What is Your Market Development Strategy Missing?
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There comes a time in the life cycle of any product when new methods are needed to encourage growth, sales, and influence into new and different markets. According to the Ansoff Matrix, however, a market development strategy is not without risk. From Ikea to Gerber, some of the world's most well-known companies have experienced pitfalls with their market development.
How can you avoid the mistakes of those who have gone before you? By developing a strategy that implements both the tools of today and the fundamental marketing strategy wisdom of days gone by.
The Life Cycle of a Product
Any product that enters the market, from fast-moving consumer goods (FMCGs) to consumer durables and services, follows a similar path from development to retirement. Once a product or service goes through the rigorous stage of R&D, it then journeys through four phases of life: Introduction, growth, maturity, and decline.
The stage between maturity and decline is the window of opportunity where we find the market development strategy. Before a product enters a decline and is removed from the market, marketing and development teams can choose to revive the product’s growth by either expanding into new markets — demographic or geographic — and introducing new uses for the product or adding new, unique features to the product.
This seemingly simple process is anything but. Without a strategy and research that rivals the original process of R&D, market development can pose a huge risk to any company or product.
Many well-known brands have pursued market development at the unique stage of product maturity, only to find that their best-laid plans were not enough. In almost every example of market development failure, there was at least one thing in common: a misunderstanding or misinterpretation of the market the company was aiming to reach.
Market Development Gone Wrong
The topic of market development often evokes thoughts of international expansion, a very common method of developing new markets. Companies successfully expand into the global market every day. McDonald's, a global leader in the fast-food industry has expanded over the years from their original U.S. stores and can now be found in 118 different countries. Other international market development strategies aren't as successful.
French retailer Carrefour pulled out of Russia just four months after entering the market, citing insufficient acquisition opportunities that would prevent them from making a bigger impact on the market. In the 1970s, furniture giant, Ikea, attempted to reach the Japanese market. Discovering that the customers were used to higher quality products that would last longer, Ikea pulled out of the country in 1986. The company did, however, prove that by researching and understanding the customer, successful expansion into difficult markets is possible. Ikea returned to Japan 20 years later, after revamping their strategy.
While geographical expansion is certainly one key factor of market development, other types of development include finding new target groups in the same geographic area, or new ways to target the same audience in a different region of the United States.
In 1974, for example, Gerber Baby Products was already a leading purveyor in baby food and had been for nearly five decades. In an attempt to reach a wider market, however, it repackaged its jarred food as “Singles by Gerber,” aimed at college students and other adults looking for a quick meal. Its target audience didn’t bite. Adults, young or otherwise, didn’t want to eat baby food, regardless of how it was packaged and marketed.
More recently, BiC, a leader in disposable consumer goods like pens, lighters, and razors, also experienced a market development flop. In an attempt to market their pens directly to women, they introduced an array of pink, purple, and sparkly pen designs "For Her" in 2011. By the next year, the pens — and their marketing message — became a source of humor and derision across the internet. BiC also priced the new pens 70% higher than the identical, non-gendered pens that were already on the market, deterring consumers and contributing further to their status as a joke.
In each of these situations, the companies saw an opportunity: a new target market, a solution for busy adults, an unreached demographic or geographical region. The strategy to get there, however, was lacking a true understanding of the audience they were seeking to reach.
Although the designs of BiC's "For Her" pens had the potential to fill a need for consumers who wanted more fashionable writing implements, their packaging and messaging ended up alienating more women than it enticed, because BiC lacked real-time consumer feedback and an up-to-date perspective of its target audience.
Likewise, a more in-depth study of adult consumers would have revealed to Gerber that adults equate jarred food with babies, and nothing will likely change that perception, regardless of taste or branding.
Market Development Strategy Essentials
Many things can lead to a failed market development strategy. Pressure from executives, poor timing, ineffective packaging and messaging, and incorrect pricing are all elements that can cause the downfall of a previously successful product.
But how do these factors infiltrate a strategy that is well researched and structurally sound? It comes down to understanding the actual perspective of the consumer.
How much someone will pay for your product is not only determined through data and analytics, but also through real-time feedback from your target audience. Shifts in purchasing trends can happen rapidly, and last year’s numbers might not be enough to understand today’s consumer.
Because your audience is willing to pay more for a popular brand of feminine care product than for a generic version of the same product does not mean they will pay more for a feminine pen versus a non-gendered pen. But then, the reverse is sometimes true as well; consumers are often willing to pay more for a gluten-free variation of their favorite cookie or bread, for example, understanding the added value that it brings to them.
A good market development strategy will understand these nuances, but it will also not assume that these trends will always be true. Gaining insight into consumer behavior requires more than just the numbers; it requires a conversation with the consumer herself.
Equally important is knowing how consumers will respond to the packaging, marketing message, and purpose of your product.
BiC's "For Her” pens are the perfect example of misunderstanding a target audience and both their needs and desires. Where did BiC’s strategy go wrong? More effective feedback on the packaging and message would have gone a long way in helping the company with a successful shift into a more female market.
Basic surveys, trials, and interactive workshops are all great ways to gain insight into consumer likes and dislikes. Returning to the same consumers over a longer period of time,however, helps you dive deeper into the minds and habits of your audience, especially those who might express some initial hesitation to your product. Ignoring those consumers, and failing to ask them more targeted questions, could result in a market development strategy that lacks a true understanding of your key audience.
The Key to Market Development Strategy that Works
There are several aspects of a market development strategy that fall in line with any other product marketing strategy.
Targeting & Positioning: Identifying the target audience, age, and region and then determining how to define your product for that audience.
Segmentation: Another aspect of targeting is breaking your audience into segments and identifying their specific needs. How does your product answer those needs?
Goals: What are the key goals your company wishes to achieve in developing the market? These should be clearly defined and achievable.
Message: Determine the message you wish to communicate to your target audience. This should speak directly to their needs and understanding of the product.
Consumer Education: Look for opportunities to spread awareness and information about the product before it reaches the shelves.
While this list is not exhaustive, these elements of a market development strategy highlight the importance of market research. Without understanding your consumer, every other aspect of your strategy becomes ineffective. You lose sight of your target audience, product positioning, message, and more.
The key is an ongoing conversation with the consumer. Your marketing development strategy may only be missing one thing, and that is alignment with the thoughts and insights of your audience.
There is a commonly accepted sentiment that the customer is always right. In the case of market development, this rings especially true. What your customers and future customers are saying, doing, thinking, and needing play an essential role in your ability to reach new audiences with old products. The consumers are speaking, it is up to us to listen.
Stay Connected With Your Target Market
Suzy provides the tools and the means to help you listen to your target audience. With real-time consumer insight—up to 300 responses to surveys in under 60 minutes—you can take your market development strategy to an entirely new level. BiC, Ikea, Gerber, and every company that has faced challenges when expanding into new markets all lacked one thing: a fast, effective tool to help them reach and understand their consumers.
Suzy allows you to experience a new standard of consumer insight at any stage in your product or market development strategy. From start to finish, know what your future customers are saying, and develop a strategy to meet their needs.
