New Business Development Strategies

Market Penetration

Many companies follow a “market penetration” strategy. That is they seek to sell more of the same products, or services, to existing customers in their current markets using tactics such as volume rebates and improved payment terms. Their goal is to achieve economies of scale with standard products through increased plant utilisation and reduced costs-to-serve individual accounts.

Market Development

This strategy usually involves selling more of the same products at new accounts in new markets. This new business development strategy focuses on luring buyers away from competitive products with standard grades or with a slightly modified product portfolio. In this scenario, new markets may include sales into geographical locations where the company’s products were not previously available.

Product Development

Companies following a “product development” strategy are involved in creating new products to sell alongside standard grades at existing customers in their current markets. This approach to new business development enables the company to increase sales, with new products, but at familiar accounts and avoids the costs of finding new buyers. Undertaking specific developments for large buyers of standard products is a well tried approach to building closer business relationships; especially if they occupy a market leadership position.

The Commercialising Technology process is designed to bring focus and discipline to the challenge of new product development.

Diversification

Diversification can be a risky new business development strategy to pursue. Sales of new products into new markets may exhaust too many of the companies resources. Alternatively, for large corporations, following a diversification strategy may help to spread the risk by enabling the company to participate in unrelated markets following different business cycles.

Applying New Skill-sets

Whichever of the four new business development strategies a business follows sooner or later it will need to focus resources on convincing existing buyers, or new buyers, that its products meet their needs.

Account teams pursuing market development and diversification strategies will need to be skilful at the identification and removal of barriers to market entry. Professional relationship management skills are important in all customer interactions irrespective of which new business development strategy the business pursues.

You can find out more about EXCITIM would help you new business development objectives by:

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