Market Development Defined
Market development is a business strategy whereby a business attempts to find new groups of buyers as potential customers for its existing products and services. In other words, the goal of market development is to expand into untapped markets. These potential customer groups may already be served by competitors or may not be currently marketed to by anyone for the product.
The Process of Market Development
Market development is a two-step process. It starts with market research. You need to engage in segmentation analysis to determine which market segments are worth pursuing. A segment is simply a small slice of an overall market. You can segment a market along demographic, geographic, psychographic (based on values and lifestyles), and product-benefit lines.
Once you have determined which market segments are worth pursuing, the second step of market development involves creating a promotional strategy to penetrate the new market. For example, you may decide to engage in an aggressive television and direct mail campaign. You'll also have to consider the pricing of your product. If there are competitors in the market, then you may opt for penetration pricing, where you aggressively price your product lower than the competition in order to quickly obtain a large share of the market and customer loyalty.