A marketing strategy is the firm's roadmap to success. It is based on an analysis of internal strengths and weaknesses as well as marketplace opportunities and threats. The strategy identifies not only the company's goals, such as revenue or profits, but also how it plans to achieve them. Four generic alternatives include market penetration, market development, product development and diversification.

Market Penetration

Market penetration is a strategy aimed at building sales among customers who already purchase the firms' products. It assumes that these buyers can also be convinced to buy the same goods in larger volume or with increased frequency. For example, bookstores try to entice readers to buy multiple books at once. Restaurants push drinks and desserts along with entrees. Market penetration strategies are commonly implemented through discounts, advertising and other promotions targeted to repeat purchasers.

Market Development

If the firm believes there is untapped potential in the marketplace for its products, it may choose a market development strategy. This means pursuing new customers for existing products. One common approach to market development, used aggressively by companies like Starbucks and McDonalds, is expanding distribution to a region where the firm has had no presence. Another is promoting new uses for existing products, like suggesting the use of soup mix as a general flavoring ingredient.

Product Development

This alternative means creating new products for current customers. It enables marketers to build on its knowledge of existing buyers, as well as build on present networks of salespeople, vendors and distributors. For example, Dunkin Donuts used a product development strategy when it introduced gourmet coffees to compete more effectively with Starbucks. Fast food companies have also chosen this approach to add salads and other healthy selections to its original hamburger-based product lines.


A diversification strategy is generally considered the most risky alternative, because it involves both creating new products and seeking new customers. Marketers must carefully study the competition as well as the needs and wants of people they have not previously served. However, diversification can pay off handsomely for firms that carve out a niche in a promising market. For example, Disney successfully diversified its entertainment business into cruise lines and various real estate ventures.