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It doesn’t matter if you are a small start-up, a large business, or if you are still at the planning stage of starting a business; you’ll always need a growth strategy. Using one of the three growth strategies discussed in this article will help you take your business to the next level. We will explain the steps you need to take to create a growth strategy for your own business to help you achieve long-term success.
What Is A Growth Strategy?
A company’s growth strategy is a series of tactics designed to help the company increase its market share. It can include evaluating your products and services and examining how you can promote them better, such as through advertising, customer reviews, sales outreach, marketing, and so on. Growth strategies are the techniques used by companies to expand their scope. A growth strategy is an action plan that allows you to achieve a higher level of success than your current business strategy or market development strategy.
Importance of a Good Growth Strategy
A good growth strategy for your company will not only increase your profit in the long term but will also help you create a competitive advantage over your competitors. Growth strategies are important because they encourage companies to pursue goals that go beyond what is happening in the market today. However, to determine and track growth and performance, it is equally important to use growth indicators and figures when setting goals for your company. Before you start, you should cover how you measure growth and what you want to do to implement these strategies so you can track how well they work. Growth can be measured in terms of sales, profit, as well as a range of other metrics relevant to the type of business. Concrete growth strategies are a crucial cog in the business and are important to consider in decision making and in support of your marketing strategies.
Types of Growth Strategies
Since there are different types of business strategies available to you, you want to choose the growth strategy that is most appropriate for your business. It is important that you move forward with your growth strategy quickly because the variables you choose can change. Changes in the market for example, can lead you to move on to your next strategies if you devised a strategy for a specific market trend.
Market Penetration Strategy
A small business uses a “market penetration strategy” when it decides to sell more of its product in the same market it already uses to achieve a larger market share and more customers from its competitors. Planning and implementing growth strategies to tap into new markets and expand business before the current market flattens will help it get through the difficult times and could also give you a significant head start over the competition. If a company’s growth strategy is implemented effectively, it will attract more customers, generate more revenue, open the door to future investment, help companies tap into new business opportunities, and help them expand their market share.
According to the experts on small businesses, the only way to grow in an existing product market is to increase market share, and that is the main objective of the market penetration strategy. Market share is the percentage of revenue a company holds in a given market compared to other competitors. One way to increase market share is to reduce the price. In markets where there is little difference between products, introducing a lower price can help the company increase its market share. Most companies increase the market share of their existing products and services when they increase the percentage of total sales of a particular product or service. If you know how much of the market you own, and which part of that market is currently undersupplied, you can identify opportunities in your market.
Market Expansion Strategy
Market expansion, often referred to as market development, involves selling current products to new markets. There are several reasons why a company could consider an expansion strategy for the market. Most small businesses have a growth strategy to expand their business and increase turnover and profits. However, there are certain methods that a company must use to implement its growth strategies. The way the company expands its business depends largely on the size of the company, the number of employees it has, and other factors such as its customer base, marketing strategy, and so on. You can develop a market expansion growth strategy by selling new products and services to the current market. Market development and growth strategies adapt marketing and sales strategies to sell people the new product or service, as well as the company’s current products or services. This strategy can be useful to combat many issues. Firstly, competition could arise because there is no room for growth in the current market. Secondly, if a company cannot find new markets for its products, it could increase sales and profits. Small businesses can also pursue market expansion strategies to find a new use for their products.
Is there a way to expand your offer and increase your turnover? There may be a niche that is well served by very few where you can expand your offering and increase sales. It could be that your product or service is linked to a product you are now offering, and you have not taken into account how sometimes the problem of a new market is solved with exactly the same offer. For example, a new product takes up a small percentage of the total market share of a particular product. Small businesses can expand their product range and add new features to increase sales and profits, or they can continue to sell into existing markets by pursuing a product expansion strategy, also known as product development. Growth strategies for product expansion often work well when technology changes. It forces small businesses to add new products when the old ones are outdated, as in the case of computer systems.
Diversification
Growth strategies for the economy include diversification, with small businesses selling new products to new markets. This type of strategy can be very risky, so small businesses should plan ahead when applying diversification strategies. Marketing research is crucial as companies need to determine which new products will potentially be attractive to consumers in new markets. Small businesses can use this type of strategy to expand their product range and open up new markets. Companies diversify in order to increase profits. Businesses employ diversification to help them expand into markets and industries they haven't previously explored. This is accomplished by introducing new products, services, or features that will appeal to these new markets' clients. You also want to be strategic as you diversify. Get creative and look at what your customers really want, what they need, and how much they are willing to pay.
Diversification strategy, unlike market penetration strategy, is regarded as high risk not just due to the inherent hazards of generating new products, but also due to the company's lack of expertise functioning in the new market. When a firm diversifies, they are consciously putting themselves in a position of considerable risk. It is recommended that a corporation undertake a diversification plan only when the present product or market no longer provides prospects for expansion. Before opting to seek diversification, organizations must properly consider the risks and analyze the chances of attaining a profitable conclusion.
Acquisition
A growth strategy may also include acquisitions by the company to expand its business. For corporations wishing to grow into new markets or regions, gain a competitive advantage, or acquire new technology and skill sets, mergers and acquisitions have become a popular business strategy. It can be as simple as buying a small business or as complex as acquiring a large company. Due to the significant investments required to implement an acquisition strategy, companies need to know exactly what they are trying to achieve. Competition can be so intense that it is impossible to grow in the current market, so companies must find new markets for their products; otherwise, they cannot increase their profits. This could be one of the reasons why an organization should consider this growth strategy.
If an acquisition strategy requires a significant investment that needs to be implemented, the company must know exactly what its primary goal. It may seem as if a company isolates itself simply by maintaining the status quo of its business, but most people intuitively know that companies can grow too fast and, as a result, perish. Some would argue that they grow or die, and you might be surprised to know that they can go bankrupt, whether through growth or slow decline. Don’t forget to think about how you can integrate your business through a merger, and it’s always wise to see who’s willing to merge. You should look for companies that you can easily close to a merger or acquisition. You can take over or merge with a supplier, competitor, or another company. Choose wisely which industry or market you want to target so that you, your suppliers and competitors, and other companies can be profitable. Companies need to realize that in the latter scenario, they are likely to have little bargaining power. If you live in a sea of strong competition and have limited financial firepower, you may not be able to grow and succeed in your business.
Strategies for Sustainable Growth
So what are the best methods that companies use to implement successful growth strategies? What lessons can we learn from companies that have survived and even thrived for centuries in the face of fierce competition? Some companies face existential threats from competitors, but you cannot protect yourself from the inevitable. You have to develop an aggressive growth strategy that should lead you to establish a more flexible organizational structure that can adapt to new markets and rapid growth. A growth strategy plan may involve expanding its existing location. You may also include diversification, whereby the small company will sell new products to new markets. You can focus on market development but also focus your growth strategies in other areas of your business such as sales, marketing, and product development. Once you have identified the type of strategy that works for your business, you can start looking into strategies that will support further business growth. Let’s discuss what they are and how they are used.
Increase and Decrease the Price
There may be one or two customers you will lose as a result, but part of it is how well your prices are communicated. If your current prices haven’t risen for many years, give your customers a solid reason why you are opting to increase the price so that they can understand. At least reassuring some of your top customers that their business is important to you is a big part of taking the time to communicate with them directly. You can increase your prices without losing customers and employ some of the most effective ways to do so in your business. On the other hand, a strategic price reduction for certain items may be appropriate and could help to increase the value of a product that puts customers at the door to sell it on to something else that’s more lucrative.
Leveraging Other Channels
The technique by which a corporation makes the most of its many distribution channels is known as channel leverage. Though it is commonly thought of as boosting the effectiveness of many channels, it is actually about maximizing the various channels in order to achieve scalability. If you have only one shop, you might sell everything from a wholesaler. In this case, you could add a value offering that they do not currently offer, or perhaps even add online shopping options. The objective is to find methods to weave new channels into what currently works, rather than seeking for new ways to get into additional channels. This confluence technique allows you to see quick results from something that has previously shown to be successful. If you want to lose business in one area, make sure that this offsets total sales and profit.
Adopting Competitor Strategies
There are other companies and influential people in your industry who can coordinate with you to increase your sales. Monitor what your competitors are doing so you know who is doing what in the upswing or downturn, and you can plan better and take note of these tactics if it works against your competition. Create a list of companies or individuals that each company or person can find who have a certain level of success and need each other to create a win-win scenario for the organization. Remember that you may need to adapt these strategies for your own business, and you can become an industry leader if you know which strategies work for your business’s unique needs and requirements.
Unique Value Proposition
Just make sure you have something truly unique that sets you apart, that is, what your customers really care about and that they are willing to pay the price. Maybe you have the most advanced product on the market, maybe you offer the best quality, or offer outstanding service.
Growth Strategies for Your Business
Most of us have heard this saying, and it cannot be stressed enough: “The more you grow, the more your competitors grow.” But so can the economy. It would be unwise to underestimate the importance of positioning. These growth strategies require your team to implement them if you want to succeed. In summary, a growth strategy is a high-level strategy that outlines everything a company needs to do to grow. Growth strategies are, at their simplest and easiest, a few tactics and action plans designed to increase a company’s turnover and market share. A company’s growth strategy must be about maintaining and developing the company’s growth. There are many different types of business strategies on the market today, from marketing strategies to business development strategies. To employ the best strategies for your business, consider a growth strategy consultant who’s had years of experience helping businesses scale and succeed. At Universal Creative Solutions, we can help carve out a plan to ensure your company’s success no matter what stage your business is at or the challenges you face. We understand that the best way for a business to grow is to have all the tools and support it needs to combat the barriers to business success.
