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Market Penetration
This involves increasing sales of an existing product and
penetrating the market further by promoting the product
heavily or reducing prices to increase sales. This strategy
has the lowest risk strategy as the firm knows the product
and the market. Market penetration is often used by
supermarkets and large retail chains.
Market Development
Under a market development strategy a firm sells existing
products to new markets. For example Ty Warner initially
sold his plush toys in contiguous states in the US as
demand grew. Through market development Beanie Babies
had the potential to become a national chain. There are
different ways to define new markets including different
locations for sales to aiming products at different customer
groups (age, background, interests, income).
Product Development
The business develops/introduces new products into
existing markets with the aim of selling the new product to
existing customer groups. For example, Ty Warner
introduced a richer red colour to his plush toy “Digger” a
year after it had been first introduced with the result that
collectors sought the scarcer version at a 600% increase in
price. This is an example of a new product which simply
needs to be added onto the existing model aimed at the
