Strategy
/
What Are the 4 Types of Marketing Strategies? An Overview

What Are the 4 Types of Marketing Strategies? An Overview

Strategy
- 07/04/2024
-7:00 AM
-
- by Biz Econ Analysis

In a well-known Harvard Business Review article from 1957, Ansoff laid out four plans for growing a business. These are also seen as the four main types of marketing strategies¹. They are market penetration, market development, product development, and diversification. Each strategy focuses on either growing with current products/markets or finding new ones¹.

For anyone running a business, knowing these four marketing strategies is key to success. I’ll explain each approach in detail, including what each one involves and how to make it work¹.

Table of Contents

Introducing the Four Basic Marketing Strategies

Being an entrepreneur or a business owner, knowing the four main marketing strategies is key. It helps your business grow and find its audience. These strategies come from the famous Ansoff matrix. They guide you in choosing the best path for your business. You pick based on your goals and what the market is like².

Market Penetration, Market Development, Product Development, and Diversification

The key strategies are:

Market Penetration: It’s about selling more of what you already have to your current customers. This way, you lower risk because you’re focusing on what’s known².
Market Development: It’s selling your current products to new markets. It’s risky because it takes time to get noticed in new places².
Product Development: Creating new products for your current customers. It means investing in research and new developments².
Diversification: It’s about selling new products to new markets. It’s the riskiest because you’re starting something totally different².

Knowing these strategies and picking the right one can make your business a success. It’s about understanding what each one offers and risks. Then, you can put together a marketing plan that leads to long-term success².

Market Penetration Strategy: Selling Current Products to Existing Customers

A market penetration approach is all about selling what you already have to people who already buy from you³. Its goal is to make these customers more loyal, draw customers from competitors, increase how often your product is used, and even turn non-users into buyers³. This approach involves improving your marketing messages, making your products easier to find, finding new ways for people to enjoy your product, and using special deals to attract attention³.

Market penetration checks how much your product is used against the total possible market³. It helps a company keep track of how well it’s doing, what they need to work on, and if they’re making enough money³. For example, companies use it to see if they can reach the earnings they hoped for³.

Typically, consumer products reach about 2% to 6% of homes or people⁴, but things for other businesses may be better, with 10% to 40% being common for them⁴. Apple and Samsung, for instance, have touched 37% of the world’s smartphone market, with Apple capturing 17% on its own and Samsung with 20%⁴.

This type of strategy is often seen as a safer way to grow than trying to make new products or find new markets³. It can involve buying other companies, keeping your prices low, working harder to sell, and making your product better⁴. By checking how well this works every time, a company can figure out what to do next to keep growing⁵.

A strong market presence shows that a company is leading the way in its industry. This comes with well-known products, a recognized brand, and the power to affect how things are made and sold⁵. To keep up this lead, companies can change their prices, change how they promote their products, start selling in new areas, make friends with other businesses, buy other companies, thank their loyal customers, come up with new ideas to sell their product, or give their sales team a push⁵.

The Ansoff Matrix highlights market penetration as a key way for businesses to grow⁵. Dunkin’, for example, has done really well by having lots of stores in places where people really love their coffee, like in New England⁵.

Market Penetration Rate	Typical Range
Consumer Products	2% to 6%
Business-to-Business (B2B) Products	10% to 40%
Smartphone Industry (Apple and Samsung)	37% (Apple 17%, Samsung 20%)

³⁴⁵

Market Development Strategy: Expanding into New Markets

Market development is crucial for marketers. It’s about selling your current products to new customers or locations⁶. This way, you grow your customer base and business without creating new products or services from scratch.

Entering New Geographic Regions and Modifying Products Accordingly

Expanding into new locations is a key strategy. You take what you already make or do and offer it in new places⁷. This might mean changing your products to fit the local market better, like adjusting features or prices⁶.

Take Uber and the NBA, for instance. They’ve done this very successfully by entering new markets. Uber now operates in more than 700 cities worldwide after starting in 2009⁷. The NBA, on the other hand, is loved in China and worth over $4 billion there⁷.

To develop markets effectively, you need a solid plan and ongoing monitoring. Market research, buyer personas, and surveys are vital tools for success⁶. They help you spot new chances and check if expanding makes sense.

By using your existing products in new ways, you can find more customers and grow your business⁶. This method reduces the risks linked with creating new products. It’s a smart way to expand and succeed⁷⁶⁸.

what are the 4 types of marketing strategies

In our competitive world, knowing the basics of marketing strategies is key to business growth. The Ansoff matrix, created by Igor Ansoff in 1957, shows four key ways to expand a company⁹.

Market Penetration: This strategy focuses on selling more of your current products to your current customers. It helps you gain a bigger share of your market⁹.
Market Development: This method aims to find new customers by offering your current products to new places or people. This could be in new areas or with different types of customers⁹.
Product Development: With this approach, you create new products to sell to your current customers. You’re looking to grow by giving your customers something new that they’ll need⁹.
Diversification: The riskiest but most rewarding, this involves selling new products in new places. It allows you to find new opportunities and grow beyond your current market and product line⁹.

Knowing these strategies helps businesses focus their growth plans. By picking the right path, they can make the most of their strengths and resources⁹.

Choosing the best marketing strategy depends on your company’s goals and the competition you face. By carefully looking at these issues, you can make a plan that leads to lasting success⁹.

Product Development Strategy: Creating New Products for Existing Customers

Bringing in new products for your current customers is a great way to grow your business¹⁰. You already have a connection with these clients. This lets you see what they need now. Then, you can make new, exciting products that they’ll love. This makes their connection to your brand stronger.

Creating new products goes through many steps, including¹⁰ coming up with ideas and testing them. It also involves making samples and seeing if they work well. Then, you launch them, tell people about them, and keep track of how they’re doing. This way, you know your new line fits your customers’ wants and your business goals.

Leveraging Existing Customer Relationships to Cross-Sell or Upsell

One big plus of making new products is the chance to sell more to your current customers¹⁰. You can do this by seeing what they need and want. Then, you create things that go well with what they already buy. This makes their shopping experience even better.

Dunkin’ Donuts started in New England but is now all over the U.S. It used its fanbase to reach new customers with its products. And Ford named its electric car Mustang Mach-E, tying it to its famous sports car. This way, it attracted more of its loyal customers.

Listening to feedback and improving products also keeps customers happy¹¹. When Nissan saw people wanted electric cars, they made the Leaf. This choice helped them lead the electric car market in the U.S. from 2008 to 2019, selling many cars. It proves that making changes based on what people want can lead to big wins.

Always making your products better and following market trends helps keep your customers happy and your brand strong¹⁰. For example, Somos started making Mexican food to meet a growing trend. They saw more people were enjoying cooking different cultural foods at home. So, they offered products that met this new demand.

Diversification Strategy: Introducing New Products to New Markets

Diversification means trying new products and markets¹². It’s about learning new skills and knowledge. This is the riskiest way to grow a business, says the Ansoff Matrix¹². But, it can lead to great chances to reduce risks, capture new market trends, and connect with what a business already does¹².

There are different types of diversification¹³. One is putting similar products near ones you already sell. This uses what you’re already good at. Another type is selling new things to the people who already buy from you. The most daring type – conglomerate diversification – adds things very different from what you normally do¹³.

Diversification Strategy	Key Characteristics	Potential Advantages	Potential Risks
Horizontal Diversification	Entering new, unrelated markets with new products	Overcome competitive challenges Expand marketing reach	Increased regulatory scrutiny Resource depletion due to rapid growth
Vertical Diversification	Integrating forward or backward in the supply chain	Eliminate reliance on suppliers Generate economies of scale Gain competitive advantage by controlling the supply chain	High initial expenditure Diversion from core business Cultural integration challenges
Concentric Diversification	Adding similar products or services to the existing business	Tap into underutilized resources Optimize infrastructure Enhance market share with less investment	Demand skills beyond current team’s expertise Risk resource depletion Reduce adaptability to market changes
Conglomerate Diversification	Adding new, unrelated products or services	Create unique revenue streams Revitalize a brand Attract new audiences	Dilute the existing brand Face challenges in brand perception Experience profit depletion from the existing product line

Diversification has its dangers¹³. The biggest risk is with conglomerate diversification. This is when you add things very different from what you do. It’s expensive in research and advertising. And it often doesn’t work out¹³.

But, if it works, the rewards are big¹³. It can protect against bad times, offer more to customers, and help stand strong against rivals¹³. For companies with slow growth, it’s a way to use their extra money better¹³.

Companies can check if a diversification plan is smart. They use tests like seeing if it’s attractive, the costs, and if it adds value¹³. These tests make sure the new step fits with the company’s goals and gives them an edge¹³.

Think about Apple. They moved from computers to phones. Canon, from cameras to office gear¹². Even though it’s risky, careful diversification can bring big success¹².

Outbound Marketing Strategies: Reaching Out to Customers

In marketing, outbound strategies are key for engaging directly with possible customers. This includes ads, video ads, and contacting people directly¹⁴. They aim to get a wide audience’s attention and start important talks. Compared to inbound approaches, outbound methods often show results more quickly. For example, while inbound might take half a year to a year to work, outbound can show its impact in just 1-3 months¹⁴. Outbound marketing is also easier to measure the outcomes of, compared to inbound tactics¹⁴.

Paid Advertising and Video Ads

Things like display ads, social media ads, and SEM can make a brand visible to potential customers fast¹⁵. The field of digital advertising has grown a lot, with options like SEM, display ads, and native ads¹⁵. Then, there are video ads. They make use of the popularity of videos to present products and services in an attractive way¹⁴. These methods give businesses direct control over how they present themselves to their audience. This is unlike the focus of inbound marketing, which aims for long-term relationships with customers¹⁶.

Other Direct Approaches

Cold calling, email marketing, and participating in events all fall under outbound marketing too¹⁵. Cold calling is a tough way to convert prospects into customers. This is because of things like do not disturb services and people not wanting to take calls¹⁵. While there’s a debate whether email marketing is inbound or outbound, it’s considered outbound because the sender starts the conversation¹⁵. Events and tradeshows are great for meeting people face-to-face. They give a chance to make leads or retain existing customers¹⁵.

By using various outbound strategies, companies can get in touch with their audience, increase their brand’s visibility, and start important conversations¹⁶. For an outbound campaign to succeed, it’s important to track metrics and set clear goals. It’s also vital to continually refine strategies for the best outcomes¹⁶.

Inbound Marketing Strategies: Attracting Customers to Your Brand

Marketing is changing. Now, companies are using inbound strategies to bring customers in, rather than pushing out. This method makes customers the focus, working to interest and make them happy with what they find. It involves four key steps: attract, convert, delight, and engage¹⁷.

Search Engine Optimization (SEO) and Social Media Presence

Two main factors drive a successful inbound marketing plan: SEO and social media strength¹⁸. SEO helps in making your brand easy to find online through practices like using the right keywords. It includes on-page and off-page optimizations¹⁸. A strong social media presence also boosts your efforts by funneling more visitors, interacting with possible clients, and spreading brand awareness¹⁷.

It’s vital to create top-notch content tailor-made for your audience¹⁸. By understanding your customers’ needs and guiding them through their buying process, you add real value. Always reviewing your content’s impact and making updates helps keep your strategy effective¹⁹.

Inbound marketing is gaining popularity for many good reasons¹⁹. It builds brand loyalty, offers a strong ROI, has high conversion rates, and is cost-effective. Even though creating content demands careful planning, the benefits of gaining loyal customers over time are worth it. This makes it a great choice for those working with smaller budgets, like new businesses¹⁹.

With a focus on SEO, social media, and custom content, companies can draw in customers and form strong, lasting partnerships. Choosing the inbound marketing path can truly set businesses apart in a crowded market and help them flourish¹⁸¹⁹¹⁷.

The 4 Ps of Marketing: Product, Price, Place, and Promotion

The four Ps of marketing are product, price, place, and promotion. They help companies market their goods or services well. This approach has been key since the 1950s, thanks to experts like Neil Borden and E. Jerome McCarthy²⁰.

Product means what the offering has, like its design, features, and brand. The price can influence how many you sell. For example, Walmart draws in budget-conscious shoppers with cheap prices. On the other hand, Saks Fifth Avenue keeps its prices high for luxury buyers²⁰. Items are often priced at $9.99 to seem less expensive²⁰.

Place considers where and how the product is sold. It could be in a store, online, or at events. This affects how you reach customers and handle shipping²⁰. Today, businesses can sell anywhere, from stores to food trucks²⁰.

Promotion is how you tell people about the product. It includes ads, public relations, and media planning. A good promotion strategy turns potential buyers into customers. It can make or break a product’s success²⁰. Promotion methods vary, like national ads for McDonald’s or website discounts for small businesses²⁰.

The four Ps work like a team to market something effectively. They support each other for a complete approach. Every industry uses the Ps in its unique way. For instance, the music industry offers different formats. Meanwhile, fashion serves varied styles through its pricing and sales²⁰.

Element	Description	Examples
Product	The key characteristics and qualities of the offering, including features, design, and branding.	Physical product attributes (size, color, materials) Packaging and labeling Brand identity and positioning
Price	The value proposition and appropriate pricing strategy to attract target customers.	Cost-based pricing Value-based pricing Psychological pricing (e.g., $9.99)
Place	Where the product will be available and how it will be displayed to the target market.	Brick-and-mortar stores E-commerce platforms Pop-up events and specialized venues
Promotion	The advertising, public relations, and media strategy for introducing the product to consumers.	Advertising (TV, print, digital) Sales promotion (discounts, coupons) Public relations (press releases, events)

The four Ps help companies create and follow through with their marketing plans. This way, their products or services are marketed right. They are well priced, distributed, and promoted to connect with the target group²⁰²¹.

Pillar-Based Marketing: A Powerful SaaS Marketing Strategy

As a SaaS marketer, I’ve found pillar-based marketing (PBM) very powerful. It helps build authority and attracts the right leads. PBM focuses on creating content around key topics. This shows search engines your brand is a top source. When your SaaS is seen as a trusted choice, customers remember you come buying time²².

Building Authority and Attracting Qualified Leads Through Content

The secret to PBM success is making detailed, quality content. This content should solve your audience’s problems. A strong content strategy shows off your knowledge. It makes your brand the first stop in your industry.

PBM excels at bringing in the right kind of viewer²². When your content is at the top of search results, it pulls in people actively looking for answers. This translates to more people likely to buy.

Also, PBM boosts your brand’s standing and reliability²². Sharing helpful, smart content positions your SaaS as a leader. This builds trust with potential customers. They’re more inclined to pick you over others.

For a good PBM strategy, you must dig into research and understand what your audience needs. Then, make a plan that covers those needs well²³. Don’t forget to keep your content fresh and effective. This keeps the leads coming.

In summary, PBM is a potent strategy for growing your SaaS business²⁴. Investing in content that positions your brand as the go-to choice pays off. It prepares your SaaS for success in the long run.

Synergizing the Marketing Mix for Maximum Impact

For a big effect, companies need to blend marketing components well. They should mix paid ads and SEO²⁵. Pillar-Based Marketing helps too. It generates authority and brings in interested customers with its detailed, linked content²⁵. By combining these methods, firms make a solid, effective strategy to connect with and interest their target group.

The 4Ps – product, price, place, and promotion – are used well by top names like Starbucks for major wins²⁶. Starbucks has a vast menu with unique coffees, teas, and baked goods, showing off new products and custom options²⁶. It uses various pricing levels to meet various shopper types, keeping value and profit in mind²⁶. Also, Starbucks locates its stores in busy spots like city centers, shopping malls, and near transport, making them easy to get to²⁶. It also uses various promotions, advertising, and online engagement to grab its audience’s notice and build loyalty²⁶.

Today, online marketing is key. Channels like targeted ads, emails, and chats are a must²⁷. Email is really good for turning leads into sales²⁷. Events, in-person or digital, allow direct contact and talking²⁷. Connecting all these platforms – paid, owned, and earned media – boosts your reach and lets you learn from each channel²⁵. This complete media approach makes marketing efficient and louder across all media, boosting brand awareness and business success²⁵.