7 Types of Business Growth Strategies You Need to Know
Are you looking for ways to grow your business and reach new customers? If so, you need to have a clear and effective growth strategy. A growth strategy is a plan that outlines how you will achieve your business goals, such as increasing sales, expanding your market, or launching new products or services.
There are different types of growth strategies that you can use depending on your business situation, objectives, and resources. In this article, we will explain what are the 7 types of business growth strategies and how you can apply them to your business.
1. Market Penetration
Market penetration is a growth strategy that involves increasing your market share in your existing market. This means selling more of your current products or services to your current customers or attracting new customers from your competitors. You can use various tactics to achieve market penetration, such as:
– Offering discounts, promotions, or loyalty programs
– Improving your customer service or after-sales support
– Enhancing your product quality or features
– Investing in marketing or advertising campaigns
– Expanding your distribution channels or locations
Market penetration is a low-risk and low-cost growth strategy that can help you boost your sales and profits quickly. However, it may also have some limitations, such as:
– Facing high competition and price wars
– Reaching market saturation or declining demand
– Having limited opportunities for innovation or differentiation
2. Market Development
Market development is a growth strategy that involves entering new markets with your existing products or services. This means finding new customers or segments that have similar needs or preferences as your current market but are not yet served by you or your competitors. You can use various tactics to achieve market development, such as:
– Exploring new geographic regions or countries
– Targeting new demographic groups or niches
– Creating new use cases or occasions for your products or services
– Adapting your products or services to suit different cultures or regulations
Market development is a moderate-risk and moderate-cost growth strategy that can help you diversify your revenue streams and reduce your dependence on one market. However, it may also have some challenges, such as:
– Facing unfamiliar customer behavior or expectations
– Dealing with legal, political, or cultural barriers
– Having higher logistics or operational costs
3. Product Development
Product development is a growth strategy that involves creating new products or services for your existing market. This means offering something new or improved that meets the needs or wants of your current customers better than your existing products or services. You can use various tactics to achieve product development, such as:
– Conducting market research or customer feedback
– Investing in research and development (R&D) or innovation
– Leveraging your core competencies or expertise
– Collaborating with partners or suppliers
Product development is a high-risk and high-cost growth strategy that can help you gain a competitive edge and increase customer loyalty. However, it may also have some drawbacks, such as:
– Facing technical difficulties or failures
– Having longer time-to-market or return on investment (ROI)
– Encountering customer resistance or cannibalization
4. Diversification
Diversification is a growth strategy that involves creating new products or services for new markets. This means entering completely new areas of business that are unrelated to your current products, services, markets, or customers. You can use various tactics to achieve diversification, such as:
– Acquiring or merging with other companies
– Developing new capabilities or resources
– Exploring new industries or sectors
– Experimenting with new business models
Diversification is the most risky and costly growth strategy that can help you tap into new opportunities and reduce your exposure to market fluctuations. However, it may also have some risks, such as:
– Lacking experience or knowledge in the new domain
– Having lower synergies or economies of scale
– Losing focus on your core business
5. Franchising
Franchising is a growth strategy that involves licensing your business model and brand to other entrepreneurs who operate as independent franchisees. This means allowing others to use your name, logo, products, services, systems, and processes in exchange for a fee and a share of the revenue. You can use various benefits to achieve franchising, such as:
– Having lower capital and operational costs
– Having faster and wider market expansion
– Having higher brand recognition and reputation
– Having more control and support over the franchisees
Franchising is a popular growth strategy for businesses that have a proven and scalable concept that can be replicated in different locations. However, it may also have some disadvantages, such as:
– Sharing profits and risks with the franchisees
– Having lower flexibility and innovation
– Having potential conflicts or disputes with the franchisees
6. Joint Venture
Joint venture is a growth strategy that involves forming a strategic partnership with another company that has complementary skills, resources, or markets. This means creating a separate entity that is jointly owned and operated by both parties for a specific purpose or project. You can use various advantages to achieve joint venture, such as:
– Having access to new capabilities or resources
– Having access to new markets or customers
– Having shared risks and costs
– Having mutual learning and synergy
Joint venture is a common growth strategy for businesses that want to enter new markets or industries that require specialized expertise or regulations. However, it may also have some drawbacks, such as:
– Having lower autonomy and control
– Having different goals or cultures
– Having potential conflicts or disagreements
7. Mergers and Acquisitions
Mergers and acquisitions (M&A) is a growth strategy that involves buying or combining with another company that has similar or related products, services, markets, or customers. This means creating a larger and more powerful entity that can benefit from the strengths and assets of both parties. You can use various motives to achieve mergers and acquisitions, such as:
– Increasing market share or power
– Increasing efficiency or profitability
– Increasing diversification or innovation
– Increasing customer base or loyalty
Mergers and acquisitions is a complex and expensive growth strategy that can help you achieve rapid and significant growth. However, it may also have some challenges, such as:
– Facing legal, financial, or regulatory issues
– Facing integration or coordination difficulties
– Facing cultural or organizational clashes
As you can see, there are many types of business growth strategies that you can use to grow your business. Each strategy has its own pros and cons, so you need to carefully evaluate your situation, objectives, and resources before choosing the best one for you.
If you need help with developing and implementing your growth strategy, you can contact us at Expert Export Management. We are a team of experienced and professional consultants who can help you with all aspects of your export business, from market research to logistics to marketing. We can help you find the best growth opportunities and solutions for your business.
Types of Business Growth Strategies
Business growth strategies are game plans to keep a business growing. They can involve developing new products or features, capturing new audiences, increasing market share and revenue, acquiring assets, or improving products or services. Here are two statistical paragraphs about some types of business growth strategies that show increase or decrease global demand in this industry.
Market Development Strategy
A market development strategy is a business growth strategy in which you attempt to sell your existing products into untapped markets. This involves identifying new markets that would be a good fit for your current product line. Market development is a common growth strategy because it allows you to move beyond your existing customers and expand your share of the market. According to a report by Grand View Research, the global market development services market size was valued at USD 4.17 billion in 2019 and is expected to grow at a compound annual growth rate (CAGR) of 8.9% from 2020 to 2027 . The report attributes this growth to the increasing demand for market development services from various industries, such as healthcare, consumer goods, technology, and energy.
Diversification Strategy
A diversification strategy is a business growth strategy in which you make new products or offer new services that are different from your core offerings. This involves entering new markets or industries that are not related to your current ones. Diversification can help you reduce the risk of relying on one product or market, create new revenue streams, and leverage your existing capabilities or resources. However, diversification can also be challenging and costly, as it requires extensive research, innovation, and marketing. According to a study by McKinsey & Company, the global diversification index, which measures the degree of diversification across countries, industries, and companies, declined by 19% from 2007 to 2017 . The study suggests that this decline reflects the shift towards more focused and specialized business models in response to the changing competitive landscape and customer preferences.
References:
http://www.eatonprogram.com/wp-content/uploads/2013/01/Strategy-and-the-Internet.pdf
http://www.cs.cornell.edu/home/kleinber/networks-book/networks-book-ch17.pdf
http://faculty.fuqua.duke.edu/~charlesw/s591/Bocconi-Duke/Papers/C10/TeecePisanoShuenSMJ.pdf
https://www.grandviewresearch.com/industry-analysis/market-development-services-market
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-state-of-corporate-diversification
https://www.investopedia.com/terms/g/growthstrategy.asp
https://www.businessnewsdaily.com/17386-business-growth-strategies.html
https://www.thebalancesmb.com/types-of-growth-strategies-2947920
