Market Product Development
Market development
Market development is the growth strategy where the business seeks to sell existing products into new markets.
In marketing management, the term “markets” is used to describe market segments as wll as geographic markets or territories. Hence the many possible ways of approaching this strategy, would include:
(a) New geographical markets: for example exporting the products to a new country, or entering into a new region within the country. MTR foods have found a very lucrative market of NRI diasporas all over the world, homesick for indian food, to whom it markets a variety of ready to eat indian meals.’
(b) Enter a new market segments currently not targeted. The recent introduction of fairness creams for men has helped companies like Emami and HLL enter a large and profitable market segment.
(c) New product dimensions or packaging: for example almost all products from shampoos to shoe polish are marketed in sachet single serve packs. This new pack size format has helped companies enter new un-penetrated markets.
(d) New distribution channels: companies use innovative distribution channels to tap new market segment opportunities. Impulse products like beverages and candies have benefited enourmously from the vending machines, as a majority of the consumption happens outside home. Vending machines have opened new sales opportunities for these categories. In rural India, HLL through its project shakti initiative sells convenience products through employed women thereby securing their financial independence and at the time giving the company access to unreachable markets.
Market development implies that when a company enters a new market, it has to “develop” the market first through customer education about the utility and usage of the product. Market development time varies according the stage of development of the market, and can take decades of sustained efforts.
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Product development
Product development is growth strategy where a business aims to intorduce new products into exisitng markets. This strategy may require the development of new competencies and requires the business to develop products which can appeal to its existing markets. New prodcuts in this case does not imply products which are new to the world or complementary to existing product areas, to offer the customer a range of solutions. The way customers view product categories, is fundamentally from the way, companies tend to categories products. For the customer, a product category is a range of solution to a given problem or need, irrespective of its physical form or manufaturing process or distribution channels. For instance a customer seeking information on “The Indus Valley Civilization” would consider enclyopedias, internet resources and CD Roms as all part of the same category, as they all satisfy the same need.
Companies tend to categorize products by physical form, manufacturing process or by distribution channels and fail to detect growth opportunities in offering a range of solutions. The Gillete Company (now a part of P & G) at first developed a range of shaving products for men. For several years, product innovations and upgrade drove the sales rapidly. However the realization that the real need that they satisfy is grooming, of which shaving is just a part, led to the expansion their shaving products line to include a number of grooming products like, deodrants, gels after shave lotions and bathing products.
Logitech, one of the world’s leading companies in computer peripherals for all types of communications and entertainment devices. Tehir latest product offering is a set of ipod and other MP3 accessories. New product development for existing markets has been at the forefront of the company’s growth strategy, even as the company has entered new market segments.
From the above examples, it would be evident that companies do not pursue a single growth direction only, during a given plan period. As much as it makes efforts to increase market penetration in a given market, a company also has to make inroads into a new markets, as well as seize opportunities to develop products for its existing markets. However prioritization of growth strategies is essential for proper allocation of resources and for balancing short term and long term growth. As such Market Penetration, market development and new product development are related growth strategies.
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