Growth within a company is vital to its survival. That means constantly evaluating your company to see where there is potential for growth.
Knowing who you are currently targeting will help in your decision for growth. That means you must identify and understand your market segments and target audience (learn how in Increase profit opportunities with STP) before considering the choices for growth.
Once you understand your target market and company impact there are four overall strategies we recommend considering and choosing from to grow your business.
1. Market Penetration
Focuses on current products and current markets in order to increase market share. Market penetration requires greater marketing efforts or intensified distribution efforts where the product is already sold. It is the lowest risk growth strategy.
This growth strategy might be achieved by attracting new consumers to the current target market or encouraging current customers to promote or buy more often from the company. Achieve these strategies by making your current product more appealing.
Example: Under Armour has consistently focused on selling performance apparel such as athletic footwear, clothing, and accessories. It has fueled its growth by focusing largely on promotion, distribution, and consistency. Under Armour has been very effective at developing inspiring advertisements that feature well-known male and female athletes. [lumen]
2. Market DevelopmentUses the existing product/service and current marketing offering to reach new market segments. It seeks to sell into new markets. Discovering new uses for your product and expanding domestically and sometimes even internationally will help you reach this grow strategy.
Example: Uber started out as a ride service app that allowed users and users friends to get a ride from point A to point B in whatever ride was offered to them. Since then Uber has expanded to offer Uber Pool (ride sharing), Uber Comfort (newer cars with extra leg room), Uber Black (luxury upgrade) and more to seek a new market of customers.
3. Product Development
Offering a new product or service to the current target market. Branch off from your current product/service to offer a new product or service you think the current target market would enjoy and use.
Example: With environmental concerns growing among consumers, rising gasoline prices and a desire for a reliable vehicle, Nissan developed a new product. The Nissan Leaf became the first electric vehicle. Nissan has remained a leader in the electric vehicle market.
Offering a new product or service to a market segment the company currently does not serve. This opportunity can be either related or unrelated.
Related diversification means the current target market shares something in common with the new opportunity. Companies might purchase from the same vendors, use the same distribution and management information system, or advertise in the same spot to target markets similar to their current consumers.
Unrelated diversification means the new business lacks any common elements with the present business. It does not rely on the strengths of the current market or products. It is very risky.
- Uber started out as a ride service app but has since used diversification to introduce a new product, Uber eats (food delivery on demand).
- General Electric began as a merger between two electric companies. Over the years, GE successfully branched out into a wide variety of industries including power and water, transportation, oil and gas, aviation, healthcare, and more.
Make sure you choose the option that is best for your company. Take the time to do research and really understand where your company should go next.
Information gathered from Grewal, Dhruv, and Michael Levy. Marketing. 5th ed., McGraw Hill Education, 2017.