Market Opportunities
Marketers analyze the market opportunities for the company’s products and/or services towards the target markets. A good planning tool for analyzing market opportunities is Ansoff’s product/expansion grid. This tool helps identify new market opportunities by considering four possible directions:
- Market Penetration, which is used to find new ways to increase sales with the current product without having to change it. This tactic is to convince users of similar products made by another company to switch to its product, such as how Pepsi tries to convince drinkers of Coca-Cola to switch. Other tactics are by cutting prices or improving advertising to make the product enticing, thus encouraging new and current customers to buy more of the product.
- Market Development, which is used to find new market segments for the current product. Ways to accomplish this would be to expand distribution channels, sell in new locations, or find new users. An example would be to look for new demographic markets to try and attract working moms or senior citizens to buy a product they currently do not use.
- Product Development, which is used to grow the business by improving existing products or developing new ones into market segments in which you are already successful. Developing new features, improved technology, and improved quality are just a few development ideas.
- Diversification, which is used to grow the business by starting up an entirely new product line outside the present business. One factor to consider when thinking about diversifying the company would be the strengths and weaknesses of the competition. The diversification strategies are of three types:
- Concentric Diversification Strategy: Develop new products with the earlier technology for new segments.
- Conglomerate Diversification Strategy: Develop new products for new markets.
- Horizontal Diversification Strategy: Develop new products with new technology for old customers.
Before taking on new market opportunities, it is important to be sure your company has the financial capital to fund the costs. If not, you’re putting your company at risk. If so, does your company have the necessary production facilities and the expertise to successfully produce and market the product and/or service? If so, then you need to look at the distribution capacity to get the new product into the marketplace. If this is not likely, then it might be a better idea to pass on the opportunity.
If an opportunity were considered viable, determining the market segment you want to target would be the next step.
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