Businesses are slowly re-opening across the globe and considering the post-pandemic economic condition, the overall optimism is low. However, this slow down is the best time to review your growth strategy since having one is fundamental to a business’ survival. Otherwise, you will always be at the mercy of your current consumer and market fluctuations.
Developing a growth strategy isn’t a one-size-fits-all process. What’s important is to select an approach that best fits the overall strategic plan and not to get sidelined into non-strategic opportunities.
The market will always be searching for something new—and you, not your competitor, must be the one to give it to them. Understanding and enacting growth strategies is essential to kick-starting a state of constant and successful evolution in your business.
“No company can afford not to move forward. It may be at the top of the heap today but at the bottom of the heap tomorrow, if it doesn’t.”— James Cash Penney, founder, JC Penney
Your particular industry and target market will influence your decisions on choosing the right strategy. But, it is almost universally true that new customer acquisition will play a sizable role.
Each approach described below has its risks and rewards. So, make sure you carefully consider each with your management team before execution.
Let’s explore each of these categories:
Market penetration is all about gaining a bigger market share compared to the competition by using current products or services.
Preferably, companies should first leverage their existing resources and capabilities to achieve maximum market penetration before they consider other options.
How you can achieve Market Penetration
- Study the competition and identify Gaps
For your business to sustain long-term growth, you must understand what sets it apart. Identify why customers come to you or go to your competitors. Ask questions on what’s wrong with current offerings and identify gaps. Be different and offer higher value products or services that would be hard for any potential customer to resist
- Increase the frequency of use
Another way to increase market share is to increase the number of times customers use your product or service. For example, offering incentives like what Starbucks or so many other companies are doing.
- Increase the quantity of use
You can increase the pack size to make it easier for consumers to buy more. For example, Costco is offering 3 packs of bread with lower price of buying individual ones. So, higher market share is achieve by selling more products
- Adjust the Price
Another way to increase market share is to lower the price. However, if constant price reduction is your only strategy, get ready to stay in this price battle for long. However, we suggest businesses to look at price adjustments as a temporary approach.
- Think outside the box
Lastly, creativity has never been more essential to competitiveness in the business world. So, think outside the box and tap into potential avenues such as finding new applications for current users or increasing your marketing spent reasonably.
Depending on the industry, product expansion can be a low-risk strategy. Since you know the current customer base already, you are developing a new product that closely relates to them. Also, product expansion, can refer to refining or adjusting your current offerings such as adding new flavors or increasing the accuracy of the application or technology,…
Cross-Selling or Up selling is another approach to increase your product base. For example, offering to train staff if a customer signs up for your VIP coaching services.
Amazon is the best example of product expansion and how they started from selling only books in 1995 and how soon they expanded their offerings to include DVDs, CDs, and now everything online.
Businesses can implement this strategy when they have already exhausted all market penetration tactics.
New markets can be defined as new geographical locations, new cities or countries as well as new channels for your current products.
For example, Nestlé recently opened a new retail location in Toronto called The Kit Kat Chocolatery to gain a bigger market share and attract brand loyalty.
Growth through Diversification
Growth through diversification happens by creating new products and reaching for new markets. Among all growth strategies, this is by far the riskiest option as the company is positioning itself into uncharted territories. Therefore, if you choose this approach, make sure your business have appropriate resources and support to effectively execute the plan.
Acquisition of other companies
Lastly, apart from strategies discussed above, companies may decide to acquire other companies to gain a bigger market share and, in most cases, to eliminate the competition. Obviously, this approach needs enough access to capital funding and thorough due diligence.
In summary, it is important to study and fully understand the key strategic options, what the best approach is and what resources are needed to be successful. Also, here is a series of question you can ask to uncover hidden capabilities and expands your growth thinking process further.
Crunch TimeZ team is here to support your business. We focus on helping clients not only develop winning growth strategies but also deliver real-world results.