The document discusses market development strategies and concepts. It covers reasons for market development, tools used like advertising and distribution, and outcomes such as increased sales and trial. It also discusses developing preference for products over alternatives, getting current users to consume more, and using products for new purposes. Key strategies involve setting objectives, determining appropriate tools and tactics, and assessing results to re-evaluate approach.

1. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 1
Market Development, Information, and
Bargaining Power
• Reasons for market
development
• Strategy in market
development
• Tools and outcomes
• Participation in
commodities market
development
• Bargaining power and
market “stabilization”
• Market information

2. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 2
define
• Market development involves creating or
expanding a market for new or existing products
and/or increasing the value of these products
• few consumers today are aware of the prickly
pear, however, but farmers who grow this cactus
plant

3. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 3

4. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 4
Promotion: Strategic and Tactical
Objectives
• Awareness
• Trial
• Attitude toward the
product
– Beliefs
– Preference
• Temporary sales
increases
Emerging
Markets/
New Products
Mature markets
/established
products

5. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 5
Marketing Strategy
MARKETING
OBJECTIVES
What we want to
accomplish
TOOLS
Use resources such
as distribution,
advertising, sales
promotion,
demonstrations
TACTICS
AND
ADAPTATION
Implementing strategy
as things change.
More tough choices!
CONSUMER/
MARKET
RESPONSE
Consumers or
intermediaries
respond
STRATEGY
How to best use
available resources
to accomplish objectives
under circumstances.
Make tough choices!
OUTCOME
Sales are influenced
(e.g., volume,
frequency, switching,
price sensitivity)
ASSESS AND RE-EVALUATE
ASSESS AND RE-EVALUATE

6. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 6
Strategies, Objectives and the Hierarchy of
effects
• The promotional activities needed for a given product will
depend on factors such as its current stage in the
product life cycle.
• Once more people know, a significant challenge is going
to get more people to actually try the product
• This may be difficult to accomplish because of the high
cost of the product and the vast number of choices of
other products that consumers can consume.
• There is simply not enough time or money to try
everything available.

7. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 7
Strategies, Objectives and the Hierarchy of
effects
• If a product category catches on, emphasis may
then need to switch to brand differentiation and
the firm may need to work on getting consumers
to hold favorable beliefs about their brand.
• In later stages of the product life cycle, where
most consumers’ opinions have largely been set,
temporary sales increases, usually through price
promotions, may be the only realistic objective.

8. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 8
Market Development: The Objectives
DECREASE CONSUMER PRICE SENSITIVITY
“Costs a little more, but it’s worth it” ● Zachy farms chicken ads
● Campbell’s soup ads
GET MORE PEOPLE TO BUY PRODUCT
Hungry Man dinners ● Hot Pockets ads ● Variety seeking advertising ● Spam luncheon meets advertising
GET PRODUCT USED FOR NEW PURPOSES
“Orange juice—it isn’t just for dinner anymore” ● “Beef—it’s what’s for dinner”
● Spam luncheon meets advertising ● Baking soda ads
DEVELOP PREFERENCE RELATIVE TO OTHER PRODUCTS OR BRANDS
Kraft cheese ads suggesting that Kraft has more calcium ● Total cereal ads suggesting vitamins
● “Coke is the real thing” ● “The Pepsi generation” ● “The night belongs to
Michelob” ● Florida orange juice “Maxwell—it’s good to the last drop”
● Progresso and Campbell’s soup ads
GET CURRENT USERS TO USE MORE
“Snickers satisfies you!” ● “Ask for A-1 Steak Sauce” ● “A sandwich just isn’t a sandwich
without miracle whip” ● “Beef—it’s what’s for dinner” ● “The Incredible, Edible Egg” ●
Fast food restaurant advertising

9. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 9
Market Development Issues
INCREASED
SALES OF
PRODUCT
DECREASE
CONSUMER
PRICE SENSITIVITY
GET MORE PEOPLE
TO BUY PRODUCT
GET CURRENT
USERS TO USE
MORE
GET PRODUCT
USED FOR
NEW PURPOSES
DEVELOP
PREFERENCE
RELATIVE TO OTHER
PRODUCTS OR BRANDS
DISTRIBUTION
ENHANCE-
MENT
ADVERTISING
SALES
PROMOTION
JOINT
VENTURES/
CO-
BRANDING
TRIAL
AWARE-
NESS
BUYING
CON-
VENIENCE
.“Big picture
only”—details
not important!

10. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 10
Strategy Issues
• Deciding on objectives
– Realism
– Suitability for
• Company strengths
• Competitor positions
• Market structure and change
• How much to spend on objectives
– Cost of advertising and/or other promotion relative to gains
– Most appropriate ways of achieving objectives based on
• Cost
• Effectiveness
• Synergy
• Consistency of objectives

11. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 11
Some Tools
• Advertising
– Awareness
– Trial
– Preference
– Reminder
– New uses
• Distribution
– Availability in
retail stores
– Quality of
placement within
retail stores
• Price/sales promotion
– Coupons
– Sales
– Value
– Premium
• Joint ventures/co-
branding
• Demonstrations
• Product investment
– Quality
– Differentiation
– Packaging
– Usability convenience

12. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 12
Setting strategy.
• Improving quality, for example, might be
achieved either by increased research and
development, the use of higher quality materials,
or by investing in new manufacturing technology.
• The most appropriate choice will depend on
factors such as cost and effectiveness, but may
also depend on risk.

13. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 13
Tactics and implementation.
• If a decision as been made to position a product
as a premium brand through advertising, specific
ads must be developed and tested and
appropriate media and advertising schedules
should be resolved.
• When implementation begins, results need to be
monitored.

14. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 14
Consumer adoption of new food products.
• One way to spread new foods is through
massive advertising. This strategy has been
used in marketing the Hot Pockets®
convenience products. Many foods also spread
as some groups of consumers “imitate” others
they see consuming them, and some are
encouraged to try new foods based on word-of-
mouth communication.

15. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 15
Consumer Adoptions of New Foods or New Food
Uses
ADOPTION BY
LIMITED GROUP
MEDIA
COVERAGE
INCREASING
ADOPTION/
ADAPTATION
PROMOTION
WORD OF MOUTH
OBSERVATION
TRIAL
TRIAL

16. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 16
Levels of market development.
• Development efforts may center at several
different levels.
• Florida orange growers—may want to promote
their food, hoping that preference will be
developed relative to other food categories
• Alternatively, development efforts can focus on a
branded product (e.g., Diet Coke®), a brand
(e.g., all Coca Cola ® branded products),

17. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 17
Commodities Market Development Programs
• Typically regional—e.g., Florida orange juice;
Idaho potatoes; Hawaiian sugar cane;
Washington Apples; Texas beef
• Intention is to differentiate
• Compulsory participation in advertising
programs
– Development is not worthwhile for the individual
farmer
– The individual farmer is assumed to benefit from
overall campaign

18. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 18
Level of Market Development
• Levels
– Commodity
• Differentiation from competing commodities
• Increase in demand for commodity
– Corporate product category (e.g., Coca Cola
drinks, including Dasani)
– Product category brand—e.g., Kraft American
cheese slices
– Brand (product line)—e.g., Kraft foods

19. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 19
Effects and Outcomes
SALES
Volumes
Prices
AWARENESS
PREFERENCE
USED IN
MORE
SITUATIONS
REDUCED
PRICE
SENSITIVITY
USED
MORE
FREQUENTLY
USE BY
MORE
PEOPLE
REPEAT
PURCHASES
TRIAL

20. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 20
Definitions
Innovation: “An idea, practice, or
product perceived to be new by the
relevant individual or group.”
Diffusion process: “The manner in
which innovations spread through
the market.”

21. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 21
To Adopt or Not to Adopt: How Will Consumers Answer
the Question?
• Some causes of
resistance to adoption
– Perceived risk--financial
and social
– Self image
– Effort to implement
and/or learn to use the
product
– Incompatibility
– Inertia/overwhelming
existing choices

22. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 22
Types of Innovations
• Fashions—tastes go
back and forth over
time—e.g., food fat
content
• Fads—product is “in”
for a short time and
then fades (e.g., ostrich
meat)
• Trends—consumption
of a food product either
increases or decreases
consistently over time

23. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 23
0
10
20
30
40
Numberofnewadoptors
-2.50 -1.50 -0.50 0.50 1.50 2.50
Adoption of Innovati
Innovators
2.5%
Laggards
(13.5%)
Early
majority
34%
Early
adoptors
(13.5%)
Late
majority
34%
Innovators and Imitators:
The Lifecycle of A Product

24. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 24
0
0.2
0.4
0.6
0.8
1
Percentdiffusion
0 5 10 15 20 25
Time
The S-Shaped Diffusion
100% adoption
or saturation
point
One Diffusion Pattern--Nicely Balanced...

25. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 25
Implications for Foods
• Many substitutes and individual tastes
• Trying new foods for variety is common
• Social opportunities for trial
• Food tastes tend to be “learned” early in life
– Best opportunities for spread are with younger
consumers

26. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 26
Influences on the Speed of Diffusion
• Risk to expected benefit ratio (relative
advantage)—usually not an issue for
foods
• Observability—is the product
consumed in public
• Product pricing—scarce foods are
“rationed” through cost
• Trialability—usually easy for foods
• Switching difficulties and learning
requirements/ ease of use—not a
problem for foods eaten out but may
be for foods to be produced at home

27. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 27
Pioneering Advantage
• Consumer expectations are usually shaped
by the first encountered brand
• Satisfying and awareness by consumers
• Order of entry vs. pioneering advantage
• Positioning of existing pioneer vs. strategy of
first entry

28. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 28
Bargaining Power
• Impact
– Price
– Conditions
• Returns
• Time of payment
• Interest or finance
charges
• Quality or other
adjustments
• Transportation or other
services
• Sources
– Size, number, and
concentration of firms
– Supply control
– Unequal information
– Diversification (?)
– Product differentiation
– Control of resources
– Financial resources
– Ratio of fixed to variable
costs

29. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 29
Marketing Orders and Agreements
• Mandates intended to “stabilize” markets
• Types of issues
– Grades, size
– Packaging
– Market allocation (quotas)
– Minimum prices
– Contributions to research
– Advertising (market development)

30. MKTG 322 MARKET DEVELOPMENT Sabry Shehata professor 30
Market Information
• Some issues
– Crop forecasts
– Demand forecasts—quantity
and prices
• Government information
programs
• Problems
– Price specification
(comparability of location,
time, and other factors)
– Net vs. gross prices
(allowances and discounts)
– Cost vs. accuracy of
information
– Changing market
orientation and scope of
market (proportion of
buyers and sellers involved
in open markets)
– Voluntary cooperation