Strategic Planning in the Small Business

Unit 3

HO 3-3

(continued)

In market development,

the business

attempts to

appeal to new and

varied market segments

whose characteristics

or demographics

differ from those

of established primary

markets.

Product

development stresses

variations or improvements

in the

firm's primary products.

In this

case,

current customers

are introduced to

the new and different

products in

the hope that the

positive

image customers

have of existing

products can be transferred

to the new

products. Note

that existing

products are not

changed, rather,

growth comes from

the same customers

purchasing

both the existing

products and the

new products.

One

of the key advantages

of developmental

postures is that

the business maintains

a high degree

of consistency and

stability while undergoing

change anJ

development for

growth. For example,

in product

development,

present customers

(with assumed loyalty)

are maintained

and targeted

while product

variations are

introduced. In

market development,

product variations

are

introduced. In

market development,

products remain

unchanged, but

new market segments

are

tapped. Therefore,

the business remains

somewhat secure

as proven products

ate emphasized.

The previous

example of Crystal

Rug Cleaners

also illustrates

the implementation

of a

developmental

posture. Once

Crystal Rug Cleaner's

single product

or market strategy

proved

effective, a developmental

growth

posture-that of

market development-was

considered.

The

middle-income

market

was targeted. Crystal's

basic strengths

of service, professionalism,

and

knowledge

of and attention

to proper cleaning

procedures

were maintained

and stressed in

advertising messages

geared to this

new market segment.

Of course,

care must be used

when

making such

a strategic change.

The business must

be sure that in addressing

new markets,

the

needs of

older established markets

are not neglected.

A developmental

posture does

add a fair

amcunt of

additional planning

complexity, however,

it is a logical

means of fostering

continued

growth.

The

Product Innovation

Posture

Initially, one may

question the distinction

between

product development

and innovation,

as the

two

do bear certain

common elements.

Product development

seeks product

variations and

improvements,

but involves

no overriding

change in the fundamental

product.

Product

inuovation,

on the other hand,

seeks a novel

alteration of the

existing product so

as to create

a

basic and significant

change in the

product. From the

consumer's perspective,

innovation

creates a new or

different product,

while product development

presents the

original product

with

scme changes.

Pearce and

Robinson (1985)

note that innocation

creates a product

so

significantly

novel that

consumers shift

preferences away

from existing products

and toward the

2

newer

ones.

Although

one may presume

that product

innovations are

outgrowths of larger

firms with well­

supported research

and development

staffs, many

contemporary product

advances

have come

from small,

entrepreneurial operations.

Advances

in microcomputer

hardware and software

are

2 John
A. Pearce II and
Richard B. Robinson,
Jr. Formulation
and Implementation
of

Competitive

Strategy, 2nd ed.

Homewood, IL:

Richard D. Irwin,

Inc., 1985, 221.

290