How To Explore Different Types of Markets For Your Business’s Expansion?
Even if you are a startup or a relatively mature business owner, it is a desire of every company to expand its business into various markets and explore new opportunities. This is one of the necessary elements for a business’s growth and expansion. But how can a business explore various types of markets that are suitable for its products or services? How can it find potential clients that will likely become buyers of its products or services? To understand this phenomenon, you need to completely understand what it is meant to be a market and what are the different types of markets.
What Is The Concept of A Market?
A market is a combination of institutions, infrastructures, systems, social relations where different parties can engage with each other performing some types of exchanging activities. Most of the markets rely on the sellers to offer goods and services to be purchased or sold in exchange for capital or money.
The markets can exist physically where you can go and walk around to purchase the commodities and products of your needs like shops, malls, and supermarkets, etc. They can also be present in the form of virtual or online marketplaces, too, like Amazon, eBay, or Etsy, etc. But how to visualize a market to be targeted for your business’s growth and expansion. For this, you need to understand the concept of market structures.
What is a Market Structure?
A market structure is a process in which you divide and sort out different types of industries depending upon the services, and goods that they offer in the marketplace. It is necessary for businesses to understand their own behaviors and resultant outcomes in the existing marketplaces to explore the new ones. There are various factors that can help to define a market structure and some of them are given as follows.
- Number of sellers and buyers in the marketplaces
- Your negotiation skills and negotiation demands in the market
- How many differentiated products can you offer in the market? What is the existing level of a variety of products in the marketplace?
- Is the market easy to enter and establish a brand identity? What is the rate of growth of competitors in the market?
In this way through the structuring of your market, you can easily analyze the relations among sellers and buyers, sellers and other sellers and buyers themselves.
What is Market Segmentation?
When you promote any product or service in the marketplace, your marketing strategies are mainly designed to target a specific group of people. Because it is highly possible that your target consumers may not be present in a broader sphere and you need to narrow down your branding efforts to a smaller circle.
Market segmentation is a process of dividing a market into subsets and smaller segments based on the interests, demographics, behaviors, desires, and needs of the end consumers.
It allows you to better understand your target market and personalize your marketing techniques accordingly.
The concept is the right product or service for the person. You don’t randomly start advertising your product to a broader audience out there without concerning the need and lifestyles and various other factors that dictate the purchasing behaviors of the customers. Through market segmentation, you become well aware of the different parameters and factors that need to be considered before starting your promotion campaigns in order to get maximum ROI. Does your target audience prefer getting news from social media or do they like self-development podcasts more? Make sure to learn about your audience as much as possible so that you can achieve maximum results.
Your research and development (R&D) is enhanced, campaign performance is enriched, target area exploration is boosted and business focus and business decisions are reinforced through market segmentation.
If you want to deliver w quality products or services to the consumers after segmenting your market, then you also need to have a basic idea of the marketing mix and its role in your business’s overall growth.
Market Mix and its Role in a Business’s Growth
A marketing mix is actually a grouping of elements that defines how your customers receive value from your business. It can also be interpreted as a combination of factors that can be utilized by a company or organization to influence the consumers to purchase products from it.
These elements or factors are generally known as 7ps of the marketing mix and they are People, Price, Place, Product, Promotion, Process, and Physical evidence.
There is a significant position of every element in the marketing mix and every factor leaves a considerable impact on your business’s overall growth and expansion.
Let’s assume that you have a product that is innovative, cost-effective, and very durable. You can not imagine selling your product without proper promotion at the proper place to the right people. Hence each of the elements compliments the other in order to address the overall business structure of the company. Your product will not generate lucrative revenues if you happen to miss any of the 7ps of the marketing mix.
3 Prominent Types of Markets That Need To Be Explored
Starting your business in a relevant market with the right opportunities, minimum threats and obstacles is one of the ideal ways of growing your business. Various factors like the number of competitors, profit margins, adoption rate, and size of the market also play crucial roles in determining the right market for your needs. There are mainly three exclusive types of markets that can be explored for further business opportunities. In the section below, we describe what are these types of markets and present some examples of markets on each of these types.
1. New markets
When you start your business in a new market, initially, your products are not in high demand. You need to create a brand image and explore the opportunities for marketing your new product or service. Your foresight allows you to predict the need for your product or service in the coming days and you envision a high customer base in the near future.
Hence entering a new market comes with pros and cons. One of the attractive advantages can be that you can become a market leader if you become successful in establishing the attention-grabbing business for yourself in the market. But if you fail to market your product effectively, or if you fail to leverage flexible fulfillment to deliver into new markets, you may end up with no reliable customer base. Here, you don’t exactly know the long-term preferences of the customers, and one-time buyers may not return again affecting your overall sales.
Example of New Market
One of the major examples of such types of businesses that ventured into new markets is SpaceX. SpaceX opened a totally new adventure when it allowed everyone for space tourism. There was almost no prominent business before that offered such a type of premium service. Twitter also did the same when it introduced its feature of “micro-blogs”.
2. Existing Markets
In these types of markets, you compete with the existing sellers to outsell your product in comparison to them. Here the product is already demanded and the customer is relatively established and has its preferences already set. You just enter your product in the market with competitive advantages like cost-effective, durable, long-lasting, more color and style options, etc, and start grabbing your revenue share from the market. You just need to compete with the existing products and offer such irresistible benefits to the consumers that they like to purchase your product or service preferably.
In the existing market, you don’t need to wait for the adoption of your products or services in the market. The demand for the product is probably already there and you just need to outrank your competitors in terms of value and benefits and the continuous stream of profits will keep flowing into your wallets.
Example of Existing Market
The major example of such a type of successful business that entered into a well-competitive market and was successful in knocking out all of its major competitors is Facebook. When Facebook in 2004 entered the world of social media, it had to face a strong competitor like MySpace. By offering competitive features and appealing advantages over the course of only a few years, Facebook was able to establish its brand image and is now a social media giant with 2.89 Billion active users worldwide.
3. Clone Markets
You enter a clone market when you have already established a successful business model in one market and now you try to implement the same model in another. Hence, you try to clone the success that you have achieved in one market to another.
While there are many advantages of the cloning strategy, there may exist some drawbacks too. Like, you may not find as much response and appreciation in the new market due to lesser elements of the existing culture and traditions in your product or service. You need to mold your services or products into the stature of the target market to generate effective results. Only then, the people will respond positively to your branding efforts.
Example of Clone Market
Baidu search engine is a successful example of a business that effectively cloned the model of Google search engine into the Chinese market. It has now almost 202 million active users in China creating around 16.4 Billion USD of revenue every year.
Another example is Flipkart. The Indian Online marketplace implemented the exact model of Amazon in the Indian market. It researched the traits and trends of the Indian market and found out that people there like to pay preferably on Cash-On-Delivery models as they were not heavy credit or debit card users. Flipkart’s value jumped over 40% in contrast to the previous year and it ranks in the 8th position in 75 most successful companies in India.
Other types of markets?
Some may ask, how many types of market are there? In some cases, the classification of markets is done differently. While there are three main types of market, as seen before (New Markets, Existing Markets and Clone Markets), some may want to answer the question of what are the types of markets by the different kinds of market structures available. In this kind of classification, we can find four popular types of markets such as perfect competition, oligopoly market, monopoly market, and monopolistic competition.
Final Words
Hence exploring different types of markets is always beneficial for the business that seeks to further expand their business activities and increase their revenues. But before entering a new market, you need to understand the concepts of the market structure, market segmentation, and marketing mix effectively. The three types of market which are new markets, existing markets, and clone markets allow you to segregate your preferences before entering any market and define your priorities and limitations considering your products or services. Various successful businesses like SpaceX and Facebook have tried various strategies to expand their business and build a strong brand image in their relevant markets. Consequently, expanding your business into new marketplaces is always beneficial if you have sound knowledge of all the required marketing techniques, terms, and processes.