even with its risk, make no mistake — this market development strategy can be rewarding.
Developing new products is a delicate process. Businesses should be keenly aware of their market, as market interest is a driving factor for product development.
If the audience isn’t receptive due to a lack of education about the product, a poor marketing campaign to promote the product, or even poor timing of launching the product, this strategy can be difficult to execute. However, companies that have failed at developing new products usually have in-depth learnings to apply to their next market development strategy.
When it comes to creating new products, consider the category of your product. Entering a space with many competitors will be a different experience than building something in a disruptive category.
“If you launch a product in an existing category with existing competitors, you’re playing by their rules and competing on their terms,” says Adrienne Joselow, director of product marketing at HubSpot. “If you instead launch a disruptive product that changes the category, you’re competing on new benefits where you clearly win — you change the game.”
Beyond making new products, product development comes in many forms. Here are a few examples.
If a business has been around for a long time or has been in hot water, it’s 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, or distrust within the market.
Companies can rebrand themselves to reconnect with their existing market while positioning themselves as a viable option among the competition.
Adjusting the packaging of a product, offering a new size, flavor, or color, or even changing the name can help a company rebrand a product to have a better position within its existing market.
Another way to gain traction within an existing market is for a business to make its products more accessible or desirable through its pricing.
Repricing doesn’t necessarily mean lowering prices, although that is one way to execute a product development strategy. It could mean shifting the brand within the market to showcase value or luxury, thus justifying a rise in prices to capture those consumers.
It’s possible to take a less risky approach when expanding into new markets. To develop a market, a business may offload some of the risks.
In this example, TAM increases because a business is adding more people to its target market — thus being able to service new customers without investing in a new product line. Here are a few ways a business can develop a new market.
Research can reveal markets that are suitable for a business to thrive within based on where the business currently operates. Geographical expansion can work for both brick-and-mortar as well as online businesses.
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 high risk.
In franchising agreements, the franchisee usually pays an upfront fee to the franchisor to obtain the rights to operate the business.
Occasionally, a business may step out of its normal operations and market to create a product for a completely different industry and market. For this reason, diversification can present a major risk to the business, but it can be very rewarding if it’s carried out effectively.
Similar Product Diversification
A company may realize that the raw materials or byproducts of the goods they sell can be repurposed into a completely new product that can be marketed to a different audience than the one currently purchasing its products.
Unique Product Diversification
Rather than using existing products, a company may take a completely unique approach to penetrate a new market by offering a product or service that is different from anything offered in its industry.
The decision of when and how to develop your existing market should be a methodical process. Just because your business has struck lightning once does not mean your new expansion plan is a guaranteed success.
Because of that reality, follow these steps and use these resources to determine if you should develop your market, how it should be developed, and whether or not the initiative is successful.
Step 1. Research your development opportunities.
It’s always tempting to go after 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 on developing your market based on trends, take these steps to determine if the expansion is worthwhile.
Review Your Buyer Personas
Featured Tool: HubSpot Buyer Persona Templates
When expanding your market, you 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 backgrounds of your new target market to help you decide whether or not the development initiative makes sense.
Research Your Market
Featured Tool: HubSpot Market Research Kit
Understanding your hypothetical positioning in a market is key before attempting to enter it. To that end, conduct market research exercises like Porter’s Five Forces Analysis or a SWOT Analysis to determine your strengths, weaknesses, opportunities, the threat of substitutes, or other attributes compared to competitors in this new market.
Additionally, you’ll want to calculate market penetration before moving forward with any plans to expand.
Survey Your Customers
Featured Tool: Customer Satisfaction Survey TemplatesImage Source
If you’re hoping to expand your current product line to generate more revenue from existing customers, make sure your intended expansion will be warmly received. Asking yourself why this development makes sense coming from your organization is a good first step.
However, talking to and surveying your customers to see if your proposed expansion is beneficial to their lives is a necessary proof point before expanding your offerings as a business.
Step 2. Set your growth goals.
A successful market development will come with added sales, profit, employees, customers, products, users, locations, or some combination of these criteria.
Because there’s so much on the line, develop goals for which facets of your business you intend to grow, in addition to what your growth goal for each criterion is.
For example, by adding one more location, you may set the following growth goals:
Increase customers by 90%.
Increase revenue by 100%.
Double annual profits after recouping the initial investment.
Increase employee headcount by 20 people.
During this stage, you should also consider the requirements needed to help you hit your growth goals, such as initial funding, tools, and software to help you get the initiative successfully up and running.
Lastly, the most important metric to measure before attempting to expand or develop your market is ROI. In this step of the process, compare the upfront costs of developing your market as intended with the projected revenue numbers of a successful expansion.
If the ROI is not encouraging enough to move forward with, you may need to go back to the drawing board and determine a new growth strategy.
Featured Tool: Growth Strategy and Planning Template
Using the template above, outline your growth goals and strategy to lay the foundation for your market development initiative. This template will help you plan out the steps necessary to achieve your goals and help you determine whether or not they are realistic for this project.
Step 3. Create your marketing plan.
An increased market means an increased need for effective marketing.
To generate demand — or to capture existing demand in your market — make sure your marketing plan is up-to-date and reflective of the initiatives it will take to grow your market share to its desired level.
You’ll also need to make sure each of your offerings is differentiated. Customers should know what makes your products different from each other and from other products in the market.
“Messaging, messaging, messaging,” says HubSpot’s Adrienne Joselow. “Create a narrative that establishes a sense of urgency. Lean into what makes your product special — and how you can help your customers get that magic.”
Featured Tool: HubSpot’s Marketing Plan Template
Document your marketing plan supporting your market development with the template above, and make adjustments to it as needed to ensure you’re reaching your market in an accurate, appealing, and consistent fashion.
Consider all of the following initiatives and how they’ll play a role in generating more revenue in your newly developed market.
Will you communicate with existing prospects via email to alert them of your initiative? Do you have a list of saved contacts who expressed interest in what you sell, were unable to make the purchase, and might now be able to purchase from you?
Do you have organic and paid initiatives to generate buzz and spread the word to grow awareness on social media?
If you’re developing your market on a regional level, are you working with local publications, PR agencies, or advertising platforms to appeal to nearby potential customers?
Content & SEO
Do you have website and blog content planned to capture the interest of website visitors hoping to learn more about what you’re selling?
When building your blog, consider the range of topics you’ll cover. If you cover many subjects, have experts devoted to managing different sections of your content, suggests HubSpot Marketing Manager Clint Fontanella.
“Group your content together so that an expert in one or a few related topics can focus their efforts on growing that type of content,” Fontanella says. “This way, they can pay closer attention to the nuances of that SERP landscape and tailor the content to the specific needs of the audience.”
Step 4: Go to market.
The time has come: Your research and planning are complete, and you’re ready to formally enact your development strategy, whether it’s opening the doors of your new location or making your new product available for purchase on your website.
But before you start collecting revenue, there are a few final steps to take — specifically, aligning your team on the best way to conduct this go-to-market launch.
Go to market successfully by managing three imperative internal tasks, all of which can be done with this Product Go-to-Market Kit:
The campaign plan should be a one-stop shop for anyone who has a stake in the success of this project. It should provide a general purpose for the market development project in addition to the tactical and strategic elements team members need to adhere to in order to see the project go off without a hitch.
The sales plan should provide more specific insights for the sales team – especially regarding overall projections, team or individual goals, and strategies for how the organization intends to meet these goals
Team Email Updates
For the company at large, particularly for individuals who need to be informed but may not have set tasks to complete, team email updates are a staple of communication during market development.
This messaging should contain a status check for the launch timeline and outstanding tasks, and any notifications the company should be aware of during their day-to-day work.
Featured Tool: HubSpot Go-to-Market KitImage Source
To centralize your internal planning and communication efforts during your market development process, use the HubSpot Go-to-Market Planning Kit.
Step 5: Analyze your results.
Once you’ve taken the necessary actions to develop your market, the work has only begun. After launch day, you’ll need to be sure customers are satisfied, products and services are high-quality, employees are retained, and, most importantly, goals are met.
Start collecting sales data as soon as possible so that you can begin analyzing whether or not you’ll meet your projections. If not, you may have to determine a plan to either adjust your goals to become more realistic or adjust your strategy to ensure your goals are met.
Once data is available, make sure you’re presenting your findings accurately and clearly so that stakeholders can fully understand what the results are, how you achieved them, and what the next steps of your market development strategy are.
“Test and iterate on your way to launch, through launch, and beyond. Stay agile. Figure out what works, what doesn’t, and what could be with adjustments,” Joselow advises. “Don’t be afraid to pivot.”
Featured Tool: Marketing Reporting Templates
Available in PowerPoint, Excel, and Google Drive, these templates will help the project driver communicate the results of your market development strategy to your team.
The Benefits of Building a Marketing Development Strategy
It’s easy to get caught up in the excitement of extending to new markets. However, to be successful, you must innovate with intention and organize the chaos from the outset.
“Marketing’s job is never done. It’s about perpetual motion,” states Beth Comstock, Former CMO and Vice Chairman of GE. “We must continue to innovate every day.”
With thorough planning, you can create a robust strategy that can better take advantage of new and emerging opportunities.
Other benefits of refining your marketing development strategy follow.
You can get an edge over competitors.
Creating a market development strategy that attracts a new audience means you may end up the only supplier in the game.
By getting creative and adjusting your marketing to prove a fit for new buyers, you’ll have less competition and more market share before other producers wise up to what you’ve accomplished.
You’ll reduce risk through preparation.
One of the known risks of moving to new markets is the unpredictability of reactions to your offerings. Knowing this, your market development strategy can include tactics that pave the way for success. One effective tactic to try is A/B testing. This presents two variations to your target audience, tracks the results, and determines which variation is more effective. Surprisingly, only 17% of marketers use landing page A/B tests to improve conversion rates.
One example of A/B testing beyond the landing page could be creating more than one billboard design to present in new geographic locations. Some communities react more favorably to reds vs. blues, or straightforward ads vs. clever ones.
Having a few prepared as part of an A/B strategy to analyze the results can provide insights into how best to invest future marketing dollars in that region.
You can brave the unexplored.
Confidently open doors for new opportunities to develop by folding an experimental budget into your market development strategy. Making a safe space for leaning into creative or unorthodox ideas is smart innovation toward a big payoff.
Baking in the financial risk from the beginning enables you to control financial losses and take bigger, bolder leaps.
Market Development Strategy Examples
1. Carl’s Jr. and Hardee’s — Geographic Expansion
Although these two companies started as separate restaurants — Carl’s Jr. on the west coast and Hardee’s on the east coast — they merged in the late 1990s to become one company under two names.
From a high-level perspective, this might seem like a branding and marketing nightmare, but within their respective geographic markets, the different names have been successful.
Carl’s Jr. took the opportunity to acquire Hardee’s, thus expanding the burger chain across the country, becoming one of the largest burger chains in the United States.
2. Popeyes Louisiana Kitchen — Market Penetration
Sometimes, a market development opportunity can appear when you least expect it. That was the case with Popeyes Louisiana Kitchen.
The company’s brand was so well-integrated into its marketing operations that a simple tweet in response to Chick-Fil-A prompted a tumultuous beef over which brand had the best chicken sandwich.
Once the Tweet gained traction, Popeyes quickly capitalized on the opportunity to sell more of a product they had recently launched.
Although some logistics issues caused supply and demand imbalances, the brand was able to maintain a stronghold on the market once the sandwiches were back in stock.
In Q2 of 2021, Popeyes was still running TV ad campaigns for the chicken sandwich — more than two years after the incredibly successful product launch. By Q3 of 2022, however, the buzz around their chicken sandwich buzzed off. They shifted their strategy to become more convenient for customers to access, and to create a more consistent experience for those using online ordering.
This is a solid example of what our CTO and Co-Founder Dharmesh Shah meant when he said, “Many companies have forgotten they sell to actual people. Humans care about the entire experience, not just the marketing or sales, or service. To really win in the modern age, you must solve for humans.”
Popeyes plans to add 200 more locations split between the U.S. and Canada.
3. The Lash Lounge — Franchise
Since 2010, The Lash Lounge has been scaling its presence across the United States through franchising. As of 2020, the company has grown to 108 locations, most of which opened around 2019.
Franchising helped this company expand into new markets with relatively low risk. The Lash Lounge team trains the new franchisees on their techniques and immerses them in the culture to create one cohesive team that doesn’t feel disjointed.
4. Unilever — Diversification
Today, we know Unilever as the parent company of some of the most notable brands like Dove, Breyers, and Hellmann’s. However, the company initially went into business selling soap.
After realizing that the ingredients for making soap shared similarities with those needed for making margarine, they diversified and expanded into a new market with a new product. Over time, Unilever created and acquired new brands in the soap, cosmetics, butter, and ice cream industries, essentially diversifying its product line and market.
Developing Your Market
Before you follow the latest trend in marketing, take a moment to analyze your strategy thus far to forge a path that will yield success.
By planning a market development strategy, you’ll have the opportunity to assess your company’s risk tolerance and understand where your business stands within the market. You can then turn your market development idea into a reality.
Editor’s note: This post was originally published in November 2020 and has been updated for comprehensiveness.
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