Most small companies have plans to grow their business and increase sales and profits. However, companies must implement certain methods to implement a growth strategy. Common growth strategies in business include market penetration, product expansion, diversification, and acquisition. A company’s method to expand its business is largely contingent upon its financial situation, competition, and government regulation.
Define Growth Strategy
A growth strategy is a program to aid your business’s expansion. Instead of emphasizing immediate earnings, growth strategies frequently concentrate on increasing long-term market share.
Despite this, intense growth techniques designed to help businesses scale more quickly are becoming increasingly common in today’s market, which is undergoing rapid change.
Top recognized strategies for intensive growth are more broadly applicable than the others; however, there are several others.
What are the top 4 growth strategies?
Market Penetration Strategy
Market penetration is one corporate growth technique. When a small business decides to promote current products inside the same market it has been using; it employs a market penetration strategy. According to small business experts, expanding market share is the only way to expand using current products and markets. Market share measures how many units and dollars of sales a company generates compared to all of its rivals in a certain market. Lowering pricing is one strategy for gaining more market share.
Market Development or Expansion
Selling current items in a new market is a component of the market expansion growth strategy, also known as market development. If a small business discovers new applications for its product, it may also employ a market growth plan. A corporation may consider a market growth plan for several reasons. First, there could not be any place for expansion within the current market due to the level of competition. A company cannot boost sales or profits if it does not discover new markets for its goods.
Product Expansion Strategies
A small business may also add new features or broaden its product offering to boost sales and profitability. Small businesses that use product development, also known as product expansion, keep selling into the current market. When technology changes, a product expansion growth strategy frequently succeeds. Small businesses could also be compelled to launch new products as they replace outdated ones.
Development Via Diversification
Diversification is a component of growth strategies in business, and it entails a small organization selling new items to new markets. This kind of tactic carries a lot of danger. Meticulous planning is required if a small business chooses to employ a diversification growth strategy. Marketing analysis is crucial since a business has to know whether customers in the new market could be interested in the new products.
Additional categories of diversification include:
Ø Horizontal Diversification
This entails the business creating or acquiring new products to market to its current clientele. Current customers might be interested in these new products even if they are frequently technologically or commercially unrelated to current products.
Ø Vertical Diversification
The business moves into its customers’ or suppliers’ markets.
As an illustration, imagine starting to offer paints and other building supplies for your company’s home and office renovation work.
Ø Concentric Diversification
Concentric diversification refers to creating a new line of goods or services similar to an existing product line in terms of technical and/or financial aspects. Small manufacturers of consumer goods frequently employ this form of diversification.
Ø Conglomerate Diversification
When looking for methods to balance their non-cyclical and cyclical portfolios, large organizations typically employ them. This entails transitioning to new products or services that have no business or technological ties to the machinery, items, or methods of distribution now in use but may be intriguing to new clientele groups. This form of diversification is mostly motivated by the new industry’s high return on investment.
The Acquisition Of Other Companies
A business’s growth strategies may also involve acquisitions. A company acquires another business to broaden its operations. A small business might employ such a tactic to broaden its product offering and penetrate new markets. Risky, but not as risky as a diversification plan, is an acquisition growth strategy.
The fact that the market and products are already established is one factor. Because of the large investment needed to undertake an acquisition plan, a company must be crystal clear about the goals it wants to accomplish.
Even though you’re making significant financial commitments with any of the business growth strategies above-mentioned, your strategy needs to include some elements of flexibility. You can find that specific growth initiatives simply don’t generate enough market traction.
You’ll inevitably succeed if you keep improving the operations of your business growth strategies