A company’s ability to grow is a core part of its success and can impact how valuable it can be.
Teams may attain targets that aid in the expansion and profitability of their organizations by putting certain tactics into practice. These growth techniques assist businesses in organizing and integrating operations that ultimately lead to market expansion and more income.
Growth strategies are a course of action for a business to increase its market share. If your company intends to develop and expand, a strategy for market growth may assist you in determining the best course of action by taking into account your company’s industry, target market, and financial resources.
Most of these growth strategies can lead to competitive advantage because they capitalize on some aspect of the entrepreneur’s, and the firm’s, knowledge base. These growth strategies are (1) penetration strategies, (2) market development strategies, (3) product development strategies, and (4) diversification strategies
A penetration strategy focuses on the company’s already-available product on the market. By encouraging existing consumers to buy more of the company’s products, the business owner tries to expand the penetration of the market or product. Marketing works well to promote repeated purchases.
For instance, pizza firms run extensive marketing campaigns to encourage its current university students to purchase pizza every night of the week rather than just twice.
This growth strategy is centered on stealing market share from rivals or increasing the business’s portion of the market, and it doesn’t call for the creation of anything new for the company. This expansion plan tries to maximize the market that the company initially entered.
Strategies for market development might also lead to growth. Using market development tactics, the company may reach out to new consumer segments with its current product offerings. Geographical, demographic, and/or product usage categories can be used to group new client groups.
New Geographical Market
It basically involves promoting already existing goods in new locations. As an illustration, a business that sells its goods in Singapore may start doing business in Malaysia, Thailand, and Indonesia. By providing things to individuals who haven’t had the chance to buy them, might increase sales.
Businesses that sell seasonal goods may find this to be very advantageous. For businesses with northern hemisphere markets. They may promote their products all year long if they enter the southern hemisphere market.
However, the business owner has to be mindful of geographical variations in client preferences as well as linguistic and legal restrictions that may call for slight product adjustments.
New Demographic Market
Demographic factors like wealth, region, level of education, and gender may be utilized to identify prospective clients.
An entrepreneur who now sells his company’s existing product to a certain audience may choose to expand by doing so to a different audience.
For instance, the studio now produces and sells computer games to guys between the ages of 13 and 17.
This company has an opportunity to boost sales by focusing on university-educated guys between the ages of 24 and 32 who have high discretionary incomes and are likely to love playing video games.
New Product Use
Businesses may find that customers use their products in ways that weren’t intended or anticipated.
Understanding how the product is used might aid in determining how valuable it might be to various client groups.
The producers are able to modify their product to suit the demands of customers who bought it in this way thanks to the knowledge gathered from this new usage.
The advantage of employing the market development approach is that it makes use of the knowledge and expertise already present in certain technologies and production processes.
Product Development Strategies
The production and marketing of new products to existing customers is one of the product development strategies used to boost sales.
Experience working with a certain customer might reveal problems clients are having with current technologies and how to better serve them.
When it comes to inventing new products, this information is a crucial source of knowledge. Disney Corporation, for instance, developed its base of Disney movie enthusiasts as clients and produced goods tailored to the market.
An approach to product creation also offers the chance to profit from the company’s reputation with these clients and the current distribution networks.
Selling a new product to a new market is a component of a diversification strategy. Despite the fact that both knowledge bases seem to be fresh, certain diversification tactics depend on the entrepreneur’s (and the company’s) expertise.
Challenges of Growth Strategies
When a firm expands, it gets bigger and starts to benefit from being bigger. For instance, a higher manufacturing capacity boosts production efficiency, which raises supplier acceptability and strengthens the company’s negotiating position.
The company’s size also improves its credibility because bigger businesses are often seen as more trustworthy and respected by clients, investors, and other stakeholders.
A company’s growth may provide the owner with more control over how well the business performs. The company changes as it grows. Various managerial problems may result from this. The pressures cause these problems to surface.
Human Resource Pressure
Employee initiatives are another source of growth. Employee morale problems, burnout, and a surge in employee turnover will occur in the company if the personnel is overworked in an effort to accommodate growth. The company’s corporate culture could be impacted by this.
For instance, the corporate culture is likely to suffer from the large number of new workers that is required owing to an increase in employment opportunities as well as to replace those who leave. This is a concern, particularly if the business depends on its culture to provide it an edge over its competitors.
Pressures on the Management of Employees
Many business owners learn that they need to change their management style as their company grows. In other words, modifying the way they deal with employees. Business growth might be hampered by management decisions that are solely the responsibility of the company owner.
The business owner may find this challenging to understand because he has participated in all significant business decisions from the company’s founding. The firm owner needs to consider changing the management in order to survive.
Pressures on the Entrepreneur’s Time
If I had just a little more time is one of the most important problems in growing an organization. Even while this is a problem that affects all managers, entrepreneurs who are growing their firms are particularly affected.
An entrepreneur’s most valuable, yet finite, resource is time. Because it is a single sum, the business owner is unable to store it, rent it out, use it, or buy it. It is both perishable and irreplaceable.
Whatever the entrepreneur performs, today only has 24 hours, and yesterday’s time is already gone. Entrepreneurs must invest time in their businesses’ growth, but doing so means devoting time away from other duties, which can cause problems.
There are actions an entrepreneur may take to address these concerns and more successfully grow their firm.
Pressures on Existing Financial Resources
Growth has a strong need for money. The company’s resources may be fully used when you invest in expansion.
When a company’s financial resources are at their maximum level and they are more vulnerable to unexpected expenses that might push them to the verge of bankruptcy.
Resources must be readily available (or in reserve) to protect against environmental risks and to promote future innovation.
A growth strategy should be created, but its implementation is even more crucial. To be sure you’re moving on the right path, use the concrete steps and compare your outcomes to the forecasting model.
If not, don’t be hesitant to adjust your approach. You will have a better chance of optimizing your company’s growth if you have a well-thought-out growth strategy in place.
Business success is based on sustainable growth. Businesses must stay proactive and grasp opportunities presented by the market since the business world is always changing and offer opportunities to fast learners.