Growth strategies are tactics designed to aid your company’s long-term expansion, such as increasing revenues or cutting expenses or improving product offerings.
Implementing your growth strategy effectively means setting measurable goals, so your teams feel accountable and are more likely to meet their targets.
Market penetration
Market penetration is one of the primary growth strategies for any business, involving introducing new products or expanding existing ones into additional markets. This can be accomplished through increased marketing efforts, reduced prices or expanded distribution channels; market penetration also requires collaboration across departments – for instance sales and marketing may need to collaborate in reaching target demographics.
One way to expand market penetration is by partnering with other brands. For instance, a ski gear company could form an alliance with an outdoor winter sports website and offer discounts and customer referrals as a result of this strategy.
Businesses looking to increase market penetration rate quickly may purchase competitors in mature markets, an approach that offers rapid expansion. Unfortunately, this strategy can also be risky; for instance, changing packaging or logo may alienate current customers and disrupt its business model.
Market development
At its core, market development strategy involves expanding sales of existing products within an existing market. This may involve entering new geographic regions, market segments or customer channels (like offering online sales in addition to physical outlets).
Market expansion strategies typically carry more risk, yet can yield greater rewards for companies. Businesses might employ strategies like lowering prices or creating customer retention materials in order to expand market share.
Strategic partnerships or acquisitions can also help your business to expand. Partnerships involve two businesses temporarily working together while acquisitions entail buying an entire company and its assets, which may open access to new markets, labor skillsets and intangible assets. It is key that teams in your organization understand your growth strategy so everyone is on board.
Market segmentation
Market segmentation is an effective strategy for increasing sales and profits by targeting specific groups of customers. Businesses can use market segmentation to inform product development and advertising campaigns as well as identify strategies for reaching and engaging new ones. Businesses should revisit their market segments regularly as consumer preferences can quickly shift over time.
Market segmentation takes four primary forms, demographic, psychographic, behavioral and geographic. Each type has its own set of advantages and disadvantages – for instance using demographic criteria can make market segmentation more measurable than psychographic criteria.
Market penetration involves discovering strategies for reaching a larger audience and convincing them to purchase your products or services. You could do this through lower prices, increasing marketing support or entering a new market with existing ones; or by adding features that can maintain or even grow market share – for instance Tinder increased user growth through referrals.
Mergers and acquisitions
Mergers and acquisitions are an increasingly popular strategy for business growth. They can help companies increase market share, reduce operational costs and gain access to new resources. A company may pursue mergers or acquisitions either by purchasing another business outright or forming a joint venture partnership; alternatively they could enter new international markets or target specific customer demographics with their products and services.
An acquiring company typically purchases its target business using cash or debt instruments, with shares of the target company often experiencing a temporary increase in value leading up to the takeover. Once completed, its share price typically increases.
Mergers often result in reduced costs by eliminating redundant employees in similar positions and creating economies of scale through combined production levels, leading to greater revenues from more industry sales generated by the combined entity.