CMOs in the US are budgeting more for market penetration than market development, according to the latest edition of The CMO Survey [pdf]. More than three-quarters of spending in the past year has been devoted to growth strategies designed around new and/or existing products and services in existing markets, compared to slightly less than one-quarter being devoted to growing new markets.
That aligns with recent research from Deloitte and The CMO Council, in which just 1 in 4 marketers surveyed had plans to turn to global market expansion as a growth factor, and only 1 in 8 (13%) planned to identify new opportunities by focusing on underdeveloped or overlooked markets.
Existing products and services are prioritized over new ones, too, the latest CMO Survey found. Slightly more than half (53%) of spending has been on existing products/services in existing markets, compared to about one-quarter (24%) going to new product/services in existing markets.
There’s not as much of a gap in new markets, though. Spending only slightly favors growth strategies surrounding existing product/services (13% share) over new products/services (10%) when dealing with new markets.
An analysis of growth strategies across B2B and B2C company types reveals that these priorities are largely consistent across them. B2C companies, though, tend to spend a little bit more of their budgets on diversification (new products/services in new markets), whereas B2B firms tend to put a little more into new products/services in existing markets.
Growth strategies – which largely focus on existing rather than new products – may reflect what CMOs think their customers want. Asked what their customers’ priorities would be in the next year, CMOs defaulted most to superior product quality (33% share) and excellent service (23%) as opposed to superior innovation (15%).
It is worth noting, though, that product companies are more apt than services companies to believe their customers value superior innovation. Services companies, for their part, are more likely to believe that their customers place importance on trusting relationships, with both results fairly logical in the context of what is being marketed.
There has been a slight shift in the past year, however, from developing new markets to spending on new products and services in existing markets. Research indicates that leading disruptive innovation isn’t high on the list of CMOs’ most important roles, but introducing new products and services in existing markets does seem to be capturing more energy than developing new markets.
That’s also reflected by other spending strategies: after all, CMOs estimate that fully 85% of their budgets are spent on domestic markets.
About the Data: The results are based on a survey of 324 top marketers at US for-profit companies, 95% of whom are VP-level and above. Roughly two-thirds are B2B-focused, and a majority (57%) have more than $100 million in sales revenue.