Here is a comparison of some attributes of micromarketing: Lower marketing cost vs. high cost per acquisition More closely targeted advertising can decrease your marketing cost because it allows you to target a smaller group of people. Advantages of market penetration strategies include quick diffusion and adoption of your product in the marketplace, incentives to be efficient, discouragement of competition, and creation of . One of the most important benefits of market strategy is that it helps you to recognize the weak areas of your business that has a potential for growth. The cost of implementing a strategy depends on the company's appetite and approach. The principles of the bank's operation may not change or may change slightly. The approaches to building an ecosystem can differ: 1. In fact, your strategy can include customer surveys and evaluations of. For example, one of the way to distribute information is through email marketing. The infamous ride service app, Uber, has seen significant growth in the last decade through a unique combination of diversification strategy (i.e. When it comes to launching a business, you need to think about infrastructure, profitability, and the development of the product. There is a growing embrace of niche ecosystems when a bank focuses on meeting customer needs in a certain area. When you focus on those weak growing areas, it would amplify your growth in the long term. The key to a market development strategy is the understanding of the current baseline performance vs. what we want our future performance to be, and then coming up with the strategy to move from A to B. First, businesses need to identify their existing customers and understand their needs and wants. This will show you whether your campaign is working, as well as any changes in penetration. So, the results can be severe because competitors might end up selling their products at an extremely low price and generate almost no profit. The company sells its products in more than 200 countries and has a 42% market share in the global soft drink industry. Do you a specific target market where you havent entered yet? It will give you a plan and a clearer focus. An example of . Businesses can use a variety of ways to evaluate the degree of competition in their sector. When you offer better prices than your competitors, luring out their customers becomes easier that previously expected. You may opt-out by. So, periodically updating your product (always to better, never lower the quality) and changing its packaging will, most probably, benefit your business. Poor Company Image If your company has several product lines (that includes a luxury line), then using market penetration strategy might be harmful. Social media and digital marketing campaigns allow you to precisely target your customer market. One of the most common ways to increase market penetration is by lowering the price of a product or service. The platform follows the market development strategy. Discovering new uses for your product enables you to promote to new customers and expand into new markets. Part of Slacks market development strategy includes, This differentiation in the market has set them apart from other products with very similar features. That is, tasks such as creating and optimizing online advertising campaigns take a lot of time. There are many ways to increase market penetration. I've seen this strategy applied by banks around the world. Advantages and disadvantages of a marketing strategy, Structure of the international marketing plan, Online Marketing | Types | Characteristics | Advantages | Challenges, Different Approaches to study of Marketing, Products and Services | Meaning, Definition, Differences, Objectives or benefits of marketing research, 5 Important Criteria for Selecting Newspaper Advertising, Commodity Boards | Functions | Kinds of, Advantages and Disadvantages of Questionnaires, How to choose best agency for International, Price skimming | Conditions | Advantages |, Quality Control | Objectives | Methods |, Accountlearning | Contents for Management Studies |. Suggest new uses for your existing product. Its because of diversification (scooters, bike, food delivery, etc.) This is how Tinkoff (an Andersen client) and Ant Financial work. This could involve developing a new product or improving an existing one. Fixed costs don't change with the number of units you produce, whereas variable costs do. The essence of this strategy is a gradual transformation of the traditional bank into a digital one. Coca-Colas market penetration strategy has been very successful. Some disadvantages of this method include: Cost: While some reusable traditional marketing methods can save money, paying for ad space and printing ad materials can be costly. Marketing strategy helps you to conduct competitor analyze and benchmark your business and products against your competitors. Customers who love luxury products will definitely avoid the product which was marketed as a cheap luxury. So, if youre focused on luxury products keep in mind that lower prices might make it look disappointing. It does this by expanding into untapped market segments. When expanded it provides a list of search options that will switch the search inputs to match the current selection. If you liked this article, we bet that you will love the Marketing91 Academy, which provides you free access to 10+ marketing courses and 100s of Case studies. It amplifies the probability of sales, growth, and success of your business in the long term. It gives you an idea of what type of product or service you should develop. food delivery, bikes, scooters, etc. You would need a team of experts and professionals to conduct market research, gather data, and implement your campaign. When a particular market is going through a saturation phase, then market penetration is a preferred strategy. Opinions expressed are those of the author. 2. Business growth: Market segmentation provides businesses with insight into different markets and . Market penetration is important because it allows for easy diffusion of a product or service in the market. 2. Though you may have an innovative idea and a capable team to execute, there's no guarantee of success. One of the primary benefits of exporting is access to a global market of buyers. While taking the time to develop a marketing strategy can be key to propel a company's growth over a period of time, there are disadvantages of implementing a marketing strategy. This enables companies to adapt to different markets and enhance competitiveness. Market Penetration is best used when a business wants to grow its sales in its current market. 0800 181 4422. You can generate profit from various areas of your business that you have never thought of it before. Sometimes, products are expensive to create and small businesses tend to struggle while trying to produce enough to lower the production and product price. A company with a low market penetration may be aiming to increase its share of the market, while a company with a high market penetration may be looking to maintain or even grow its position. The NBA has always dominated the relatively large and lucrative market for professional basketball here in the United States, but the league also had the foresight to recognize how much more lucrative business could be if they could successfully bring their product to international markets. If youre not sure how often to calculate market penetration, consider doing it after every marketing and sales campaign. A market development strategy aims at reaching non-consuming users in currently profitable segments. Micromarketing has advantages and disadvantages. Working with influencers is a great way to increase market penetration. This can be done through coupons, sales, and special promotions. This means that there is less resistance from customers when they are introduced to the product or service. Use tab to navigate through the menu items. Ahsan Ali Shaw is an accomplished Business Writer, Analyst, and Public Speaker. Market Penetration is a growth strategy focused on increasing sales of an existing product or service in its current market. The acquisition involves acquiring another company that already has a strong presence in the desired market. For a better understanding, if the large number of your customer base becomes familiar with the cheap product, its highly possible that everyone will forget that the firm also produces luxury items. Expanding into new geographical areas is a great way to increase market penetration. However, it is significant to segment your market strategy into small daily actionable plans and activities that are easy to conduct and enter. In articles about the banking industry over the past year or two, authors often talk about the necessity of implementing big data, AI and quantum technologies. The primary disadvantage of product development is that changing consumer preferences can cause a valuable product to actually be seen as worthless. Other ways to increase market penetration include-. Judging by the results of the IPO of those banks, the main business of which is BaaS, the cost of implementing the model may be tens of millions of dollars. The cosmetic companies have been focusing on men for the past 20 years. While market penetration is the lowest risk growth strategy, market development is a close second because unlike product development and diversification these two strategies dont include the extremely high risk nature of developing and selling a new product. Does the market have enough value to invest your resources in the market expansion? Creating A Digital Ecosystem Around The Bank. Thats how market development strategy works. Adjust your pricing. If your startup is ready to take its growth to the next level, youll be weighing up the different avenues you can use to get there. The market strategy allows you to focus on one problem at a time, but it is possible that your campaign is facing challenges in various areas. All you need is to think about things from a different angle and change your perspective. Fast Growth If your business and marketing objective is to enlarge your consumer base, then market penetration is the most effective way to act. Finding ways to, 2. You need to adjust your campaign for different cultures, and it is not easy sometimes. There are several ways to increase market penetration. Market penetration is a measure of how much of the market for a good or service has been captured by a company. The most important thing to remember about market penetration is that it takes time and effort to be successful. Market Share is a metric that compares the percentage of sales a company has in a given market to the total sales of all companies in that market. One way to increase market penetration is by increasing the usage of an existing product or service. How Would the Marketing Mix Change at Different Stages of the Product Life Cycle. Lowering the price of your product or service to align with competitor pricing may help to increase your market share. Market Share can be increased through initiatives such as price cuts, promotions, and marketing campaigns. Earlier they used to target and focus only female segment of the market. Bedford Square Do I qualify? Executing successful marketing strategies often takes time, money and resources and for a small company especially, that can be frustrating. Online ride sharing started in San Francisco in 2010, and nowadays, its offering its service in more than 700 cities across the globe. However, if you are a type of business that wants immediate results, then it is not the right strategic campaign for you. Successful marketing strategy may depend on the use of different strategies to obtain the best result . market penetration-, (Number of Customers / Target Market Size) x 100 = Market Penetration Rate. However, marketing strategy offers you a layout to best approach your audience and their needs and wants. The absence of a clear vision of and plan for integrating a fintech into a legacy structure may not bring the desired effect. The market strategic campaign allows you to promote your business and spread your brand awareness. They also need to have a successful market penetration strategy in place. To find new potential markets, companies must carry out systematic market research. However, in the future, traditional banks will probably try to catch up with BaaS companies by integrating directly with fintechs without intermediaries. The company has made significant growth for the last 10 years. There are four main growth strategies that businesses can use to increase their market penetration: product development, market development, diversification, and acquisition. This allowed them to better articulate the value of their software. Here's how to calculate cost-plus pricing:: 1. Increased Promotion Investing more time and strength in a promotion can dramatically increase market penetration. Disadvantages of business diversification. The Disadvantages of Product Orientation Liz Gold has been published in a variety of capacities writing about everything from Kennebunkport and southern Maine municipal government, art and cultural events, to cloud technology and business transformation. Disadvantages of Product Development Strategy Riskiness. (vitag.Init = window.vitag.Init || []).push(function () { viAPItag.display("vi_23289101301") }), Conclusion: Advantages and Disadvantages of Marketing Strategy, What is Business Management? 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