Market development strategies involve selling the firm's existing products to new markets, both nationally and internationally. It also aims at identifying new groups of customers. The new groups of customers can be searched in terms of:
- New demographic market: Demographics are used to characterise customers based upon their:
- Income
- Marital status
- Standard of living
- Education
- Age and sex
Thus, herein, the entrepreneur, who is currently selling the existing product to a specific demographic group can now offer the same to a different demographic groups.
e.g. Tata Nano caters to a segment of middle income group. But its upgraded version with trendy colours and additional features is targeted towards the young generation.
- New product use: An entrepreneur might find out that people use his product in a way that was not intended or expected initially. This new knowledge of product use provides insight into how the product may be valuable to a new group of buyers.
For example, Aspirin, a pain killer, has been discovered to be good for heart too:
- New geographical market: This approach aims at selling the existing products in new locations and new markets. This has the potential of increasing sales of the product by making it available to those customers, who did not have access to it. Having a large customer base is always beneficial for a business as it helps to:
- Achieve economies of scale.
- Reduce its risk.
- Reduce its dependence on any one market.
- Counter attack a global firm for snatching their customers through better products or lower prices.
- Might discover that some foreign markets present higher profit opportunities than the domestic market.
- However, before adopting this approach, an entrepreneur must be aware of:
- Customers' preferences
- Their language
- Legal requirements
- Regional differences, etc.
e.g. Nirma, which was initially confined to local Gujarat market later expanded to regional and then to national markets.