How To Craft a Market Development Strategy in 2025

Say you’re planting your backyard vegetable garden, and you want to maximize yield. You could up the density of your tomato plants or mix in some higher-calorie options like sweet potatoes or squash. Now imagine that there’s an abandoned lot next door, and your squash vines are just starting to creep across the border. Are there any other growth strategies that come to mind?

Like gardeners, business owners use multiple strategies to maximize returns. For businesses, this option is known as a market development strategy.

Here’s an overview of the different types of market development and how to build a successful market development strategy for your business.

What is a market development strategy?

A market development strategy (or market expansion strategy) is a type of business growth strategy in which a business expands by selling its existing products or services to new customer groups, also referred to as new markets or new market segments. Market development strategies can involve selling in new geographic areas, targeting different consumer demographics, or introducing new use cases for existing products. 

Types of market development

An effective market development strategy can help you earn more leads, increase sales, and boost revenues. It also increases resilience by distributing gains across multiple consumer segments, providing a durable competitive advantage that can position you for long-term business growth. Here are three strategy types:

Geographic expansion

Selling products or services in a new geographic area is a classic market development strategy. For brick-and-mortar businesses, it typically involves opening new locations. For ecommerce businesses, it can mean selling in international markets or using targeted marketing campaigns to earn market share in new regions.

Demographic expansion

Another way to reach a new market is to target a new customer demographic. This strategy can involve developing marketing materials for previously untapped customer groups or tweaking product offerings to increase their appeal to a broader range of potential customers.

Industry or use case expansion

This strategy involves positioning your product or service as a solution to a different type of problem. A wedding planner might expand into corporate events, or a company selling indoor air filters that mitigate seasonal allergies might market its products as a solution to wildfire smoke. Use case expansion requires an investment in marketing and industry research, and some businesses also adjust their product offerings based on new customer needs.

Popular market development tactics 

• Strategic partnerships
• Competitive pricing
• Licensing or franchising
• Product adaptation

These four tactics can support your market development efforts:

Strategic partnerships

Partnering with other businesses can help you tap your partner company’s customer base and marketing infrastructure to introduce your brand to a new customer segment.

For example, mattress brand Polysleep partnered with local retailers to get its products in front of in-person shoppers—a critical brand strategy, according to cofounder and CEO Jeremiah Curver. “We’re in an industry that’s extremely competitive, and margins are under pressure,” Jeremiah says on Shopify Masters, adding that customer acquisition costs are high and online-only retailers struggle to compete. “When someone sets foot in a retail store specialized in selling mattresses, if we’re not there, odds are that we’ve pretty much lost that person,” he says.

Polysleep decided against operating its own physical retail space due to the challenge of maintaining an expert in-person staff. Instead, the brand formed strategic alliances with major brick-and-mortar retailers to increase exposure to its products, a strategy that Jeremiah says has paid off. “We know we have the best products, so I’m more than happy to be put in a competition with other brands,” he says, adding, “So far, it’s working.”

Competitive pricing

Adjusting your pricing strategy can help you attract new audiences and increase market penetration. Consider economic conditions and social factors, such as demand for your product type and cultural expectations around cost, and adjust your prices based on what you learn. You might move from subscription billing to a la carte or combine two product offerings into a single higher-priced unit. You can also lower prices, but look for corresponding ways to scale down what you offer—especially if your existing customers can participate in the new market. A performance sunglasses retailer that starts selling the same product at half price for casual street wear risks eating into its profit margins and reducing perceived value for existing customers.

Netflix’s India strategy is one example of how businesses adjust pricing for new markets. The company launched in India in 2016 at 500 RS ($5.83) a month, but it has more than halved prices since then. As of 2025, the Standard plan costs just $2.32 monthly. Bloomberg cites this change as a response to the market’s “massive price sensitivity,” adding that Netflix has also experimented with strategic alliances and bundling. In 2023, the company partnered with India’s leading cell service provider, Reliance Jio, in a bid to gain market share by combining streaming services with a familiar utility. The companies’ joint plan costs $5 a month and includes talk, text, data, and streaming.

Licensing or franchising

Licensing or franchising involves parent companies making agreements with franchisees who can use their intellectual property to make money in a new target market. This allows businesses to enter new product categories or geographical regions without massively scaling operations. However, the parent company typically earns an upfront payment and ongoing royalties, rather than the full profits from the business.

Brand licensing is a particularly popular market development strategy for entertainment industry companies. Consider Mattel: In the run-up to the 2023 Barbie movie, Mattel announced licensing agreements with brands like upscale department store Selfridges, DTC furniture retailer Joybird, insurance provider Progressive, and fast-food staple Burger King, boosting the company’s earnings and adding multiple revenue streams across diverse customer segments.

Product adaptation

Market development focuses on selling your existing products to new customers or segments instead of launching new ones. Market development can involve tweaking your existing products to make them more appealing to new consumer groups or positioning them differently to appeal to a new audience. A fitness apparel company might add Gen Z–friendly colorways to appeal to a younger customer base or launch its bestsellers in camouflage and fluorescent orange to target customers interested in hunting.

The practice of altering existing products for a new country or region is known as localization, and it’s popular with international retailers like Swedish furniture giant Ikea. After a failed attempt to enter the Japanese market in 1986, IKEA conducted extensive research into the needs of Japanese consumers, visiting more than 100 Tokyo homes and reviewing tens of thousands of photos of living spaces in the country. It relaunched successfully in 2005 with localized product systems designed for the compact living spaces common in the country.

How to develop a market development strategy 

1. Set goals
2. Determine the budget
3. Analyze current markets and revenue streams
4. Identify potential target markets
5. Choose a market development strategy
6. Conduct market research and plan for implementation
7. Launch in new markets and monitor results

The term “market development strategy” can refer to either the process of identifying markets for entry or the process of entering new markets. For planning purposes, it typically refers to the former: A written market development strategy is an internal company tool that clarifies how expansion into specific markets can help a business reach its goals. Many also include action plans that outline the steps required for market entry.

Here’s how to develop an effective market development strategy for your company:

1. Set goals 

Your market development strategy is a subset of your overall business strategy, so start by setting goals that ladder up to your broader business objectives. Common examples include improving short-term profitability, increasing business resilience, and laying the groundwork for long-term growth.

Your goals will guide your market development efforts, helping you choose a strategy, identify growth opportunities, and measure success later on. Use the SMART goal framework, setting goals that are specific, measurable, attainable, relevant, and time-bound. Make your goals useful and actionable, but don’t let the need for specificity discourage long-term planning. If you’re targeting long-term business expansion, your SMART goal might be to identify four new markets by the end of the calendar year.

2. Determine the budget

Market development requires time and money, so set a budget for your development efforts by considering your available resources and business priorities. If you need to boost profits in the near term, you might set a relatively limited budget and focus on strategies that offer a short-term return on investment (ROI). If you’re planning for long-term market expansion and have the resources to fund a multi-year runway, you might set a larger budget to accommodate strategies with high up-front costs and the potential to deliver significant value over time.

3. Analyze current markets and revenue streams

Market research helps you understand what customers need and how you provide value to them, and you’ll return to it multiple times as you build your market development strategy. Start by asking yourself which markets generate the majority of your revenue and in which markets are you underperforming? Then consider each answer from a geographic, demographic, and use case perspective: 

Geographic

Consider what drives revenue in your top geographic markets. Does it have to do with where you’re located or how you market your products? Or is there something about climate, culture, or population that drives demand for your products in specific locations? Then compare markets that bring in little or no revenue with these top-performing regions to identify differences, considering your brand’s presence in the market and climate, lifestyle, and demographic factors correlated with success.

Demographics

Repeat the same process with demographic groups, considering your efforts to reach key segments and the needs and preferences that drive demand. If any of your demographic target markets are underperforming, determine what makes them different from high-performing markets.

Use case

What problem does your product solve for your current customers? What problem motivates them to purchase? How do the answers align with your unique value proposition and selling points? On the flip side, which use cases or selling points aren’t catching on with your customers?

4. Identify potential target markets

Use the criteria you identified in the previous step to identify promising markets you don’t yet serve. Focus on previously unexplored markets—trying to boost sales in an underperforming segment is a market penetration strategy, not a market development strategy.

Here’s how to build your list:

Geographic

Consider regions you aren’t actively targeting and those you’ve intentionally excluded. If customers in certain markets can’t order your products, note why, and see if conditions have changed. Common reasons for market exclusion include prohibitive shipping costs, regulatory barriers, perceived lack of market fit, and the desire to maximize the impact of limited marketing resources.

Demographics

Repeat the process with demographics, including customer groups you aren’t actively targeting and any groups you’ve intentionally excluded.

Use case

If any surprising use cases surfaced during your audience and market analysis, note them here. Then ask yourself what other problems your product could solve. If you’re stuck, try listing similar contexts or similar user groups and considering whether your product or service could meet their needs.

Your list doesn’t need to be particularly granular or parallel at this point; use this as a forum to brainstorm. You might include European markets, younger customers, single parents, and Philadelphia on the same list if each one surfaced during the research and analysis phase.

You can also explore strange patterns or outliers in your customer data to investigate market potential. Purchases from demographics you don’t typically serve or unusual order volumes or frequencies can point to use cases you haven’t identified or segments you aren’t yet targeting. A perplexing number of small-sized orders of heavy-duty overalls might mean that a workwear company has become popular with middle and high school–aged girls, for example.

5. Choose a market development strategy

Once you have a list of promising growth opportunities, consider how each type of market development strategy serves your goals. This is a quick way to narrow down your list—you may be able to take full strategies off the table based on resource requirements or time to ROI. Here are a few factors to consider:

Domestic expansion

Identifying new cities or regions to target can be one of the quickest paths to a strong ROI on a market development strategy. In many cases, you can reuse existing marketing strategies, production infrastructure, and distribution channels with your new target audience. A US-based ecommerce company that effectively targets 10 major population centers in the Northeast and upper Midwest could drive revenue growth by identifying five similar markets in the mid-Atlantic and Southeast, for example.

International expansion

Venturing into international markets can give you access to a large volume of potential customers, but it’s typically a longer-term business growth strategy. Unless you’re considering licensing or franchising, you’ll likely need to invest significant resources to gain meaningful market share overseas. Upfront costs include international warehousing or manufacturing, localizing marketing strategy, and establishing international distribution channels.

Demographic expansion

Demographic expansion can use existing production and distribution infrastructures, but it often requires reworking your product positioning and marketing strategies based on the marketing channels and messages that motivate your new target audience. It can also provide access to a large number of new potential customers, and subsequent geographic expansion can compound any gains.

Use-case expansion

Serving a new use case can be a major change—in some cases, it’s almost like running another company. You might need to adapt your product, create a new branding and positioning strategy, and conduct extensive market and industry analysis to understand the needs of your new target audience. It can also position you for significant growth and spread risk across industries, increasing resilience by insulating you from industry trends that negatively impact performance in one market.

Use this information to eliminate strategies that show potential but aren’t a fit for your current goals and resources, keeping in mind that there’s a lot of individual variability in costs, payout horizons, and profit potential. Say you discover a disruptive new use case, but your goal is short-term returns, for example. You may be able to access investment capital up front or form a strategic alliance that reduces time to market.

Consider your business assets, too. An office in another country, an employee with extensive experience in another industry, or a cross-border selling system like Shopify Markets can change your cost-benefit analysis by significantly reducing the barrier to entry for certain strategies.

6. Conduct market research and plan for implementation

By now, your list represents good-fit markets that are appropriate to your market development goals. Conduct preliminary research into the profit potential and estimated cost of entry for each market, and prioritize your remaining options.

Then select your top market and build your implementation plan. Start with in-depth research into your new customers. Use primary sources (like focus groups, customer surveys, or interviews) and secondary sources (like reading trade journals, government publications, and reliable research reports) to learn more about what new customers need and how to serve them. Then outline the step-by-step process of launching in your new market, including information about distribution tactics, pricing, and marketing efforts.

Specifics will vary depending on your business model and the market development strategy you’ve chosen, but most market development plans include the following steps:

• Finalize new market research

• Draft a new unique value proposition (if applicable)

• Set market-specific goals and identify key performance indicators (KPIs)

• Select distribution channels

• Determine your pricing strategy

• Create a marketing strategy

7. Launch in new markets and monitor results

Launch your plan, and use the KPIs identified in your market development plan to evaluate your performance. Compare outcomes to your market development strategy goals, too. If your goal was to boost revenue by 20% within two years, gauge whether you’re on track to do so with your newly entered market. If not, you might adjust your strategic goal based on what you’ve learned or repeat the implementation process with another high-priority market to further increase revenue.