Market Penetration – The concept of increasing sales of existing products into an existing market. The least risky, in relative terms, is market penetration.
When employing a market penetration strategy, management seeks to sell more of its existing products into markets that they’re familiar with and where they have existing relationships.
Typical execution strategies include:
- Increasing marketing efforts or streamlining distribution processes
- Decreasing prices to attract new customers within the market segment
- Acquiring a competitor in the same market
Market Development – Focuses on selling existing products into new markets
A market development strategy is the next least risky because it does not require significant investment in R&D or product development. Rather, it allows a management team to leverage existing products and take them to a different market.
Approaches include:
- Catering to a different customer segment or target demographic
- Entering a new domestic market (regional expansion)
- Entering into a foreign market (international expansion)
Product Development – Focuses on introducing new products to an existing market
A business that firmly has the ears of a particular market or target audience may look to expand its share of wallet from that customer base. Think of it as a play on brand loyalty, which may be achieved in a variety of ways, including:
- Investing in R&D to develop an altogether new product(s).
- Acquiring the rights to produce and sell another firm’s product(s).
- Creating a new offering by branding a white-label product that’s actually produced by a third party.